I couldn't agree more. New York and Michigan are probably next in line.

The other thing that comes to mind is something I believe Todd said - There isn't enough money to bail everyone out. I'd be surprised if the Treasury could even print enough money to bail out these bloated state level spending programs without just as serious ramifications.

I know you don't do politics, but I can't ignore that these three states are very heavy Democratic.
Maybe that should tell us something as well.

I agree, Bob, but I find it interesting in Andrew Jaffery's article, that the people of California voted down a referendum on higher taxes. People enjoy a lot of public services but they don't want to pay for them. Something for nothing is the greatest delusion and the source of lots of pain and heartache in the world. Trading on Wall Street making money sounds great until you start to read Toddo's book and realize the blood, sweat, and tears involved. There is profound cost for everything. There is no free lunch.

Spending has been out of control for a long time in government because no one pays the true cost of it. We tax a lot, spend more, and finance the difference so that no one has to pay the bill for awhile. Unfortunately, the true cost of government is showing itself and not many people like what they see. You have to pay sometime. Democrats have been irresponsible, but Republicans have no credibility on fiscal responsibility and the American people are selfish. We have no sense of self control and we have arrogantly believed that we can change the laws of the universe and get something for nothing.

The sooner we realize that, the sooner we can be part of the solution, repent of our stupidity and start down a path of sustainability. I am not advocating blame but simply recognition of the truth, acknowledging it, and then doing something healthy about it.

There is no limit on the amount of money the Fed can print... and we don't have a vote.

Always count on the govt doing the easy thing. Nothing is easier than printing Dollars.

As of this morning Arizona still doesn't have a budget

we have a 30% deficit gap to CUT

our govenor wants to RAISE taxes

and our state legislature is CUT, CUT, CUT - good guys - maybe

but our spread on a % basis is the LARGEST of any state

and we don't want more taxes

SO THE MOTTO OF THE DAY SHOULD BE

LIVE WITHIN YOUR MEANS

It seems very much that central banks global effort to maneuver markets is being used as part of a grand reparation/remuneration design. Without ideological sway (I agree on eventualities) it would appear that all data is contorted and the reach is recognized as constructive. Watching the political theatre result in back
room deals to emend corporate balance sheets is just who we have become. Why
bother with earnings, we can diddle the balance sheet.
Sure markets are not credible and control is seemingly a narrowing band but the choices here are limited. Retail brokers representing various financial entities would like to direct
our accounts. Those of us not advantaged enough to know the "white-shoe" desks daily angle are
left watching or wagering by the hour. We appear between a shame and a sham, that said, it is what it is.
Looking to the green-shoot media or the floor traders fog is senseless.
Factor in the Villes very capable daily conjecture on opposing possibilities and various time-lines and one is left with headaches, doubt and cynicism.
Equities have doubled and tripled and indecies have moved 40% as each and every S&P point gain came with "instant exit instructions".
My vibe (and credible data) tells me things are a mess, my eyes tell me access and influence can do anything they want. At this point, right or wrong, agendas are in control.

Really, why buy rationale:

*There are not many on board the Bull SHow
*TAF ALMF CPFF PDCF TSLF TALF...
*Financial Earnings I mean balance sheets provide hot air liftage.
*Political leverage, "we'll takem higher if ya don't slaughter our cash cows.
*Bikini volume
*Market atonement for rapacacious behavior vs obligated atonement on the marginal tax bracket.
*Market-to-mouth consumer resusitation, best hope for holiday bobble-binge
*The appeance of inflation at any cost...even credibility (price going up buy now)
*Ponzitology redemption
*Not many choices left

The city of Atlanta was being fined $1MM per day by the EPA for dumping untreated and under treated sewage into the Chattahoochee River. The city had put off upgrading and repairing its crumbling wastewater treatment facilities for many years. Finally, in 2008 the city had had enough of the fines and floated a $2B bond to completely renovate its treatment system.

The below link is to the water and sewer rate schedule through 2011. It details the increase in water and sewer rates that the fair citizens are now starting to pay. The first year increase was 27.5% alone and the rates will increase 12.5% in each of the next 3 years . The total increase will be 90% from July 1, 2008 to July 1,2011.

To add insult to injury, the city council voted this week to increase property taxes 30%------ effective today!!

http://www.atlantawatershed.org/custsrv/Rate/2008-09%20to%202012%20Rates%20&%20Bill%20Calc.pdf

I agree with every word.

Well, I'm old enough to know, unfortunately on both counts, that true education requires pain. I can't imagine how Americans are going to avoid a lot of pain in this process, but again as Toddo says in so many words that it's only bad if we don't learn from it.

Spending under Bush was terrible, but well within historical averages. It was lower than under Reagan for all those like myself who love the man.

Democrats ran on a platform of anti-corruption and deficit reduction. They won because the people were upset with government spending, not because we wanted more benefits.

How is that working for ya?

Wish it had not taken this crisis to get us moving. The elites response has been the opposite of what the people want. Every poll shows that people want to lessen government spending even if it means the cutting of services.

The current government has over-played its' hand and the backlash is beginning.

The special interest dictatorship of our nation is coming to an end right before our eyes.

The real question is how will the governing elite handle the coming change? I am afraid it may be not be very pretty but I hope I am wrong. They are trying to grab as much power as they can during the panic to shore up their position going forward.

The positive is that no one can stop the sea change we are just getting started with it. It will be a crazy time but one that is necessary to clean the slate.

As a Californian, I can say that a very big part of the problem in this state is governmental employees represented by unions. The number of state and local employees represented by unions has skyrocketed in the last 20 years.

Worse yet, the State Legislature and local governments have constantly either pandered to the unions for votes or given in their demands due to (at certain times) tight labor markets.

Most Californians would be appalled to learn about the salaries of their average fireman or policeman or teacher. With very liberal overtime pay packages, these salaries can and often do reach well into the six figures.

Then comes the ridiculous retirement packages governmental bodies have granted. Retirements at very early age at the last salary amount. That's retirement payments and health benefits for life when someone retires at a very young age. This of course is what the car companies did.

California simply cannot afford this. Why this doesn't get more press is beyond comprehension.

My guess is that California is particularly bad in this regard as our Legislature is clearly controlled by the unions. Perhaps New York and Illinois are in the same shape, as they are controlled by the same politics. (Schwarzenegger has been largely AWOL with respect to any guiding principles since being elected -- he would make a caught fish avoiding a net look tame.)

But my guess is that there are other states where these shenanigans have been largely avoided by sound fiscal management.

How many older investors have who wanted "safety" shifted money into municipal bonds upon the advice of (non-fiduciary) Wall Street brokers? The only good to come out of the coming massive Municipal Bond Defaults is that it will finally be the End for the Ratings Agencies - S&P, Fitch etc.

My take on the AIG bailout was it was deemed critical because they were/are a primary insurer of municipal bonds. Insurance on municipal bonds kept easy and cheap money flowing to both state and local governments. In other words, it was supposed to somewhat prevent the crisis everyone is currently facing.

I don't see how the Feds bailout CA without bailing out the other 49. I understand why everyone is waiting to see what happens next but even the densest of politician should have seen the "everyone else asks for a bailout" effect of bailouts in the last 12 months. I think if it was just CA alone that was the problem, they might have acted by now.

"Then comes the ridiculous retirement packages governmental bodies have granted. Retirements at very early age at the last salary amount. That's retirement payments and health benefits for life when someone retires at a very young age. This of course is what the car companies did. "

This is system works great when there are few retirees to workers. Unfortunately, the about to retire generation keeps overlooking that they are quite literally the largest in the history of the world.

I know people get upset about lowering or eliminating pensions. They will say they were promised - they put in their dues. And they were and they did.

But at the end of the day, we can't we afford to pay people to do nothing (at their highest income level) for the last 2 decades of their life. There are not enough worker bees to accomplish retiring them the way their retired their (much smaller group of) parents.

"I know people get upset about lowering or eliminating pensions. They will say they were promised - they put in their dues. And they were and they did.

But at the end of the day, we can't we afford to pay people to do nothing (at their highest income level) for the last 2 decades of their life. There are not enough worker bees to accomplish retiring them the way their retired their (much smaller group of) parents."



It certainly is clear that there is no way out of this situation of the under-funded states. Even if you print money and send it out, at some point GDP growth must take over that responsibility.

Given the current situation and the fact that the baby boomers are really just starting to hit the systems, it is a perfect storm. I consider myself a boomer and I'll hit the system in about 12 years. People are hitting it now, and I figure they'll continue to hit it for about another 10 after me, so my non-scientific conclusion is that the country's retirement system will be hit with 30 years of flow of the highest numbers of retirees ever.

Trying to tax that away would totally destroy the economic engine.
Trying to print it away would destroy the dollar to the point of being useless.

Government has to stop spending. People need to pick themselves up by their boot straps. And from my view there are too many people ill-equipped or educated to have the capacity to do that. It could get really ugly. Like never before seen ugly. I hope I'm over-reacting with that comment.

doesn't mean no retiree commitments...

but does imply a need to revisit what is reasonable for the time and money vested -

does imply a savage test of trust between a worker and whomever he or she has agreed to work for -

and does demand that monies vested by a worker, and any matched by the employer, public or private, be secure as best possible, without excuse to risk or fraud -

ya gotta know this is not a boomers or workers wart that placed America at this crossroad. Granted there are abuses inherent in all employment compensation, from governance or leadership, public to private top to bottom. Best they can, leaders very much need to be aware and stop misconduct at any level. The details put forth here are mistaken and misapplied. If you are interested in facts regarding public safety pay, pensions, benifits or ways the sytem gets gamed I would be more than happy to join any forthright, genuine discourse. --respectful sincerity--

ya gotta know this is not a boomers or workers wart that placed America at this crossroad. Granted there are abuses inherent in all employment compensation, from governance or leadership, public to private top to bottom. Best they can, leaders very much need to be aware and stop misconduct at any level. The details put forth here are mistaken and misapplied. If you are interested in facts regarding public safety pay, pensions, benifits or ways the sytem gets gamed I would be more than happy to join any forthright, genuine discourse. --respectful sincerity--

"but does imply a need to revisit what is reasonable for the time and money vested"

I agree, believe it or not, and I probably won't see a dime of retirement money. (Generation X) The hard part is that the unions, particularly, have not hit their own point of recognition about the reality of the situation.

Current negoations seem to go like this:

Powers That Be: Look, we can't afford to give you the money/retirement/benefits we promised you. If we pay you all that we'll go bankrupt/can't pay for existing services/etc, etc. How about this x% as pay cut/benefit reduction?

Unions: No. We'll throw any new hires (ie people we haven't met yet and who can't say anything) out as sacrificial lambs, so that helps, but otherwise Evil Management, we want everything promised during the boom times.

(The trend for the last decade is to essentially make new hires 2nd class laborers who have to pay in higher amounts for health care/no or reduced pension benefits, etc.)

PTB: Okay then, we'll cut salaries/benefits/pensions or go bankrupt anyway because we don't actually have a choice.


We *can* met part of our obligations and I want the PTB to do so, but it's getting critical that the unions and organizations like AARP wake up to the "new" reality, which is the old reality of the demographics problem that is the boomer generation. :(

the main thing i usually see left out in this debate is, working people have paid their monies into social security, and if the money had not been used for wars and bridges to nowhere, and that money saved, even with little interest earned, there would be no social security short fall -

robbing a household of their food in the pantry to re-sell to someone else, a grocer can't then say, oh, your growing family is demanding more than i can supply, you'll have to make do without (while i, the grocer/govt have used and benefited from what you've already paid for)

misuse and misappropiration of trust-deposited-paid monies, by our own elected officials, is the story that keeps getting ignored when telling regular people they won't see a penny of their decades of contributions...

but this is a discussion that will come out, and i'm glad you and so many others are participating in our own price discovery: truth discovery -

thanks amy....

I came to this article late, and having read the stream of comments it seems that our elected leaders have failed us in a very basic sense. But if you want to understand that, take a look at the benefits packages they award themselves for minimal years of service.
No economy anywhere can support a large number of unproductive members. I am a boomer and have reached retirement eligibility, but will be working for many more years if I am able.

As odd as this sounds, I guess I'm not concerned with getting the details exactly right.

In my mind, we're in a situation where government at all levels maintained spending programs that were priced according to perfection in the economy.

When the financial meltdown occurred, all this has to come crashing down. Just like a stock that is priced to perfection or beyond as in the March 2000 tech stocks. It's not real and it shouldn't happen but the results are obvious.

I find it.... Well, I can believe anything these days, but the incompetence of government to spend every red cent of the money with no foresight to a potential rainy day is almost unbelievable. It's been going on a long time. Clinton administrations claim that there was a budget surplus based on the performance of the biggest market bubble in the history of the markets to that point in time is an absurd and irresponsible view.

We're into this a year and a half now, and why haven't, at least the local government's reduced spending? The height of denial or irresponsibility. I liken them to coke addicts.

But the boomers should have been on their radar for a long time. We boomers were already out and about when LBJ opened the SS lock box and put it in the general fund.