States and cities borrow big

[steven johnson]

Source: USA Today

Following in the federal government's footsteps, states and cities are borrowing heavily to finance spending, a strategy that could speed economic recovery while leaving a heavier debt for future generations.

States and local governments borrowed $53.5 billion in the first three months of the year, just shy of the first-quarter record set in 2003, Thomson Reuters Financial reports. Governments also refinanced $31 billion in debt to get lower interest rates and longer repayment schedules.

"Governments with good ratings can borrow as much as they like at some very good rates," says Steve McLaughlin, executive director of Municipal Market Advisors, a research company.

Credit has tightened for corporate borrowers and individuals during the recession. But governments — federal, state and local — have been a magnet for investors seeking safe investments.



Read more: http://www.usatoday.com/news/nation/2009-05-03-borrowing_N.htm

[Psephos]

1. The ship is going to go down

Government borrowing is now the biggest threat of them all.

They borrow without any idea of how it's going to be paid back. There will be a day of reckoning.