While bankrupt Eurozone nations are forced to sink deeper in debt to bailout Greece and other countries using the euro that are in even worse fiscal difficulty, a similar absurdity is becoming ever more likely in America. The virtually insolvent U.S. federal government may be forced, sooner rather than later, to bailout its most populous state. California is fast descending into a fiscal sinkhole, with no resolution in site.
In 2009, California "solved" its massive $26.3 billion state budget deficit through a combination of budgetary cuts and accounting gimmicks and other games, the only "solution" offered by Governor Arnold Schwarzenegger and the dysfunctional state legislature.
In 2010, California's fiscal woes are back with a vengeance. Even after the budget cuts of 2009, the state is now faced with a $19 billion deficit. While contemplating savage cuts in public services, the state is faced with the absurdity of being compelled to add another $600 million to its extravagant pension program for its public workers. The state employees pension fund lost more than $55 billion during the financial implosion that erupted in the fall of 2008, and expects California taxpayers to make up for the shortfall.
At some point, California will be unable to borrow funds at sustainable rates, replicating the ordeal Greece recently endured. At that point, it is likely that a California delegation will be speeding on its way to Washington DC, demanding that all the taxpayers in the other 49 states assume responsibility for bailing out Sacramento. The problem with this stratagem is that most of America's states are facing immense fiscal challenges.
How do in fact the bankrupt bailout the insolvent? In the near future, this will become a far from academic exercise confronting policymakers in Washington.
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This statement is extremely inaccurate. What the delegation from California will have to tell the other 49 states is that the California taaxpayers are no longer able or willing to continue to support and constantly bail them out. We simply cannot continue to send well over $200 billion a year back east more than we receive in goods and services. We're willing to help out poor people, which is the charitable thing to do. But not to the point that we're wiling to bankrupt ourselves for the sake of foreigners. It is time that the other 49 states got their financial acts in order and stopped expecting the folks in California to support them. The free ride is over. You're going to have to work.
For sure the other 49 states are NOT going to bail out California with out some serious reforms (just like Greece). Unless the people of California get a grip on reality, this state is going to be in even worse shape.
This is not just hyperbole, it is flat out wrong. The US government cannot be insolvent as long as its debt are denominated in US currency. Now we have huge fiscal challenges, but we are not insolvent.
Of course, that doesn't mean California isn't insolvent, it is. Mostly because of the fact that we somehow think that a direct democracy will work with 35 million people! The electorate here in CA will vote yes on every spending increase and no on every tax increase forever. The ineffectual legislature can't be blamed for everything (though they are the ones that off throw their bad bills that they can't pass in Sacramento onto the ballot) because frankly they have no power left.
So Greece and the EU are in for trouble, BIG trouble, and the US is insolvent but still borrowing a billion dollars a day from China to pay the interest on the money China loaned us but that we cannot pay back.
And we have no jobs and millions of people have lost their homes and millions more are about to but we can still spend trillions playing at unwinnable wars in Asia. Congress, composed mostly of millionaires, cannot see further than their oak-paneled offices.
We are losing the Gulf of Mexico and we will lose the natural habitats in Louisiana and Florida just for starters. We are watching a perfect storm develop.
"The term and meaning of a Resource-Based Economy was originated by Jacque Fresco. It is a system in which all goods and services are available without the use of money, credits, barter or any other system of debt or servitude. All resources become the common heritage of all of the inhabitants, not just a select few. The premise upon which this system is based is that the Earth is abundant with plentiful resource; our practice of rationing resources through monetary methods is irrelevant and counter productive to our survival.
Modern society has access to highly advanced technology and can make available food, clothing, housing and medical care; update our educational system; and develop a limitless supply of renewable, non-contaminating energy. By supplying an efficiently designed economy, everyone can enjoy a very high standard of living with all of the amenities of a high technological society.
A resource-based economy would utilize existing resources from the land and sea, physical equipment, industrial plants, etc. to enhance the lives of the total population. In an economy based on resources rather than money, we could easily produce all of the necessities of life and provide a high standard of living for all." http://www.thevenusproject.com/a-new-social-design/resource-based-economy”
America can solve its financial problems over night by increasing taxes on the rich, this is not an option that Europe has, as it already is heavily taxing the rich.