The American Country Club Losing Members
Think of America as a HUGE country club. We all have to pay our dues to keep the golf course and club house up. We have a great security system with defense and even a great health facility on the grounds with some of the best doctors in the world. We even spend a lot on charity such as welfare, social security, and unemployment benefits for our members who lose their jobs. Because of our club, our town flourishes. If it wasn't for our club, there would be no town.
But all of this comes at a price, $6.5 Trillion dollar per year collectively. If we come up short, we can borrow, but than we all have to pitch in to make up the difference. If enough members quit, the entire nut must be borne between a few members.
Right now millions of members are quitting due to job losses or wage cuts. Fewer and fewer are paying dues as corporate profits evaporate. Residential and Commercial RE prices are crashing at unprecedented rates gutting property tax revenues. Sales tax receipts are way down too. Further, our expenses are skyrocketing due to more and more of our members getting old requiring social security or losing their jobs needing unemployment payments or welfare.
THE PROBLEM IS ONLY A FEW MEMBERS LEFT REALLY CAN PAY ANY ADDITIONAL DUES.
The Lingle administration yesterday delivered written layoff notices to about 1,100 state workers who will lose their jobs in November because of the state's budget deficit.
Gov. Linda Lingle said she also met with her Cabinet about a second round of layoffs, since the administration will not know how much money will be saved by the initial layoffs because of seniority protections.
In a separate move, Lingle announced she is ordering 900 nonunion workers to take three furlough days a month starting in September.
The governor said hundreds of state workers also may soon be laid off. Rendell said that number is expected to be between 300 and 800, a figure to be announced Thursday or Friday.
These layoffs were based old budget estimates. Now revenues are contracting even further across the nation. Many more layoffs are likely from Cities, States, and other agencies such as the Postal Service that is about to make very large cuts.
Private Company layoff notices increased in July and preliminary retail numbers are contracting further resulting in lower sales tax receipts.
It is getting mathematically impossible for government to come close to fulfilling its promises to us because there is simply not enough money coming in....and trying to cut a $6.5 Trillion dollar budget cannot be done without massive pain to the economy.
In this environment, it is clear few municipalities are decent credit risks based on shrinking revenues and a negative outlook. Moody's today lowered NJ's rating. Expect a torrent of downgrades in upcoming weeks.
Pretty soon tough decisions are going to have to be made whether a city protects its citizens or pays its bondholders. Hospitals will have to decide whether they treat patients or pay debt obligations. School districts are in the same boat.
Nobody is talking about the GOVERNMENT CRASH...except Alstry and a few others. If we don't retructure debt soon...there may be not many members left in our country club as few are getting jobs after they are fired.
MAYBE KILLING THE ECONOMY IS THE GOAL....IT WOULD WIPE OUT ALL OF GOVERNMENT'S OBLIGATIONS TO US THAT IT CAN'T PAY.