Saturday, June 22, 2013

Negative Feedback Loop From Hell

The Return of Wall Street’s Cassandra: In Armani and Pearls, Meredith Whitney Smacks Back | Observer: "And here’s what’s going to happen: because taxpayers—both corporations and individuals—can actually pack up and move to avoid a dramatically lower quality of life and the final tax bill on municipal borrowings, Ms. Whitney sees a radical redrawing of the economic power map. Those 17 flyover states in the central corridor are going to emerge as winners, while the overleveraged housing-boom high-fliers like California . . . grapple with what she calls the Negative Feedback Loop From Hell—higher debt requires higher taxes, which drives people and companies out of town or state, which lowers the tax base, which results in further budget cuts, which reduces quality of life, which causes the value of real estate to decline, which lowers tax receipts, which … you get the point. It’s called Detroit. We’re approaching the endgame quickly."

California and . . . . Detroit--the epitome of the negative feedback loop from hell!


No comments: