Word: defaulted
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Dates: during 1970-1979
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...that New York's "scare tactics" had some effect. A nationwide publicity blitz orchestrated by New York's Democratic Governor Hugh Carey turned the country at least part way around on the issue. New Yorkers hammered away at the theme that if the city fell into default, others would soon accompany it. Yonkers, N.Y., teetered on the brink of default last week, only to be rescued at the last moment by a $25 million infusion of bank loans and state aid. Massachusetts, too, seemed headed for default until it managed to balance its $3 billion budget by slashing...
Administration insistence that a New York default would have only a minimal impact on the U.S. economy began to carry less weight. Each time Federal Reserve Board Chairman Arthur Burns was asked about the effect of default on money markets, he sounded a bit more anxious. A Federal Reserve report released last week indicated that 546 U.S. banks (out of 14,000) held New York State and New York City securities in an amount equal to at least 20% of their capital. Carey said that Burns pronounced the new rescue program "interesting...
Carey insisted on calling the provision a moratorium, not a default. To others, it was a difference in name only...
...Wallace, Azbell cites the Governor's position on New York City. During his Montgomery announcement, Wallace criticized New York as a "prime example of what the ultra-liberals can do to a city." But he indicated that he would not oppose some kind of federal assistance, partly because default would have wide-ranging economic consequences. He also attacked the United Nations resolution condemning Zionism as racist (see THE WORLD). "We told you years ago that the U.N. was a no-'count outfit," he said...
...together, Otto Eckstein estimates, default would eventually cost the nation a disastrous $14 billion in lost production and 500,000 jobs. The effect would be greatly magnified if New York State followed the city into default-and unfortunately that is much more than a remote possibility. Basically, the effects of a New York City bankruptcy are immeasurable, since the situation would be unprecedented. But many economists believe the risk is too great to be worth taking. Says Heller: "No one knows how to judge a New York City default on a Richter scale of financial earthquakes, but we should...