Wednesday, April 8, 2009

State & Local Budget Deficits Continue To Pile Up

New York City is going to resort to layoffs.

New York City is not alone.

In Washington, D.C., where the city’s chief financial officer has projected a $1 billion deficit within three years, Mayor Adrian Fenty proposed 1,632 municipal layoffs in his 2010 budget last month.

Los Angeles Mayor Antonio Villaraigosa warned that the city faces nearly 3,000 layoffs if it could not cut costs to reduce its projected fiscal 2010-11 deficit of nearly $1 billion.

Boston: Mayor Tom Menino’s 2010 budget envisions $2.4 billion in cuts that would require 565 layoffs.
This story is being played out in all of the U.S.'s big cities and counties, and the little ones, too.
Every municipality made promises based on a NEVER ending increase of tax revenues - it was not just the Federal Government.  Those bills are coming due, and the money just isn't there.  There is much jaw boning about when the cycle turns and the economy "recovers" to make people feel better and give them hope.  But those cycles are over - the "reset" button just got pressed and these cycles do not exist in the same way as they once had.  There will be new cycles - but what they will look like are anyone's guess.  

The political ramifications cannot he understood - nor understated.  The "Left" vs "Right" of the past 40 years are like 2 whipping boys beating each other senseless even though the Master of the House is dead.  I feel for the Left - they just got the rug pulled out from under them and broke their hip in the fall.  Imagine spending a life time believing the earth was flat and fighting a group in mortal combat that has as its core belief that the earth was square only to discover that you are both as dumb as a box of rocks (fighting a bag of hammers).

I don't need to beat this dead horse anymore -  there will not be any income left to redistribute, healthcare will be free AND unavailable, and you better come up with a better strategy for providing for your old age other than Social Security.


Remember that "economic recovery" we were supposed to have "later" this year? Weelllllll.... its been put off to 2010, according to the U.S. Federal Reserve.  My bet is next year's "recovery" won't do a thing to help tax revenues, the various budget deficits, or unemployment.  

I would not put money on the other side of that trade if I were you.


Moody’s Investors Service assigned a negative outlook to the creditworthiness of all local governments in the United States, the agency said Tuesday, the first time it had ever issued such a blanket report on municipalities.
And with all of this, the price of Oil is still over $50, higher in real terms than any other boom time, during the worst recession of the Post War era...  just wait till the energy issue arises again.

Here we go...

Mentatt (at) yahoo (d0t) com


Anonymous said...

Hey Greg, I've been following your blog for one year. Thank you, keep it coming. I follow many of the other financial blogs, Jesse AutomaticEarth NC etc, but always enjoy your combo of politics, economics, markets, and the elephant in our overcrowded planet-room - peak oil.
- James -

Anonymous said...

Greg, did you see that chinese car sales have rebounded? I think things are going to get really ugly really soon!

Anonymous said...

Probably a good thing you didn't change the name of your blog.

Greg T. Jeffers said...

Dear Anon @ 2:26 am:

Thank you. Most peak oil aware folks are on the Left, and don't seem to appreciate much my view that they are wasting their time. They should engage in the oldest form of capitalism known to man - food production. Or perhaps the second oldest profession... either one would be more worthwhile than sitting around and bemoaning the unfairness of a system that is in the process of unwinding.

Considering that many of these folks are the beneficiary of legacy money/trust funds... they should have been careful what they asked fo.

The Mad Scientist said...

The Treasury Department says the federal budget deficit soared to $192.3 billion in March, and is near $1 trillion just halfway through the budget year, as costs of the financial bailout and recession mount.

You know what they say about Monetization without Representation ...Or is it Taxation without Representation...
Sorry I am a mess this morning

bureaucrat said...

Glad you and Jeffers are so concerned about out-of-control deficits and "currency printing," Scientist, buddy. As you know, 80% of all Federal spending goes to five programs: social security, medicare, medicaid, interest on the debt and defense. And wealthy people get a LOT of that money. Since you are so concerned about the deficit, and are an ace financial analyst like Jeffers, making lots of money :), how much extra tax money are you willing to contribute? Or, are you willing to slit "your own peoples throats" (the rich people, that is) and cut back on your share of government income? Hahaha!

The Mad Scientist said...

I voted with my feet Bureaucrat. I left the US.

bureaucrat said...

I've been in the Chicago area my whole life, and I have nowhere else to go. While Aunt Nancy says our family fled Sweden one step ahead of the sheriff, I am staying in my country. :)

The Mad Scientist said...

Good for the US!
The country can use thinkers like you.

sharon said...

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