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March 19, 2010
Is government at all levels falling apart?
Government services will be cut at every level. Potholes will deepen, infra-structure problems will worsen, pension plans will become insolvent, school systems will declare bankruptcy, police and fire protection will be reduced, etc. etc. You will be "nickled and dimed" in terms of new fees and taxes. Public unions will strike, providing further disruption. But when there are no funds, there is nothing to gain.
A friend is outraged over his North Carolina state income tax refund. He has been waiting for 5 months, and there is no sign that it is forthcoming. This outrage is likely to be viewed eventually as merely an inconvenience compared to what is coming. Brace yourselves.
Similar outcomes will appear at the Federal level. Cutbacks of postal services are coming. At some point Social Security benefits may be cut. Ditto for Medicare and Medicaid. Welfare programs may eventually have to be restructured to produce fewer benefits. The passage of a new entitlement, Obamacare, is true madness.
The profligate madness of our politicians has finally come home to roost. The government Ponzi scheme is unraveling. It is speeding up as the money and options runs out. At some point, there may be an implosion that renders governments inoperative for some period of time.
While all of this happens in the governmental sector, the private sector, at best, putters along at a low level. At worst, it will decline from here to Great Depression levels. Either scenario will be plagued by continuing high levels of unemployment. The private sector will not expand or hire given the uncertainties created by government actions.
The public sector has used up all its bullets. The next wave of unemployment will be government employees. The links below are the beginnings of headlines you will be seeing and hearing for the next several years. Only the frequency and intensity of such headlines will increase. There is no level of government that is not dead broke! The mess is so big that there is no "bail out" of governments. Every government boat is taking on water at a faster rate than it can be removed.
The links below from March 17 are from Chris Martenson's site. They are a harbinger of things to come.
· Christie Seeks to Suspend N.J. Tax Rebate, Skip Pension Payment
· Garden State to skip $3 billion pension contribution (New Jersey)
· 'I Borrow Money to Buy Food,' Says City Employee as Mayor Dave Bing's Cut Threatens to Push Working Families Onto Welfare Rolls in City of Detroit
· Vallejo struggles to keep city safe during bankruptcy
· ECB's Stark Sees Sovereign Debt Crisis Risk Unless Deficits Cut
· National Debt Up $2 Trillion on Obama's Watch
· 'India Will Muddle Along Until The Debt Crisis Hits' (Jim Rogers)
· Canadian finance chief warns US, others on deficit
· U.S. debt at no risk of downgrade-Geithner
· German Defense Cuts Loom as Merkel Fights Record Budget Deficit
· Schwarzenegger Will Veto $1.1 Billion Gasoline-Tax Swap Measure
· 'Live within your means,' citizens tell city leaders (Toledo)
Monty Pelerin www.economicnoise.com email@example.com