Bankruptcy is usually shameful, but not always. It means something has gone seriously wrong. Sometimes it cannot be foreseen, as when serious illness or death of a key person means survivors can’t make payments or keep a business running. No shame there. Others are willing to help in those situations.
When bankruptcy results from irresponsible behavior, there is shame, or should be. Those undergoing it shouldn’t be trusted with authority or power until they demonstrate change. When the hammer falls on them, they try to shift blame for their ineptitude and others are disinclined to help.
What does it look like when governments go bankrupt? We get an idea watching cities deal with it. The most recent is Stockton, California, which has many problems but like most governments, their biggest problem is pensions. Politicians promised more than governments could deliver but they don’t want to admit that. Cities are facing the same crunch our federal government is, but neither Stockton nor the feds want to take responsibility. They’re looking for others to blame and observers are not inclined to help until they admit culpability.
When discovering it couldn’t pay for pie-in-the-sky pensions, Stockton didn’t cut back. Instead, it borrowed money by issuing bonds. Now, it cannot afford to pay for either pensions or bonds and is trying to stiff bondholders. Better to confront investors than confront government unions. They’ll have to scale back pensions too, but they’re refusing to for now.
Bond holders will lose almost $200 million. Can’t imagine who would ever lend money to Stockton again, so how will it pay for those pensions now? One former police chief retired at $204,000 a year after serving only eight months. How can this continue? How many times can a city go bankrupt?
San Bernardino went bankrupt too, a few months before Stockton. One third of its 210,000 thousand citizens are below the poverty line but a police lieutenant can retire in his fifties at $128,000 a year, and,
according to Reuters, that’s after getting “$230,000 in one-time payouts on his last day.”
Unions provide campaign contributions go to politicians who vote them pension benefits. Want to guess which political party gets those union contributions? Hint: it isn’t the Republicans. Democrats will bankrupt a city before confronting the unions.
A Detroit city councilwoman
asked President Obama for a bailout last month: “Our people in an overwhelming way supported the re-election of this president and there ought to be a quid pro quo,” she said. Maybe she didn’t hear that President Obama is busy trying to dodge a bankruptcy crisis of his own.
States are in flirting with bankruptcy too and for the same reasons: Government union pensions, especially for teachers, police and firemen. Even a liberal news outlet like the
Huffington Post admits there’s a crisis: “[Illinois has] the nation's worst case of underfunding state employees' pensions,” it declared, “a problem approaching $100 billion and mounting by $17 million per day.” Illinois recently raised income taxes by 62% but even that didn’t make a dent.
Several other states are in danger of bankruptcy too. Will states that manage their affairs be expected to bail out states that don’t? I hope not. Will federal Democrat “leaders” try to bail out fellow Democrats running blue states? Will the United States itself go bankrupt? These are open questions as we watch irresponsible political “leaders” limp along with last-minute deals and continuing resolutions month to month.
There’s one important difference between the feds and the states: the US government can print money. States cannot. Democrats who control both the White House and the Senate refuse to deal with our looming unfunded liabilities in Social Security, Medicare and Medicaid. Observers with rudimentary knowledge of arithmetic see impending bankruptcy unless there are huge cuts immediately. When federal Democrats try to borrow more money, creditors are reluctant to lend. Bond sales have few buyers, so what to do? Get the Federal Reserve to create digital money out of thin air and buy up unsold bonds.
Do our Democrat leaders think we’re any different than Weimar Germany or Zimbabwe? Do they think they can print funny money forever without inflationary consequences? I guess. Will they ever admit their New Deal and Great Society predecessors promised more than they could deliver? Not likely. Meanwhile, they blame “the rich” for “not paying their fair share” as if taking more from them will make it all add up.
It won’t. Even if we took 100% of what “the rich” make, it wouldn’t put a dent in our ever-expanding debt. Thus we drift toward unparalleled catastrophe - because if we go belly up, there’s no one else left out there to fix it.
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9 comments:
Yes, we have a problem. Where is Clinton when you need him? After fixing the national debt which Reagan tripled we went into the crapper again with Bush, and now Ob ama is not helping with continuing Bush bailouts, catering to banks, etc.
No talk about the state of the US economy can be be taken seriously anymore without mentioning ending the federal reserve. Make no mistake, this private gaggle of bankers are singlehandedly ruining the economy.
Talking about presidents being responsible for the economy proves you have no clue how this country operates.
The fed loves it though. No heat on them.
End the fed. It's madness-- paying interest on our own money??!! Income tax was enacted to pay of this debt interest!
Damn right labor unions are ticks - imbedded right on the pale, pasty fat asses of those who prefer we go back to the days of 80 hour work weeks, no vacations, child labor, no health benefits, dangerous working conditions, etc...
Cute how Tom slipped in one of his gay fantasy pictures again!
Of course taxing the rich more would not put a dent in our defecit. NO one thing will. Does that mean we should do nothing?
Throughout the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it
is 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the
1970s; today it is 15%. The real GDP growth rate averaged 4.2% and real per capita GDP
increased annually by 2.4% in the 1950s. In the 2000s, the average real GDP growth rate was
1.7% and real per capita GDP increased annually by less than 1%.
True enough, all that.
Remember though, in the fifties we were the only intact industrial country on earth. All the others had virtually destroyed each other in World War II. We had put everything into building the infrastructure of a war economy. We converted factories from making cars and other consumer goods to making tanks and planes and such.
When the war ended, all that was intact and easily converted back to producting consumer goods, and we didn't have competition in the production of those goods. We had a workforce that was highly trained, disciplined, and politically cohesive. We had an enemy in international communism that tended to keep us that way.
We had a president who had led us through all that as a general and was a competent administrator, not too full of himself. He really did have shovel-ready projects like the interstate highway system and the space program. He didn't waste $1 trillion with nothing to show for it afterward but empty words.
We had a stable currency. People trusted government and didn't depend on it.
The world isn't like that now and neither are we. Neither is our president. We have lots of competition out there now and we're losing our competitive spirit.
The only entitlement program we had was Social Security and we had a rising population to sustain it. Now we're aborting ourselves at a rate of over a million of us a year.
Those who are allowed to be born are becoming more and more dependent on government to support them.
Even if we returned to those confiscatory tax rates, it wouldn't come close sustain the enormous growth of our welfare state.
I'd be okay with going back to 1950s tax rates if we could go back to 1950s federal budgets also.
Heck, I'd be okay with Clinton-era tax rates with Clinton-era rates of government spending to go along with them.
Print Version
Source: Michael Snyder, BLN Contributing Writer
"Barack Obama has greatly expanded the powers of the presidency during his time in the White House, but there is one institution that he simply will not mess with. There is one organization that is considered to be so sacred in Washington D.C. that Obama will not dare utter a single negative word against it. That organization is the Federal Reserve. Even though he has shown that he is unafraid to pick a fight with just about everyone else in Washington, Obama flat out refuses to criticize the Fed and he even reappointed Ben Bernanke for another term as Fed Chairman even though Bernanke has a track record of failure that would make the Chicago Cubs look good. Perhaps Obama is aware of what has happened to other presidents that have chosen to tangle with the Fed. In any event, it has become clear that Obama submits to anything that the Fed says without question, and the controversy over the "trillion dollar coin" is another perfect example of this. For weeks, there has been much speculation in the mainstream mediaabout the possibility that the Obama administration may print up a one trillion dollar coin that it would use to keep paying the bills of the federal government if an agreement to raise the debt ceiling is not reached. But on Saturday the Federal Reserve killed that idea, and we shouldn't be surprised by that because under no circumstances will the Fed ever accept a threat to their monopoly over money creation in the United States. If the Federal Reserve had allowed Obama to print up a debt-free trillion dollar coin, that would have set a very dangerous precedent for the Fed. The American people would have realized that the federal government can actually create debt-free money whenever it wants and that it does not actually have to borrow money from anyone. That is something that the Fed probably would have moved heaven and earth to keep from happening. But now we won't ever know how far the Fed would really be willing to go to keep their monopoly over money creation, because Obama has no plans to challenge this latest ruling from "the real boss" of our financial system.."
Con't
.."Sadly, most Americans don't even realize that a private banking cartel has a monopoly over all money creation in this country. In recent years they have abused this power by wildly printing money ("quantitative easing"), and by making more than 16 trillion dollars in secret loans to their friends during the last financial crisis. Under our system, the private Federal Reserve creates money whenever they want, and nobody else gets to create money. It is an insane system, but very, very few of our politicians will ever dare to question it."
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