Zero Hedge reports this weekend:
Courtesy of Economic Policy Journal we now know that the majority of American states are currently insolvent, and that the US Treasury has been conducting a shadow bailout of at least 32 US states. Over 60% of Americans receiving state unemployment benefits are getting these directly from the US government, as 32 states have now borrowed $37.8 billion from Uncle Sam to fund unemployment insurance.
The states in most dire condition, are, not unexpectedly, the unholy trifecta of California ($6.9 billion borrowed), Michigan ($3.9 billion), and New York ($3.2 billion). With this form of shadow bailout occurring, one can only wonder how many other shadow programs are currently in operation to fund states under the table with federal money.
Now that all states are slowly moving toward insolvency, it is just another large expense to tack on the back of the Federal Budget deficit. What will be the straw that finally breaks the camel's back and brings America to bankruptcy? We wait with breathless anticipation at every debt auction, every week, for the time when no one shows up to bail us out.