Financial News Story of the Day – Harrisburg, Pennsylvania is Bankrupt
Pennsylvania’s capital city, Harrisburg, today filed for bankruptcy. This is the second city to do so this year after Central Falls, Rhode Island filed for it as well. For those of you not paying attention, many U.S. cities now face overwhelming pension and retirement health care costs that current workers simply cannot fund, especially in light of a deteriorating economy. Meredith Whitney made headlines when she announced that after 2 years of study, she didn’t see anything but a large municipal bond market default. Things are getting ugly people (source: YahooFinance.com)
Excerpt: “Levy does warn that if counties and cities continue to run into troubles, there will be less hope of greater government assistance. “States under their own distress are going to become less and less generous,” he says. That means we can’t count on bailouts. Unless of course, the defaults move up the ranks and start directly hitting financially fragile states like California, New York, Illinois, etc. In that case we may see a federal bailout. “They (Washington) may have to at least help them work it out some point,” he says. “A state like California is too big to fail.”
Personal Finance Post of the Day – Student Loan Debt to Wipe Out a Generation of Homebuyers
For those of you who don’t know Dr. Housing Bubble, check him out. In today’s post, he highlights an issue that is often glanced over by the media – that a whole generation of young people are saddled with student loan debts and zero job prospects, even while wages fall. This is a disastrous element going against a housing recovery that no one is talking about. Student loans may be the bubble that finally does us in (source: DrHousingBubble.com).
Excerpt: “The student debt market is now much larger than the credit card debt market in the United States and the trend is making a clear move to $1 trillion. Now this wouldn’t be such an issue if graduates were earning a nice ROI on their investment. More and more evidence is showing that with over 4,000 colleges in the U.S. some degrees are simply not worth it. In fact, it is like purchasing a Real Home of Genius except you have absolutely no ability to walk away. You bought a shack at the peak and now have to pay for all the debt associated with the place.”
Daily Finance Summary – S&P Cuts Spain’s Debt Rating
Stocks are down today as Standard & Poor’s cut Spain’s long term debt rating. Google beat earnings expectations again by a wide margin while J.P. Morgan disappointed as expected. Fitch may cut a few investment bank ratings as well, including Morgan Stanley and good old Goldman Sachs.
Stocks, Metals and Mortgage Rates
Dow Jones: 11,478 (-41) you lost -0.35%%
S&P 500: 1,204 (-4) you lost -0.30%
Gold: $1,667 (-0.10%) you lost -$2
Silver: $31.73 (+0.06%) you earned +0.18%
30-Year Fixed Mortgage Rates: 4.26% (+0.04)
15-Year Fixed Mortgage Rates: 3.61% (+0.02)
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