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And as the New York Times has just documented, the timing couldn’t be more critical …
“So the forecast grows darker,” says the Times …
“What’s clear is that almost everywhere the fiscal crisis of states has grown more acute.
“Rainy day funds are drained, cities and towns have laid off more than 200,000 people, and Arizona even has leased out its state office building.”
Meanwhile, the Times adds that any recoveries in tax revenues are tiny and are more than wiped out by the expiration of federal stimulus aid.
Bottom line: Despite all the cuts … despite sales of critical state assets … despite massive tax increases … the historic state and local debt crisis continues to grow more severe with each passing day.
A default — in any state or major city —
can impact you in more ways than one …
First, if you own tax-free bonds of any kind — whether revenue bonds or general obligation bonds, whether high rated or low rated — you will most likely see an immediate decline in their value. Indeed, a decline is already under way right now, and it’s bound to accelerate dramatically in the wake of a major default.
Second, if tax-exempt bonds are among the holdings of your mutual fund, money market fund, ETF, or pension fund, the value of your investments will be negatively affected.
Third, banks and insurance companies: Fortunately, most do not invest heavily in municipal bonds. Banks hold only $229 billion in municipal securities and loans, while insurers hold only $448 billion, according to the Fed’s latest tally.
But some banks and insurers do invest more heavily in this sector, and if yours is among them, the safety of your savings or insurance could be reduced by defaults. Moreover, nearly all financial institutions are adversely impacted when troubles in any sector of the bond market cause a general rise in interest rates.
Fourth, if you do business in the state or city that’s defaulting, your revenues can be reduced due to a nosedive in the local economy and, worse, due to payment failures by the government or its contractors.
But the most challenging impacts are those that extend beyond business and investments — to your family’s security and well-being. If you or your loved ones reside in a state or city in trouble …
- Your local police, fire and other emergency services could be disrupted.
- Medicare and other critical programs could cease to function.
- And in the worst case scenario — which we pray will RARELY occur — you could see the kind of civil unrest we’ve already seen in Greece, Ireland and elsewhere.
All this is why reason my team and I are hosting America’s Day of Reckoning in 2011 this coming Wednesday:
Right off the bat at this timely briefing, we’ll name the 11 states most vulnerable to financial disaster PLUS the 26 large tax-exempt bond issuers most likely to default this year.
Then, my team and I will also answer the most critical questions our readers asked us all last week on my personal blog:
- “How can the current stock market rally last with all the cities on the brink of bankruptcy? What are your projections?” — Richard K.
- “In light of all these negative comments, how will gold perform in 2011?” — Burton R.
- “What about silver? What can we do with silver?” — Tim S.
- “For those with significant money in retirement accounts, what can be done?” — FBL
- “What will happen to the real estate you own if the financial sector crashes?” — Steve
Plus, we’ll also NAME the specific investments
we’re counting on to not only PROTECT your wealth,
but also to MULTIPLY IT as this crisis unfolds!
Look: This government debt crisis is real. As New Jersey Governor Chris Christie told 60 Minutes recently, the Day of Reckoning is here. There is no ignoring it or delaying it.
When the first domino falls, it will have major ramifications for every investment in your portfolio and every dollar you own.
That’s why I believe it is absolutely critical that you do NOT miss this critical online event!
THE EVENT: America’s Day of Reckoning in 2011
THE DATE: Wednesday, January 26, 2011
THE TIME: 12:00 Noon Eastern Time
THE VENUE: Online video teleconference
THE PRICE: Zero
This briefing is complimentary
for all of our readers.
All we ask is that you reserve your place
NO LATER than NEXT Tuesday, January 25.
Good luck and God bless!
Martin