Get Out of Muni Bonds: Fed Analysts say Falling Property Values May Amplify Municipal Budget Crises

The impact from the Great Recession is not completely over, especially at the municipal government level.

The dramatic fall in home prices is shrinking the property tax base, contributing to a sharp decline in municipal tax revenues, says a study by Federal Reserve Bank of Cleveland researchers Thomas Fitzpatrick IV and Mary Zenker.

Using Cuyahoga County, Ohio, as an example, Fitzpatrick and Zenker say that differences between market and county estimates of property values from 2008 through 2010 imply that when property values are reassessed in 2012, they will be between 11 percent and 18 percent lower than the 2010 county estimates. This suggests that after reappraisal, the county tax base will be at least $1.1 billion lower than it was in 2010.

The impact has been felt most strongly in Cuyahoga County's central city (Cleveland) and its inner-ring suburbs, which may see property values fall 38 to 45 percent and 26 to 30 percent, respectively.

Jamie Dimon Is Now Also Paul Volcker's Favorite Banker

Move over President Obama, not only is Jamie Dimon your favorite banker, he is also Paul Volcker's favorite banker.

Reuters has the details:

[ At the Japan Society's Annual Dinner in New York] White House Economic Adviser and former Federal Reserve Chairman Paul Volcker introduced Dimon, 54, as a man "at the top of his game" and said under his leadership JPMorgan "maintained stability throughout the crisis."

I can't think of any other active banker that the Rockefeller controlled Volcker would put in that category. If you are concerned that this might get to Dimon's head, it's too late for intervention. It already has. Reuters, again:

"I'm also proud to call myself a banker," Dimon said [at the dinner].

Of course, Volcker did forget to mention that, during the first phase of the crisis, Dimon's bank was gifted Bear Stearns and Washington Mutual. It's pretty easy to maintain stability with those kinds of gifts. And EPJ Irregular Bob English is working on a blockbuster story that may explain some of the other help Jamie is getting to  maintain that stability. Stay Tuned.

Volcker Shows His True Spots: Recommends Closer Union Between European Countries

Former Federal Reserve Chairman Paul Volcker said he’s concerned that the euro area may break up after the Greek fiscal crisis .

“You have the great problem of a potential disintegration of the euro,” Volcker, 82, said in a speech in London today, according to Bloomberg. “The essential element of discipline in economic policy and in fiscal policy that was hoped for” has “so far not been rewarded in some countries.”

“Will economic and financial distress finally be resolved by looking toward more integration in a closely integrated Europe, politically as well as economically?” Volcker said. “I do have my hopes, as a believer in the euro.”

This, my friends, is what a one-worlder sounds like. The answer for Europe is not more integration, where the Germans have to bailout the Greeks and Spaniards for the benefit of the banksters, but indepndence for each country where each country has to fend for itself and reap what it has sewn.

Letters from Bernanke and Volcker Against a Fed Audit....

are now in the EPJ Vault.

Paul Volcker's letter is here.

Ben Bernanke's letter is here.