I am linking to this so that you can read the study from the National League of Cities (their press release is here, download pdf report here). Note that this is significantly larger than the state budget problem I referenced last night (also different time frame and scope). From the report:

Local budget crises lead to job losses in both the public and private sectors. The business of local governments is often conducted through the private sector — construction and maintenance, garbage collection and recycling and tree trimming are just a few examples. The Economic Policy Institute estimates that for every 100 public sector layoffs there are 30 private sector layoffs. Local government investment in transportation, water, sewer and communications infrastructure also leverages significant private sector growth by reducing private sector costs and creating opportunities for additional investment. Local governments are also significant sources of employment. Local and state governments comprise one of the nation’s largest employment industries, larger than the manufacturing and construction industries combined. Local governments account for seven in every 10 of these employees.

Local governments across the country are now facing the combined impact of decreased tax revenues, a falloff in state and federal aid and increased demand for social services. Over the next two years, local tax bases will likely suffer from depressed property values, hard-hit household incomes and declining consumer spending. Further, reported state budget shortfalls for 2010 to 2012 exceeding $400 billion will pose a significant threat to funding for local government programs. In this current climate of fiscal distress, local governments are forced to eliminate both jobs and services.

People still think municipal bonds are a safe investment.

Summary of Basel III:

European banking stocks posted strong gains Tuesday after global regulators agreed to soften some of their new capital and liquidity rules and to phase in the reforms over several years.

Most of the banks passed the stress tests. But sane accounting practices might cause the whole fraud to be exposed for what it is.

This isn’t simply an example of captured regulators. The regulators may have some understanding of the magnitude of the problem. Several European banks are operating with insane leverage ratios, holding assets much larger than their home countries’ GDPs. As a consequence, regulators must either allow the banks lie about their health or allow the banks to collapse. They aren’t just too big to fail, they are too big to be bailed out. Since everyone is afraid of the consequences of a banking system collapse, they will do anything they can to allow the system to continue. But as I’ve said before, sometimes authority and effort aren’t enough to determine outcome.

That bleak assessment contains one ray of good news: The total is slightly less than the estimate in March for an $89 billion gap.

Progress!

For some reason, this post read like poetry to me. Many things are absurd about everything related to the AmeriCredit purchase. It’s a short post, clicky.

Updated. I knew I didn’t wait long enough.