The Governement Bubble – National, State, Local…

Here are a couple of reposts from HighBoldtage Mar. 2010:

The Government Bubble:

It turns out that the bubbles that we have recently experienced – housing, derivatives, banking, insurance, stockes and so on were not just economic bubbles.  It appears that there was also a bubble in government at the same time, and this bubble is now bursting.

California is the poster child for this, with recent furloughs and i.o.u.s for state payments, but this week Los Angeles is starting to lay off 4,000 employees.  Cities all over California are beginning to downsize, along with school districts and transportation systems.  It looks like before it is over a hundred thousand or more government workers in California will soon be unemployed and the ripple effects of that will be immense, particularly in Sacramento.  Also heavily impacted will be the small rural counties like Humboldt where government payrolls account for 30% or more of the local economy.

The Federal government has its own bubble to deal with, with out of control deficit spending it will be unable to bail out the states.  The states will be unable to bail out the cities and counties.  You are on your own.  The Bubble Government is bursting.

have a peaceful day,

Bill

The Government Bubble in Humboldt County

There is one trend that is unmistakable in Humboldt County government:  It has gotten more expensive very quickly, at least as quickly as those dastardly insurance rates.  In just four years, county expenditures have gone up 41%, more than 10% per year.  How does that stack up to your personal experience, Joe Six Pack?

To put this nicely, if the county government increase had been limited to roughly the official inflation rate (lets say around 3%) then the county expenditures exceed that now by some $60,000,000 per year, and rising.  It is possible that Humboldt County residents are getting $60,000,000 worth of services now from their county government  that they didn’t get in 2004.  If so please inform us.  It is also possible that we are paying a lot more for the same thing we were getting in 2004.

http://co.humboldt.ca.us/portal/budget/2009-10/A.pdf

Why the Greek rescue isn’t going to plan

By Mohamed El-Erian

Published: April 7 2010 15:53 | Last updated: April 7 2010 15:53

It should be apparent to all by now: despite the rhetoric out of some European capitals, the Greek rescue package is not going according to plan.

Buoyed by a cyclical recovery, markets around the world have yet to recognise the complexity of this situation. When they do, it will also become apparent that Greece is part of a wider, and historically unfamiliar phenomenon – that of a simultaneous and large disruption to the balance sheet of many industrial countries. Tighten your seat belts.

Mohamed El-Erian is chief executive and co-chief investment officer of Pimco

Copyright The Financial Times

http://www.ft.com/cms/s/0/c2709314-4252-11df-9ac4-00144feabdc0.html

FaceBubble FacePlant

Let’s party like it’s 1999.

Oh and watch out for falling APPLs too.

The Government Bubble

Link here:

http://urlet.com/sudden.expect

http://highboldtage.wordpress.com/2010/03/11/the-government-bubble/

It turns out that the bubbles that we have recently experienced – housing, derivatives, banking, insurance, stockes and so on were not just economic bubbles.  It appears that there was also a bubble in government at the same time, and this bubble is now bursting.

California is the poster child for this, with recent furloughs and i.o.u.s for state payments, but this week Los Angeles is starting to lay off 4,000 employees.  Cities all over California are beginning to downsize, along with school districts and transportation systems.  It looks like before it is over a hundred thousand or more government workers in California will soon be unemployed and the ripple effects of that will be immense, particularly in Sacramento.  Also heavily impacted will be the small rural counties like Humboldt where government payrolls account for 30% or more of the local economy.

The Federal government has its own bubble to deal with, with out of control deficit spending it will be unable to bail out the states.  The states will be unable to bail out the cities and counties.  You are on your own.  The Bubble Government is bursting.

have a peaceful day,

Bill

Housing’s shadow inventory expands

But the ratio of loans 90 days or more past due has increased every month for the past 43 months!

At the end of October the ratio hit a record 7.4%.

http://mortgage.freedomblogging.com/2009/12/21/housings-shadow-inventory-expands/22993/

China: Overcapacity – Commodity Stockpiling

http://urlet.com/schedule.anything

http://www.rgemonitor.com/emergingmarkets-monitor/257856/chinas_september_data_suggest_that_the_long-term_overcapacity_problem_is_only_intensifying

Bank failures hit 106 on year

By Greg Morcroft, MarketWatch

NEW YORK (MarketWatch) — Seven more banks failed Friday, pushing the 2009 total to 106 and marking the first year since 1992 that at least 100 have gone under

Experts suggest we could be no more than 10% of the way through this cycle of bank collapses, which is sure to be the worst run of closures since the Great Depression.

http://urlet.com/len.man

http://www.marketwatch.com/story/bank-failures-hit-100-for-year-2009-10-23

Matt Taibbi on Wall Street Criminals

Like all the great merchants of the bubble economy, Bear and Lehman were leveraged to the hilt and vulnerable to collapse. Many of the methods that outsiders used to knock them over were mostly legal: Credit markers were pulled, rumors were spread through the media, and legitimate short-sellers pressured the stock price down. But when Bear and Lehman made their final leap off the cliff of history, both undeniably got a push — especially in the form of a flat-out counterfeiting scheme called naked short-selling.

The new president for whom we all had such high hopes went and hired Michael Froman, a Citigroup executive who accepted a $2.2 million bonus after he joined the White House, to serve on his economic transition team — at the same time the government was giving Citigroup a massive bailout. Then, after promising to curb the influence of lobbyists, Obama hired a former Goldman Sachs lobbyist, Mark Patterson, as chief of staff at the Treasury. He hired another Goldmanite, Gary Gensler, to police the commodities markets. He handed control of the Treasury and Federal Reserve over to Geithner and Bernanke, a pair of stooges who spent their whole careers being bellhops for New York bankers. And on the first anniversary of the collapse of Lehman Brothers, when he finally came to Wall Street to promote “serious financial reform,” his plan proved to be so completely absent of balls that the share prices of the major banks soared at the news.

http://urlet.com/go.caught

http://www.rollingstone.com/politics/story/30481512/wall_streets_naked_swindle

This bubble will burst sooner

This bubble won’t last long

ft.com

We did not need to wait until the Dow Jones Industrial Average hit 10,000. It has been clear for some time that global equity markets are bubbling again. On the surface, this looks like 2003 and 2004 when the previous housing, credit, commodity and equity bubbles started to inflate, helped by low nominal interest rates and a lack of inflation. There is one big difference, though. This bubble will burst sooner.

http://urlet.com/thrown.predicts

http://www.businessspectator.com.au/bs.nsf/Article/A-new-crisis-on-the-horizon-pd20091019-WXUVM?OpenDocument

AND THEN WHAT? Prolonged Aid to Unemployed Is Running Out

ERIK ECKHOLM

Published: August 1, 2009

Over the coming months, as many as 1.5 million jobless Americans will exhaust their unemployment insurance benefits, ending what for some has been a last bulwark against foreclosures and destitution.

Because of emergency extensions already enacted by Congress, laid-off workers in nearly half the states can collect benefits for up to 79 weeks, the longest period since the unemployment insurance program was created in the 1930s. But unemployment in this recession has proved to be especially tenacious, and a wave of job-seekers is using up even this prolonged aid.

http://urlet.com/strategies.fair

http://www.nytimes.com/2009/08/02/us/02unemploy.html?hp

US and UK on brink of debt disaster

20 Jan 2009, 0419 hrs
 
 
 
LONDON: The United States and the United Kingdom stand on the brink of the largest debt crisis in history. 
While both governments experiment with quantitative easing, bad banks to absorb non-performing loans, and state guarantees to restart bank lending, the only real way out is some combination of widespread corporate default, debt write-downs and inflation to reduce the burden of debt to more manageable levels. Everything else is window-dressing.
 
The proximate trigger of the debt crisis was the deterioration in lending standards and rise in default rates on subprime mortgage loans. But the widening divergence revealed in the charts suggests a crisis had become inevitable sooner or later. If not subprime lending, there would have been some other trigger.

The charts strongly suggest the necessary condition for resolving the debt crisis is a reduction in the outstanding volume of debt, an increase in nominal GDP, or some combination of the two, to reduce the debt-to-GDP ratio to a more sustainable level.

From this perspective, it is clear many of the existing policies being pursued in the United States and the United Kingdom will not resolve the crisis because they do not lower the debt ratio.

In particular, having governments buy distressed assets from the banks, or provide loan guarantees, is not an effective solution. It does not reduce the volume of debt, or force recognition of losses. It merely re-denominates private sector obligations to be met by households and firms as public ones to be met by the taxpayer.

BANKRUPTCY OR INFLATION

The solution must be some combination of policies to reduce the level of debt or raise nominal GDP. The simplest way to reduce debt is through bankruptcy, in which some or all of debts are deemed unrecoverable and are simply extinguished, ceasing to exist.

Bankruptcy would ensure the cost of resolving the debt crisis falls where it belongs. Investor portfolios and pension funds would take a severe but one-time hit. Healthy businesses would survive, minus the encumbrance of debt.

http://urlet.com/bingo.angels

http://economictimes.indiatimes.com/rssarticleshow/msid-4004567,flstry-1.cms