The Day Of Reckoning

Posted: December 28th, 2010 by Militant Libertarian

by Russell D. Longcore, DumpDC

The CBS info-tainment program “60 Minutes” ran a piece last Sunday entitled “The Day of Reckoning.” The subject of the segment was the imminent and unavoidable default by as many as 100 American municipalities that is expected in 2011.

100 municipalities in default. 100 governments declaring bankruptcy. 100 governmental entities that cannot continue operating. These could be states…counties…cities. The segment featured Illinois and New Jersey among others.

60 Minutes has been a reliable propaganda outlet for government over the last 40 years. So, if they ran this piece on national television, the chances are pretty good that the situation is much worse than shown.

If you have been a regular visitor to, you’ve seen article after article telling you the various ways that the American economy will meltdown. One of the ways we’ve showcased is the amount of foreign debt that Washington has sold globally, and that DC cannot pay. But here is yet another source of disaster that cannot be avoided, and this source is here on our own shores. This source…municipal debt defaults…WILL happen in the coming 12-24 months.

Think about this situation. What do you think will happen in the bond markets when one state, or big city, or big county…defaults on their municipal bonds? What will the bondholders do before the default…that is, if they know about the coming default? What would YOU do if you were holding an IOU from a friend, and you knew that the friend was going broke? Would you take pennies on the dollar from your friend as settlement of the IOU? Would you try to sell the IOU to some other fool without telling him that your friend was going broke? Or, would just wait until your friend was broke, and his IOU became worthless, and you got nothing in repayment of the debt?

Those are some of the decisions boldholders will be forced to make in the coming months. Further complicating their decisions is that other bondholders can and will make the wrong decisions that will affect everyone’s holdings.

Many bondholders are big pension funds, insurance companies, mutual funds, banks….all the institutional investors out there that used to look to municipal bonds as safe havens for wealth preservation. But there are also millions of individuals holding municipal bonds in their private portfolios for the same reasons. Bond defaults will mean that interest income ceases. So the big investors lose their arses and the individuals do too. But remember…the big losses could affect the entire bond market. It could even cause it to collapse. And the collapse of the domestic municipal bond market because of these government defaults can easily collapse the entire economy.

The municipalities will look to Washington for help. Washington only has a couple choices here. (1) It can print more money and bail out the municipalities to the tune of $1 TRILLION dollars. Or (2) it can tell them that they are on their own. Printing more money will hasten the hyperinflation already on the horizon. Choice #2 is the wise choice, but when in the last 150 years has Washington done anything wise?

Ladies and Gentlemen, please remember that even states that might secede…like Texas…are likely facing these grave bond defaults. So does anybody get out of this scenario unscathed?

Answer: Only the states that have not been mismanaged. I do not know if such a state exists in the USA.

Take the time to view this video with your children.

The Day Of Reckoning

Secession is the hope for mankind. Who will be first?

DumpDC. Six Letters That Can Change History.

© Copyright 2010, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.


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