The $2.3 Trillion State and Local Government Debt Monster – California Pension Systems on Unsupportable Path with $500 Billion Projected Shortfall. CalPERS, CalSTRS, and UCRS.
Much of the focus on government debt over the past few years has revolved around the federal government. No doubt, this is a stunningly large amount. Yet the government has the ability to finance this debt through the U.S. Treasury and Federal Reserve with a buffet of choices. You have direct bailouts to Wall Street, quantitative easing, and systematically dismantling the U.S. dollar. But one issue that is rising to the top is that of state and local government debt. States do not have the ability to print money at the whim of any central banker. And the state and local government debt market is up to a whopping $2.3 trillion. At this point, trillion is the new billion.
State and Local Budget Crisis Black Swan – California paying out $100 Million per Day in Unemployment Insurance. Detroit’s Shrinking Population Crushes Revenues. The Employment Situation at a Micro Level.
One stunning statistic that hit this week regards California’s unemployment insurance claims being paid out. California is paying out some $100 million per day in unemployment benefits. I’m not sure if I would call it a “benefit†but more as a buffer to get by. In reality if we really want to get a pulse on what Americans are facing in terms of the recession unemployment claims and benefits are a good place to start. The unemployment rate as we all know can be fudged in many ways. If you work 10 hours at Wal-Mart but want full-time work then you are counted as employed in terms of the headline rate. This isn’t a big deal when a small part of the country is working part-time for economic reasons but this group is enormous (9 million to be exact). The headline rate is 9.7 percent but add in this group and we are up to 16.9 percent. And people seeking unemployment rarely fudge numbers because they need the money and they have to report their status every two weeks to continue receiving claims.
What does it mean to be Middle Class in 2010? – No College Degree, Massive Amounts of Debt, One Health Crisis from Bankruptcy, and Beholden to the Banking Elite.
Being middle class today does not carry the financial security that it once carried in the 1950s and 1960s. Interestingly enough, many Americans at that time did not own stocks yet somehow they managed well because they had access to affordable housing without toxic mortgages and many had the ability to work with one company and have some kind of security from their company. It was a mutual relationship as even Henry Ford shook the auto manufacturing world by upping wages for his workers. Yet today, we are being fed distorted information from Wall Street that we need to have this system where workers are disposable entities only to increase the profits of the corporate class. If people are hurting so much why are we paying billions in bonuses to a small group of people that really haven’t helped the country? In fact, many of these are directly responsible for our current economic problems. At the root, this has been the cancer that has eaten away at what it means to be middle class. Social government welfare for Wall Street and Darwinian capitalism for the rest of us.
The Big Change and Four Rules not learned from the Great Depression – Break up the Banks, Protect Workers, Use Stimulus Funds for Jobs and not Banks, and a Government Protecting the People.
As we drift further and further from the abyss of March of 2009, there is a slow acceptance that things are getting better even though average Americans need only look at their individual household balance sheet to know this isn’t the case. How can things not be better they ask? The S&P 500 is now up 74 percent in one year, the strongest run up since the Great Depression. Yet Wall Street gets it that the longer they can stall and water down reform the more chance they have at getting away with the biggest wealth transfer in American history. Even during the Great Depression, we actually learned lessons and enforced new rules to curb the gambling that led to the collapse. This has yet to occur. Let us look at some changes that occurred during the 1930s that certainly have not happened this time.