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,
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.
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