Zero Hedge: Bailing out the Illinois state pension system is the worst idea from a week in which we were discussing the health benefits of mainlining Lysol. (Please do not mainline Lysol. It will kill you.)
Irresponsible state and local governments are attempting to exploit the fear and disruption of the coronavirus epidemic to push off the consequences of their decades of reckless and culpably dishonest policies onto the federal government.
This will inspire a great deal of conversation about “moral hazard” and “fairness,” but the fundamental problem is something else: Such a bailout would not work because it would not actually solve the real-world problems that threaten to cripple state and local finances.
Opinion: Bailout nation. Let’s take an (approximate) inventory of Federal Reserve and Congressional stimulus in the last 30 days:
- Fed Stimulus – $5.8 trillion (QE5)
- Fed bailout of money market – 2.9 trillion
- Fed bailout of Municipal bond market – 2.3 trillion
- Fed bailout of junk bond market – 2.3 trillion
That the Fed has not paid off the $4 trillion from the first 4 rounds of QE is now totally irrelevant.
And how is it that anyone is surprised that the stock market (DJI) is back up to 24000?
Bailout nation means no company, state/municipal pension plan, college, University, cruise line, airline, auto maker or any other national employer will have to file for bankruptcy.
Bailout nation means small business loans will not have to be paid back. Bailout nation means that the US is one step from nationalizing essential businesses and bailout nation means we are one step closer to what Donald Trump said would never happen:
There is one thing standing between the US and hyperinflation. The US dollar is still the cleanest shirt in the dirty laundry bag.