Lenders are starting to care about endless, consumption based deficit (AKA debt) spending.

New York, like many places where they cram too many people into to too small an area because they think "it takes a village", is bankrupt.  They haven't had to admit it yet but it's coming.  The public unions are sucking at the city's teats so hard that they are drawing blood.  But they don't care because that is the way of the parasite.  They will absolutely not only keep it up but increase the behavior, grabbing whatever they can from whomever is stupid enough to loan it to them until they finally have to default on all of it: payment for services owed, pensions, you name it.  Anything for which actual payment can be deferred will be deferred.  I'll gladly pay you Tuesday if you just let me have that hamburger today.  Of course, Wimpy never paid a hamburger back because there was always a good reason not to.

Right now federal, state and many local governments are borrowing like mad.  Why?  In the infamous words of Bill Clinton, "because they can".  They can do it because the interest rates have been manipulated to artificial all time lows by the federal reserve. But manipulation is not free.  It isn't even cheap.  The fed is running out of capacity to keep it up and when interest rates begin to rise, the full faith and credit of the US and of the individual states and cities is going to decline rapidly.

In fact, signs that the party is ending are all around us for anyone who will see.  Today's news sees bond firms bailing out of NYC debt due to capo (mayor) Blasio's out of control plans to increase the debt based consumption.  The article says his "plan to pay for labor contracts that boost deficits."  Breaking it down into simple English, he is conspiring with the socialist union bosses to pay the city workers more than the taxpayers can afford in order to buy their loyalty.   Of course, that continues up until the ability to acquire new debt runs out and then the Major will announce mass layoffs and a haircut for pensioners.  In other words, they plan to default.  They know it will happen. The math will not allow another outcome and so it is clearly fraudulent behavior.  But they do it anyway because it suits their needs.  They will stay in power and break the back of the people so that the people come begging to government for the basics of life.  The con men are using the greed of the people to eventually destroy them.  It is a treasonous plot and never let anyone tell you "we never saw it coming".



The days of the con grow short.  As soon as the net inflows of new debt into the system turn into net outflows, the Ponzi has but a few months to live.  The Ponzi requires new debt buyers all the time and if the herd looks at a big player like UBS and wonders why it is selling NYC debt then others could follow soon. The result of this paper hitting the market along with the continuous debt floating of the city itself would drive down debt value and drive up their interest rates, thus making the service of any new debt very painful.