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-- -- -- on the market since a good story and look who we have with us now Meredith Whitney.
She's gonna talk interest rates -- welcome back Brandon talk -- great stuff right.
Yes we look.
It rates have just gone straight up.
It occurs to me that that's gonna put enormous pressure on municipal bonds and that's the area where you really hit the headlines.
What's not just municipal bonds gonna hurt its communities that's our reliance upon the issue -- an extra dollars that.
Bringing on debt has afforded certain communities so.
The -- states and local governments have managed themselves and managed basically creating a -- complete debt balloon and a dangerous apple and has been because the low rates have enabled them to keep keep a very low thresholds of minimum payment sounds familiar like credit cards right so.
All they have I conditions -- constitutional one that's over is the minimum payment they have to make on the interest they of course they can.
The balloon a lot more debt and incur a lot more debt load on a lot more debt while interest rates are low but once interest rates right -- start rising.
That they hit the deck -- they can't issue any more debt and what that means that if I had to make even more cuts to.
Local services to community services to things that all we taxpayers care about like schools like public safety.
Like infrastructure all those things are what we think is a constitutional right and why would pay taxes.
Okay now Chicago I believe was warned by Fitch yesterday he gonna get -- downgrade.
Because they've not -- that pension plan in order and that facing these higher rates.
-- that do you think that we're looking at bankruptcy.
I mean flat out but not just restricting services even -- -- file bankruptcy on the part of some service.
Well you are looking at bankruptcy in terms of the city some cities in California -- your problem.
Yeah you're looking at bankruptcy throughout Michigan's -- Detroit which would be the largest bankruptcy on record.
Will decide whether it's going bankrupt in -- at me and I think that's that's a very day it very scary precedent for other municipalities so.
State haven't wanted municipalities to go bankrupt because they haven't wanted to jeopardize their own ability -- -- But then -- -- states that costs so much money to local governments and now they're really nowhere -- -- to play again next because the municipalities don't have money so they're gonna go bankrupt the states -- -- does not enough money to bail everybody out -- -- I think you're missing word is what's worse is you see states cut even more because of rising interest rates and it just gets what a lot worse for.
You and me John and Jane taxpayer.
Now what's your outlook for rates because we've gone from under 2%.
Of the long term rates now -- two and a half percent.
Do you think we rise from here all because of this what's happening in the marketplace you think Ben will come in and stop printing all over again and get rates down again.
What I think -- understands or he comes out makes a statement last week and many -- -- his deputy governors or governors but below him out to basically -- back on what he had said and -- didn't get that.
What they wanna do is to have rates rise in an orderly fashion but they're too scared to allow that happens so -- -- and they controlled.
They kicked into our but the hubris was they know they have awarded -- control it.
So I think that they they played chicken and wait too long and now you're gonna have spikes and rates that they can't control almost second elegant to -- --
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