Economist: 46 Out of 50 US States Are Insolvent
by Robert Wenzel
During a presentation today at the Adam Smith Institute, economist Kevein Dowd, a visiting professor at the Pensions Institute, Cass Business School in London, told his audience:
Fiat money is entering its death spiral…
Banks use crooked accounting methods to hide losses and enrich employees with bonuses. It’s another form of looting…
At least 46 out of 50 US states are insolvent.
What’s behind Dowd’s thinking? He wrote this last December:
Sooner rather than later, it will dawn on investors that Treasuries are over-valued and confidence in the Treasuries market will crack: one possibility is that rising inflation expectations or higher deficits will then push up market interest rates, causing bond prices to falter and then fall; an even more imminent prospect is that some combination of the Fed’s quantitative easing and yawning Federal budget and U.S. balance of payments deficits will cause a further decline in the dollar that makes foreign holders of Treasury bonds lose confidence in their investments. In either case, there is then likely to be a rush to the exits – a flight from Treasuries on a massive scale – forcing up interest rates in general and inflicting heavy losses on bondholders, especially on those holding long-term bonds.
• The collapse of the Treasuries market will cause the banks’ previously profitable ‘gapping’ adventure to unravel with a vengeance: the very positions that yielded them such easy returns will now suffer swingeing capital losses. Confidence in the banks – never strong since the onset of the crisis – will collapse (again) and we will enter a new (and severe) banking crisis.