Implode-o-Meter News - U.S. cities seek federal help to ease economic crisis

Three major American cities buffeted by the global financial crisis are requesting at least $50 billion in federal funds to help pay for infrastructure improvements, pensions and short-term borrowing.

Philadelphia, Phoenix and Atlanta are asking U.S. Treasury Secretary Henry Paulson to release funds from the $700 billion financial bailout authorized by Congress last month.

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Participating cities are asking Paulson to set up a $50 billion fund to rebuild infrastructure.

The fund would consist of $25 billion in grant money for cities that are unwilling or unable to take on debt, and another $25 billion for loans to cities at an interest rate of 50 basis points above that of 30-year Treasury bonds.

In order to fully fund pension obligations, the cities are also seeking loans of an unspecified amount to cover pension liabilities that have become increasingly expensive because of a decline in investments with the slump in global markets.

Well this is interesting. Aside from the fact that cities are not banks, there is the minor point that the actual wealth of the country (to the extent we have any) is created in the cities, not by the Federal government. So the fact that cities are going to the Federal government to ask for money suggests there is colossal mismanagement going on, with funds concentrated "at the top".

But of course, neither side really has the money ... its just that for now, the Treasury is the only entity in the country that can borrow at a low price.

Relevant:

U.S. cities seek federal help to ease economic crisis