Gotcow?

The next Covid unemployment wave...states/cities/towns

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That next unemployment wave is on the horizon and coming into view.

 

The economic damage from the Covid shutdowns is starting to severely impact states, cities, municipalities and towns revenue (tax) collections and it's not looking like they are going to get a Fed bailout.  

 

That translates into a whole big mess of government sector layoffs.

 

Prepare to start hearing a sob story about how all these government jobs are essential and must be maintained.

 

BTW, I'm not cheering this outcome.

It's just due that government will now suffer the unintended consequences of it's mandates.

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Just now, Gotcow? said:

That next unemployment wave is on the horizon and coming into view.

 

The economic damage from the Covid shutdowns is starting to severely impact states, cities, municipalities and towns revenue (tax) collections and it's not looking like they are going to get a Fed bailout.  

 

That translates into a whole big mess of government sector layoffs.

 

Prepare to start hearing a sob story about how all these government jobs are essential and must be maintained.

 

BTW, I'm not cheering this outcome.

It's just due that government will now suffer the unintended consequences of it's mandates.

While most states cannot run annual deficits, it appears NJ has found a way to borrow to cover its deficit.

For those who don't borrow, this is a positive, unintended, consequence.  Downsizing government.

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12 mins ago, Gotcow? said:

That next unemployment wave is on the horizon and coming into view.

 

The economic damage from the Covid shutdowns is starting to severely impact states, cities, municipalities and towns revenue (tax) collections and it's not looking like they are going to get a Fed bailout.  

 

That translates into a whole big mess of government sector layoffs.

 

Prepare to start hearing a sob story about how all these government jobs are essential and must be maintained.

 

BTW, I'm not cheering this outcome.

It's just due that government will now suffer the unintended consequences of it's mandates.


 

is a government worker being kept on the payroll like PPP?

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my company does a lot of engineering projects for municipal DPWs through On Call contracts... we're seeing many projects in the pipeline either being scaled back or pushed to a later date TBD...needless to say, that's not good for us... 

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Back in May I was thinking that states need to get ahead of this drop in revenue.  They should have raised sales  taxes, increased gas taxes, increased any tolls.  And they should have also started to decrease spending by furloughing or laying off state employees.  It was inevitable.  

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3 hours ago, Gotcow? said:

That next unemployment wave is on the horizon and coming into view.

 

The economic damage from the Covid shutdowns is starting to severely impact states, cities, municipalities and towns revenue (tax) collections and it's not looking like they are going to get a Fed bailout.  

 

That translates into a whole big mess of government sector layoffs.

 

Prepare to start hearing a sob story about how all these government jobs are essential and must be maintained.

 

BTW, I'm not cheering this outcome.

It's just due that government will now suffer the unintended consequences of it's mandates.

 

~

It is due and it will be painful too many; as someone who's been laid-off and gone through the financial turmoil it is not a fun time in the least.

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RI was offering state employees in some departments to furlough and collect unemployment including the previous $600 covid benefits.  The unions would never allow full scale layoffs, the most they'd ever agree to is furloughs.  

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3 hours ago, JohnP said:


 

is a government worker being kept on the payroll like PPP?

YES, and you should know better. 

 

In a yield/income starved world, municipalities are issuing more and more debt to close their fiscal deficits and bond buyers are buying it up. These funds are being used to keep their employment up thinking/hoping for a Pelosi-Schumer led bailout (if not now, then in February under President Biden they think). So no PPP needed for state and local governments when they can access the bond market with impunity. 

 

But the muni bond market is getting nervous. Warnings from brokerage firm strategists and other observers are on the rise. Ultra short term muni debt is trading in-line with taxable levels, a yield premium they should not be paying based on historical spreads and the after-tax calculations. 

 

GC is correct, a reckoning is coming and it will be felt in the muni bond market. 

 

Meredith Whitney was laughed at in her infamous 60 Minutes interview, not because of her diagnosis, but for its timing. She underestimated how long municipalities could stay afloat with the help of a willing Federal government and a bond market willing to kick the can years down the road. Well, here we are, years down the road and getting closer to her vision. 

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34 mins ago, DZ said:

Back in May I was thinking that states need to get ahead of this drop in revenue.  They should have raised sales  taxes, increased gas taxes, increased any tolls.  And they should have also started to decrease spending by furloughing or laying off state employees.  It was inevitable.  

To date, they have had a credit card in the form of bond market issuance that has allowed them to continue their practices. The leaders are betting that this election will create a better environment for a full and total federal bailout so they are biding their time. 

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3 hours ago, Gotcow? said:

BTW, I'm not cheering this outcome.

It's just due that government will now suffer the unintended consequences of it's mandates.

 

It is necessary for all to feel the pain of these harrowing times.   For better or worse, we are in this together.  

 

Gov layoffs will, in the end, be a blessing.  So many of those people can get retrained and follow their passion into entrepreneurship, coding, engineering, and other 21st century new economy careers.

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5 mins ago, flyangler said:

GC is correct, a reckoning is coming and it will be felt in the muni bond market. 

 

Different topic but same theme- i am not a market / finance guy, so I may be off base here, but wont there be a catastrophic corporate real estate crash coming as well?  I am thinking that the brick and mortar closings coupled with a flight from high rent city areas may have a huge effect on reits and other similar vehicles (which probably exist but that I know nothing about ).   I recall hearing that there were signs of a bubble way back before covid.  The past 6 months cant have helped.

 

Once these go under, and if (?) some of these large corporate buildings close down and go bankrupt, what impact will that have on real estate taxes collected on them?  Some towns must rely heavily on this.  

 

Thoughts?

 

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4 mins ago, 55555s said:

 

  So many of those people can get retrained and follow their passion into entrepreneurship, coding, engineering, and other 21st century new economy careers.

You do understand that these are government employees we are talking about here...………..right? 

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How are these cities and states going to pay to fix all the destruction done by BLM with a huge reduction in tax revenue?  I can't imagine insurance companies are going to continue to take this kind of hit either.

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