[Jim72]

Here in NJ, the Governor is swinging blindly with an axe. If much of his cuts get passed, there is a real possibility some local munis will actually go bankrupt... along with their bonds. While this is speculation right now, it does seem that either counties are going to go broke or the State is.

There was also a story not too long ago about foreign investors forgoing the usually favorable T-bills because there were considered too risky. I am not quite sure what that really means. Here it is at WSJ: http://online.wsj.com/article/SB3000142405274870480420457506...

Now, about this 0.00%. I firmly believe that we are in a time vacuum, by design. You see, consumers form the foundation of our economic system. They are the engine. By keeping interest rates across the board obscenely low, we are providing much needed time for them to pay off debts. Once the bulk of the consumers become stable, then the rates should rise. Until then, the front of the caterpillar has to wait for the back to catch up!

[CWuestefeld]

If much of his cuts get passed, there is a real possibility some local munis will actually go bankrupt.

Yes, and I hope that happens. Just like the fed bailout of banks and of GM were wrong, we need to let bad institutions die. How else can society learn what works and what doesn't?

By keeping interest rates across the board obscenely low, we are providing much needed time for them to pay off debts.

Interesting thought, I hadn't considered it that way. The question is whether it's worth the cost.

[nradov]

Mish had some interesting comments on Gov. Christie's recent actions. http://globaleconomicanalysis.blogspot.com/2010/03/governor-... It looks like he's one of the few politicians with the courage to actually face reality.

And the current zero interest rate policy only helps consumers with adjustable-rate debt. It actually hurts those with fixed-rate debt.