Bond rates for states and localities that invest in public infrastructure is starting to go up. They're not going up for an economic reason but because Newt Gingrich and conservatives are trying to make it easier for states to declare bankruptcy so that they can destroy public sector unions. That's it, using fiscal power for an overtly political goal.
Slate on the uptick in bond prices for states.
As Felix Salmon heatedly explains, this is a tricky story to do, because the very mention of the idea that states might default on their bond obligations sends bond markets into a big tizzy, which results in higher interest rates, which makes borrowing more expensive and ends up putting state finances in an even lousier situation. And such a scenario is already underway, as municipal bond yields have started rising ever since chatter about the possibility of a nuclear bankruptcy option to solve state financial woes started being discussed.
Newt Gingrich should be proud, because, as Walsh reports near the end of her article, he started the bankruptcy groundswell while giving a triumphalist post-midterm election speech at the Institute for Policy Innovation in Dallas.
On the reason Newt Gingrich is destroying local and state economies.
But if you actually read the speech, (something I don't recommend for any liberal who wants to sleep well for the next month), you will discover that Gingrich is hardly at all concerned with the problem of helping states "get out from under crushing debts." His primary goal is to break public sector unions, pure and simple. The entire speech is a monument to partisanship, epitomized by his quotation of Reagan's famous answer to the question "What's your vision of the Cold War?"
"We win, they lose."
As in conservatives win, liberals lose. Period. End of story.