If you pop into a toilet on the Seattle waterfront this summer, you might see over-flowing bins. The reason? A polite notice explains that \u201cbecause of 2010 budget reductions\u201d\u009d, the Seattle government can no longer afford to \u201cservice this comfort station\u201d\u009d each day. Hence the dirt.<\/p>\n
Investors would do well to take note. In recent months, America\u2019s fiscal mess has assumed a rather surreal air. On paper, the country\u2019s federal-level deficit and debt numbers certainly look very scary. But in practical terms, the impact of those ever-swelling zeroes still seems distinctly abstract.<\/p>\n
After all, so far the federal government has not been slashing spending; on the contrary, there was a stimulus bill last year. And, as my colleague John Plender pointed out this week, Treasury bond yields have been falling as investors flee the eurozone woes. As a result, those scary numbers still seem to be a problem primarily concocted in the world of cyber finance.<\/p>\n
But there is one place where reality is already starting to bite in America and that is in terms of state finances. Just look at the statistics. A report from the US Center on Budget and Policy Priorities issued last month estimates that in fiscal 2010 the US states collectively posted a $200bn-odd budget shortfall, equivalent to 30 per cent of all state budgets.<\/p>\n