Thirty Two states are Officially Bankrupt

[captain morgan]

Hey, look at it this way:

If the government has a debt of one trillion dollars, then to inflate the currency until the minimum wage is one million dollars an hour, suddenly our debt ain't so big anymore... though of course there may be fear of revolution or civil war, but that's a minor issue, really

Zimbabwe tried that, it didn't work worth a damn.

What you really want to do is the opposite... Deflate the value of your dollar and pay as much debt as possible with a lower dollar.

 

[petros]

Or high interest.

 

[VanIsle]

Looks like a win win for the rich.

:lol: Maybe it's time we swooped up Florida by paying it's debts and call it a part of Canada!!! 8O

 

[Machjo]

Zimbabwe tried that, it didn't work worth a damn.

What you really want to do is the opposite... Deflate the value of your dollar and pay as much debt as possible with a lower dollar.

Deflation is just as harmful since then you're pushing the value of the debt up. In fact, looking at it that way, inflation is a good thing since it pushes the value of the debt down.

That said, I'm still opposed to inflation owing to other factors, whereby it essentially just replaces one problem with another. While deflation is certainly preferable to inflation, 0 inflation is best as much as possible.

:lol: Maybe it's time we swooped up Florida by paying it's debts and call it a part of Canada!!! 8O

After the gas leak, hell no.

Washington State on the other hand does have a nice mild climate.

 

[darkbeaver]

Paying off the national debt is a sure way to get a banker bought bullet in the head.

 

[captain morgan]

Deflation is just as harmful since then you're pushing the value of the debt up. In fact, looking at it that way, inflation is a good thing since it pushes the value of the debt down.

I think you have it backwards - kinda. The value of your debt remains the same. If you owe $100 at 5%, it is still $100 @ 5% regardless of of the currency fluctuations. Assuming that 1USD = 1CDN, if the Americans were to devalue their currency to 0.50, where 1USD would buy $0.50 Canadian, the Americans could in fact sell commodities like gold that are traded in USD and get more "paper" for that gold.

In this scenario, 2 things would happen if the US devalued their dollar:

1. The value of the USD will decrease relative to Canadian dollars (among others).
2. The (relative) value of gold would go up because it will take more (devalued) USD's to buy an ounce of gold and gold is traded in USD.

The Americans could sell-off their gold reserves (or a portion) and artificially get more money for that gold. The feds then pay for that 100 USD debt from the proceeds... In the end, because the US devalued their dollar, (where 1 USD = 0.50 CDN), they debt (settled in USD's) was 1/2 of the relative original amount.

There are more issues at hand than just this, but perhaps this gives you a picture of what's possible.

 

[darkbeaver]

The bet is that the Americans have no gold reserve.

 

[Machjo]

I think you have it backwards - kinda. The value of your debt remains the same. If you owe $100 at 5%, it is still $100 @ 5% regardless of of the currency fluctuations. Assuming that 1USD = 1CDN, if the Americans were to devalue their currency to 0.50, where 1USD would buy $0.50 Canadian, the Americans could in fact sell commodities like gold that are traded in USD and get more "paper" for that gold.

In this scenario, 2 things would happen if the US devalued their dollar:

1. The value of the USD will decrease relative to Canadian dollars (among others).
2. The (relative) value of gold would go up because it will take more (devalued) USD's to buy an ounce of gold and gold is traded in USD.

The Americans could sell-off their gold reserves (or a portion) and artificially get more money for that gold. The feds then pay for that 100 USD debt from the proceeds... In the end, because the US devalued their dollar, (where 1 USD = 0.50 CDN), they debt (settled in USD's) was 1/2 of the relative original amount.

There are more issues at hand than just this, but perhaps this gives you a picture of what's possible.

That depends on the denominaiton of the debt. If the debt is in USD and you deflate the USD, then the actual value of the debt in USD drops. If the debt is in CAD and you devalue the USD, then that debt is unaffected by the devaluation since it's not in USD anyway. So it really depends.

However, even if the debt is in your own currency, it's still not wise to deflate since that will push interest rates up too, so while the money already owed might shrink, you may find yourself in a position to have to borrow more money, or at least find yourself cash strapped when no one wants to buy your money anyore.

 

[AnnaG]

Isn't the cycle peachy? Who suffers? The majority of people. Aren't plutarchies wonderful?

 

[The Old Medic]

No state is, or has been, "Officially Bankrupt". The US Federal Government has, since the 1930's, provided a great deal of money to the various states. They are not obligated to pay it back, it is comprised of tax money that the Federal Government has taken from the citizens of those states.

Wake up and learn some reality.

 

[AnnaG]

Thirty-Two States are Now Officially Bankrupt
$37.8 Billion Borrowed From US Treasury To Fund Unemployment Insurance


Global Research, May 23, 2010
Zero Hedge - 2010-05-21

Courtesy of Economic Policy Journal we now know that the majority of American states are currently insolvent, and that the US Treasury has been conducting a shadow bailout of at least 32 US states. Over 60% of Americans receiving state unemployment benefits are getting these directly from the US government, as 32 states have now borrowed $37.8 billion from Uncle Sam to fund unemployment insurance. The states in most dire condition, are, not unexpectedly, the unholy trifecta of California ($6.9 billion borrowed), Michigan ($3.9 billion), and New York ($3.2 billion). With this form of shadow bailout occurring, one can only wonder how many other shadow programs are currently in operation to fund states under the table with federal money.The full list of America's 32 insolvent states is below, sorted in order of bankruptedness.


California
$6,900
Michigan
3,900
New York
3,200
Penn.
3,000
Ohio
2,300
Illinois
2,200
N.C.
2,100
Indiana
1,700
New Jersey
1,700
Florida
1,600
Wisconsin
1,400
Texas
1,000
S.C.
886
Kentucky
795
Missouri
722
Connecticut
498
Minnesota
477
Georgia
416
Nevada
397
Mass.
387
Virginia
346
Arkansas
330
Alabama
283
Colorado
253
R.I.
225
Idaho
202
Maryland
133
Kansas
88
Vermont
33
S.D.
24
Tennessee
21
Virgin Islands
13
Delaware
12

Officially bankrupt? I never heard of any States declaring bankruptcy. NZ did a long time ago but it isn't a US state.

 

[Bar Sinister]

Officially bankrupt? I never heard of any States declaring bankruptcy. NZ did a long time ago but it isn't a US state.

I did not know NZ declared bankruptcy. I know that in the 1980s its government was pressured into making drastic cuts by the IMF so that Friedmanites could privatize every government service they could get their hands on, but I did not hear of NZ defaulting on any loans, which is what bankruptcy usually means.

Interestingly after bamboozling NZ into line the same technique was used in Canada - hence the wave of privatization that swept provinces like Alberta. Sadly all the so- called "reforms" did was result in higher costs for the average citizen and fewer and less efficient government services.

 

[The Old Medic]

New Zealand declared bankruptcy not because of privatization, but because of socialist policies that they simply could not finance.

No government entity has had to declare bankruptcy anywhere, because of privatization. Many governments, at every level, have had to go bankrupt because they tried to provide more than they could pay for through the government.

Keep in mind that absolutely nothing that the government provides is free of charge. It must pay for everything through either taxation or borrowing. Over time, virtually every service that the government provides ends up costing significantly more than if a private company were providing the same service.

This is true with every commodity, including oil, gas, minerals; most services like medical care, street cleaning, maintenance work on buildings; in fact it applies to virtually every service except for law enforcement and the military.

The fastest way possible to inflate costs is for the government to become involved in the delivery of services to the public. There is not a single country on the face of the earth where this has not been the case.

 

[Bar Sinister]

New Zealand declared bankruptcy not because of privatization, but because of socialist policies that they simply could not finance.

So far as I know New Zealand did not default on any of its debts, hence it did not declare bankruptcy. Also you have the events backward. NZ privatized many of its services after it began its drastic cutbacks of its programs, not before.

Keep in mind that absolutely nothing that the government provides is free of charge. It must pay for everything through either taxation or borrowing. Over time, virtually every service that the government provides ends up costing significantly more than if a private company were providing the same service.

This is true with every commodity, including oil, gas, minerals; most services like medical care, street cleaning, maintenance work on buildings; in fact it applies to virtually every service except for law enforcement and the military.

The fastest way possible to inflate costs is for the government to become involved in the delivery of services to the public. There is not a single country on the face of the earth where this has not been the case.

I am not sure where you got your information, but your conclusions are simply wrong. There are many nations which have public programs that are more efficient and cost effective than private programs. In Canada several provinces have public automobile insurance which provides lower cost coverage than any competing private plan. Canada also has government health care as do many other nations of the world - all of these countries deliver health care at much lower cost than the private systems of the United States. The same thing is true in many other areas as well, including daycare and education. Sadly too many in the US have been sold a bill of goods on the merits of the private sector. Private companies excel in many areas, but they generally do very poorly when it comes to providing low cost comprehensive services such as health, education, and many other basic services.

 

[ironsides]

It might just be time to move to the land of fruit and nuts. Ever wonder why California is on the verge of being bankrupt?


Lifeguard pay of $200K riles Calif. beach city.

NEWPORT BEACH, Calif. – Aurora Toussaint brings her disabled son to the sun-kissed beaches of this Southern California city almost every day in the summer, knowing that the lifeguards who watch from their towers will be there in seconds should anything go wrong.
Yet Toussaint, who quit work and dipped into her retirement early to care for her seizure-prone son, was shocked to learn that most of the fulltime lifeguards in this city earn well over $100,000 in total compensation a year — more than Toussaint made in her previous life as a nurse and more than she believes is right in an economy where pink slips have become common fare.
"When I first heard that I was amazed at how much they make. To think that these are lifeguards! That's more than some doctors make," said Toussaint, 55, as she sat by the beach with her son's therapy dog, Romeo. "It does kind of make me feel like, `Gosh, maybe I should be a lifeguard.'"

http://news.yahoo.com/s/ap/20110520/ap_on_re_us/us_lucrative_lifeguarding

 

[TenPenny]

Officially bankrupt? I never heard of any States declaring bankruptcy. NZ did a long time ago but it isn't a US state.

When did NZ go bankrupt?

 

[JLM]

When did NZ go bankrupt?

That was probably in the 80s, well advertised at the time and pretty stringent measures were taken, imposed by the (now nearly defunct) I.M.F.

 

[TenPenny]

So, when did NZ declare bankruptcy?

I never heard of any States declaring bankruptcy. NZ did a long time ago but it isn't a US state.

I don't believe they ever did 'declare bankruptcy'.

They had a fiscal crisis, yes.
Go bankrupt? Declare bankruptcy?

 

[petros]

(going by memory) It was the 90's. It took a GST type tax of 23% to pull them out of it.

 

[JLM]

So, when did NZ declare bankruptcy?



I don't believe they ever did 'declare bankruptcy'.

They had a fiscal crisis, yes.
Go bankrupt? Declare bankruptcy?

New Zealand Bank Bailout - NYTimes.com

I can't determine if they were officially bankrupt.