Barack Obama’s home state of Illinois is near the point of fiscal disintegration. “The state is in utter crisis,” said Representative Suzie Bassi. “We are next to bankruptcy. We have a $13bn hole in a $28bn budget.”
The state has been paying bills with unfunded vouchers since October. A fifth of buses have stopped. Libraries, owed $400m (£263m), are closing one day a week. Schools are owed $725m. Unable to pay teachers, they are preparing mass lay-offs. “It’s a catastrophe”, said the Schools Superintedent.
In Alexander County, the sheriff’s patrol cars have been repossessed; three-quarters of his officers are laid off; the local prison has refused to take county inmates until debts are paid.
I can’t say that I understood too much of this article; it has many references to economists’ technical language. However, it certainly appears that we are about to learn that there are certainly fundamental realities that cannot be swept away by sleight of hand or by some legal remedy.
For many Americans, “boom” times are desirable, and normal. But boom times set the stage for disasters. Unwanted outcomes can be delayed, but they cannot be totally prevented. We are in for some interesting times…
It’s the other kind of payday; the wrong one. This is that day when payment is due. We’ve run out of credit cards to use. We now find out how it all stacks up.
Hakkatan (#1),
I admit that I didn’t understand it all either. I’m no economist, but this sort of dire rhetoric from expert economists and central bankers is truly scary, because the stakes are so very high and the danger seems very real. The USA may not be Greece, or Moldova or the Ukraine or Haiti, but even billionaires can go bankrupt if they spend more than they have.
So IL has a whopping $13 billion hole in a $28 billion budget? Yikes. That calls for draconian cuts indeed But at least the state government is forbidden by law from deliberately operating on a deficit budget year after year. Hmmm, too bad the federal government doesn’t have to abide by the same law.
David Handy+
Trouble is…some of us weren’t using the “credit” cards. We have just been stuck paying the bills for them. Here’s a novel idea: stop funding all those things that aren’t paid for.
Social Security- meticulous records have been kept of how much each person contributed. Calculate the interest (at the savings bond rate) of that money and add it to each person’s record of contributions. Subtract benefits already paid out. Any remainder should be refunded to each person. Start a Pay-Go retirement plan and end the ponzi scheme. (Note, some folks may have to return to work because they failed to save for their retirement.)
Do the same thing with Medicare.
Stop bailing out banks. If action must be taken to forestall an economic collapse, then give bailout money to mortgage holders…all mortgage holders and all taxpayers. The average mortgage in the US is about $67,000. Mortgage holders pay off the debt, banks get their money, the economy doesn’t collapse, everybody is happy. If you owe more than $67,000 on your mortgage, too bad; pay the rest yourself. If you are not a mortgage holder but you paid at least $67,000 in taxes, you get that amount (or up to that amount as a tax refund).
Gosh, do you think that would stimulate the economy? Millions of folks suddenly having their mortgage paid off and millions of others getting a wad of cash to spend…
Do you think [i]that[/i] would have created jobs? Duh!
Instead, we poured a Trillion Dollars into the banks…so they can improve their collateral and [i]not[/i] lend the money!!! Then, they give themselves billions in BONUS money for being such shrewd businessmen! So, we are all now a Trillion or few MORE IN DEBT, the banks are STILL ON THE EDGE OF COLLAPSE, tax revenues are declining faster than a meteorite, and the banks are coming back for round 2 of more bailouts.
The $700 Billion in stimulous went to…more government! The unemployment rate continues to get worse and the economy is still shaky.
Where is the pay off for all these Trillions of Dollars?
I have said this before…$1 Billion…just ONE Billion will pay off a $100,000 mortgage every single day, 365 days a year…FOR over 27 years!!! The average mortgage in the US is only $67K. That $1B would pay off 14,925 mortgages in one year. Lets see, we spent about $700B on stimulous. That would have completely paid off about Ten and a half MILLION mortgages!!! AND IT WOULD HAVE STIMULATED THE ECONOMY AND ACTUALLY MADE MORE JOBS!!!
Instead, we poured good money after bad down a rat hole…giving it to the very same people that CAUSED THE CRISIS IN THE FIRST PLACE AND THE PEOPLE THAT ARE GETTING OBSCENE BONUSES FOR GROSS INCOMPETENCE!!!
The GOOD news is…this may all cause a currency failure and completely wipe out the billions of dollars that the billionaires have accumulated at the expense of the rest of us and it will lead to a national RESET of the entire pollitical class.
As a nation, we are nearly at the “blue screen of death” on our financial PC and the only way out is to reboot the system. Get ready for…interesting times.