Another State descends into Financial Crisis
As California's suicidal budget-impasse continues, another large, U.S. state is facing a similar (if smaller) crisis. Pennsylvania announced on Friday that it, too, is reneging on pay-cheques for state workers – with 69,000 currently affected, according to a CNN article.
The overall problem is that with state revenues plunging by close to 1/3rd, and with costs for virtually all state social programs soaring in the U.S.'s Greater Depression, this spending-crunch at the state level is just beginning. Even if, the U.S. economy began some anemic “recovery”, the best-case scenario at the moment, all this would do is lessen the rate of revenue-declines for U.S. states – meaning another round of budget-impasses and spending cuts this time next year.
However, for many reasons there is zero possibility of a “U.S. economic recovery” either this year or next year. The mini-crises of individual states are merely part of a much larger and broader pattern. The problem is that the U.S. chose to turn itself into an unsustainable “consumer economy” (i.e. a borrow-and-spend economy). Because individual Americans are unable to borrow, this means they are also unable to spend.
Sheep “frightened” back into U.S. Treasuries
This morning, Bloomberg wrote, “Bond investors across the country are snapping up 10-year Treasury notes as expectations for a U.S. economic recovery this year disappear [emphasis mine].” If it sounds like Bloomberg is reading from a script, it's because they are.
Here is what I wrote two months ago (see “U.S. Bond Bubble Bursts, bye-bye Equities Rally”), after it was clear that the U.S. Treasuries bubble had burst:
Now here's the question boys and girls: what does the U.S. government do when an asset bubble bursts? Correct! They try to re-inflate the bubble.
To figure out how the U.S. government plans to (attempt to) re-inflate this bubble all we have to do is look back to last fall – and see how they created this bubble, in the first place. The answer is clear: they started a panic.
A DIRE warning for the United States
Perhaps the U.K.'s leading economic commentator is The Telegraph's Ambrose Evans-Pritchard. Somewhat schizophrenic, Evans-Pritchard vacillates between pandering to the banksters of London and New York (along with their servants in government) and condemning them.
His July 4th commentary is an example of the latter. Evans-Pritchard supplies some alarming data (and astute research) which totally repudiates the noise from the U.S. propaganda-machine that an “economic recovery” is imminent.
Evans-Pritchard focuses on alarming unemployment data, and the efforts of governments (particularly the Obama regime) to hide the truth about this jobs-catastrophe. Regular readers will note that this has long been one of my own regular themes (see “Why lying about unemployment is so important” and “U.S. economy to lose 20 MILLION jobs this year”).
Evans-Pritchard begins by noting recent data which was totally ignored by other, media talking-heads: the number of hours worked by Americans has plunged by 6.9% over the last year – to an average of only 33 hours/week. Thus, in addition to massive job-losses, those Americans who still have jobs are rapidly being transformed into a part-time workforce.
AND THE WINNER IS… GOLDMAN SACHS
AND THE WINNER IS…GOLDMAN SACHS
The king to the banker did say
Tis I who ride you this day
This day it is true the banker did say
But tomorrow tis I who ride you
News of Goldman’s Sachs’ triumph arrived when Reuter’s newswire reported on June
22, 2009: “Goldman Sachs on pace for record bonuses”. At a time when the US is
struggling with the greatest financial crisis since the 1930s, Goldman Sachs has
triumphantly weathered the crisis. That should be no surprise for Goldman Sachs created
the crisis in the first place.
As capitalism collapses, its very foundation—the centuries old alliance between private
bankers and public government—is feeling the pressure; and without the direct and
indirect aid of billions of dollars in public dollars, the private bankers at Goldman Sachs
would now be facing record layoffs instead of a record year of profits and bonuses.
WASHINGTON DC: WELCOME TO THE WHOREHOUSE
Under the two-party system that characterizes present-day democracies, the conservatives
represent private interests and the liberals the public interest. In truth, however, the public
interest is often served by private interests just as private interests are also often served
by the public interest.
Financial sector meltdown was no “surprise”
There was a very interesting article in the Financial Times on May 30th, the topic: that the U.K. government was completely aware of the risk of a financial sector meltdown, and the resultant insolvency of Ponzi-scheme banks like Northern Rock as far back as 2004.
The U.K.'s bank-regulator, the Financial Services Authority, had conducted what it called “bank war games”. These were simulations, designed to show the consequences of adverse developments in the marketplace.
It's extremely likely that the U.S. government conducts similar simulations. However, even if the U.S. government was so reckless that it never engaged in such research, with the close relationship between the two governments, and the even closer ties between U.S. and U.K. banksters, there can be no doubt that the U.S. government was aware of the U.K. simulation results.
