There are around seven to ten states (Cal, OR, WA, NJ, ILL, Virginia, Delaware....as a minimum)....that will have a cash imbalance situation....with massive debt owed to banks over loans....covering pensions, salaries and operational costs....where companies simply said enough, and left.
When that day arrives....the states will turn to the federal government for a bailout. In the case of California....it's probably in the range of $50-Billion with a second year bailout likely in the same range.
This being strictly a state thing? No....I would imagine at least one-hundred cities lined up with the same imbalance problem...with Portland and Seattle at the front of the group.
Will the feds save them? I think it's highly unlikely.
So I'll predict three things likely occurring in lightning speed: pensions across the board cut by 50-percent, property taxes in cities like Portland and Seattle doubling (triggering a massive exodus), and public services (like fire departments and libraries) curtailed.
When does the fallout occur? 2026? No....nor in 2027. Somewhere between 2028 and 2030....the collapse will start to occur....with some banks saying 'enough'....that they don't believe states can honor the loans currently existing.
I'm also of the mind....that very negative 'wording' (like 'ghetto-states') will come to exist.
So....settle back....it will be an entertaining event to watch.
1 comment:
During the 1999-2003 Governor Gray Davis Administration, California bureaucrats borrowed about a billion fedbux daily.
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The hollywood 'actor' Arnold Schwarzenegger campaigned on his solemn promise to eliminate TheDeficit© and end bureaucrat borrowing.
During the 2003-11
Schwarzenegger Administration, California bureaucrats continued to borrow about a billion fedbux daily.
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If I was to uneducated guess, I would say nothing much changed.
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