Several states are showing scary illiquidity.  New Jersey’s governor just yesterday impounded funds the legislature had already appropriated and announced a state of emergency.  He stopped short of “declaring” emergency, which would have given him special powers over contracts.  New Jersey comes up high on the list of states with big budget gaps, heavy pension [...]

fiscal stress, state and local politics, states

Further to our discussion of Detroit’s pension, we see that Missouri’s public pension is in a lawsuit with State Street Bank over their securities lending program.  These programs are intended to act like demand deposits — but the dollars are huge, so any movement of large blocks of funds are likely to affect liquidity.  What with [...]

fiscal stress, liquidity, securities lending

The city of Detroit does not need another financial setback.  With unemployment topping 17% and ever increasing short term borrowing, the city is under an immediate survival imperative to cut spending or face insolvency.  State revenue sharing is being cut in the recent budget.  Local taxes, including the casino wagering tax are falling. 
The good news [...]

Detroit, fiscal stress, liquidity, securities lending