Last night, news emerged that New Jersey was seeking a bridge loan from JPMorgan due to a cash-management situation related to the end of its budget year.
The news is a bit concerning, but we haven’t seen anyone suggest that New Jersey has some major imminent problem. It seems almost entirely about accounting and timing of revenues.
Still, Meredith Whitney — the muni bear crowds most vocal spokesperson — wil take it
Whitney said New Jersey’s possible short term loan may be a “routine cash management exercise,” she said on CNBC this morning, but she said it is “endemic of the larger issue” — local-government tax receipts are barely clawing back to 2006 levels, while spending is near all-time highs.
She said July 1, the start of the new fiscal year for many states and municipalities, is the new D-Day because new slashed budgets are going to be pushed through and pain will be felt.
Yes, pain will be felt. Massive defaults? Still not yet.
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