Available credit continues to disappear. I do not see how you can be bullish until this stabilizes. Let me let you on a little secret. There appears to be no stabilization. In fact it seems to be accelerating with news everyday of HELOC's being taken away, stricter standards on car loans, yesterday it was Wachovia not doing any more student loans. Here is an article on the cost of money for munis that continue to go up.
The Oakland, California, agency that runs toll bridges across the San Francisco Bay is proving that the era of cheap money for municipal borrowers is over.
This week the Bay Area Toll Authority sold more than $700 million of bonds at rates as high as 5.33 percent to refinance debt that cost 4 percent last year. That leaves less money to finance projects, such as bridge improvements.
Do the multiplier affect on this one:
Spread over the $330 billion of fixed-rate municipal debt that JPMorgan Chase & Co. estimates will be sold this year, that translates to as much as $1.6 billion in extra interest costs annually over the historical average.
Probably not all that big by itself but start adding all the billions that are now going to extra interest cost in all areas and you can see the problem.
All this turns into less spending feeding the downward cycle of a beast.
The state lawmakers group found that states are cutting spending on schools and health care, tapping reserves and borrowing to close $40 billion of budget gaps. New York, Virginia and eight other states trimmed spending across the board for the budget year that began in July for all but four states. Seven of the 31 states with fiscal 2009 deficits raised taxes.