The fiscal crisis facing many states is about to go from bad to worse.
The unrest in states like Wisconsin and Illinois (and California too) are spiraling out of control. The mayhem is just a symptom of a much larger problem. The debt crisis in America is spreading. It’s becoming insurmountable. At last count, 43 states are staring at monster budget deficits. Hit the “pause button" on the $14.3 trillion National Debt and let's drill down into the individual states dilemma.
Last month New-York Governor Cuomo released a statement saying the state is “functionally bankrupt.”
The projected budget shortfall? A mere $9 billion for fiscal year 2010. It’s no better across the Hudson. The state of New Jersey recently revealed that its unfunded pension liability for state government employees reached a record $54 billion. An 18% increase from the prior year. At this rate, the liability will double in just 4 years!
Reportedly state and local governments have more than $2.8 trillion of outstanding debt. In addition they are carrying approximately $3 trillion of unfunded public pension and health care liabilities. Up until this year they solved the problem by borrowing more, refinancing their debt, and then incurring new debt to cover out of control pension and health care benefits for public employees.
But it looks like the party is about to end. The well has dried up. Even Social Security funds will be depleted in less than 30 years, without change immediately.
Governors in states like Wisconsin, Ohio, Florida, Illinois, and California (the list goes on…) and even in many other “Republican party” held states, are slashing budgets like never before. What’s happening in our country today is unprecedented. You have to go all the way back to the civil war to find a time when this many states could potentially default on their debt obligations. And even during the Great Depression in the early thirties, only the state of Arkansas defaulted on its debt!
So it appears the day of reckoning may finally arrived for states that may consider bankruptcy as a way to wiggle out of their mess. Will the Fed bail them out as they are “too big to fail?” Just like the banks, AIG, GM, Fannie and Freddie.
But where is the money going to come from? (Now hit “play” and leave pause)
Today our national debt is more than $14.3 trillion. The Fed already holds more than $1 trillion dollars of U.S. treasuries—that’s more than 70% of all outstanding debt, making it the largest lender to the U.S. in the world.
For every dollar the government spends almost $.50 cents of it is borrowed! Our debt is about 500 times larger than the size of our economy. That’s the real story. And this is the alarm that needs to be sounded! You hold the solution for yourself and your friends and family. Your vote and how you spend your money counts.
Mainstream media seem to be missing the warning signs. They’re fascinated with the rallies, protests, political strategies and party rhetoric; more interested in extra marital affairs and philandering than our national economy. You can see how seriously this will affect all Americans. Not only today, but generations down the road.
Another writer comments: Continuing turmoil in the Middle East could lead to oil prices hitting $200 a barrel. That means paying as much as $10 a gallon at the pump. While that may sound far-fetched, so did the prediction of gold prices hitting $1,000 and now surging past $1,400; when just a short time ago it gold was trading at $350. If the Middle East falls we could see $200 oil. You need to have an evacuation plan in place now. Just tell a friend, a neighbor, a family member and be prepared.
It’s no wonder gold is at an all time high, people are starting to stock pile food in their homes, and the dollar has lost most of its value since 2001. Will the Fed once again ignore the will of the American people and bailout the states? National monster deficits and states teetering on the edge of bankruptcy are just the tip of the iceberg. Keep your life vest handy and keep dancing until the fat lady sings… but be financially prepared.