Sunday, June 13, 2010

The Municipal Meltdown Has Begun

I wrote an article back in January this titled Greek American States, where I described how America is one large bankrupt country composed of many Greece like states.  If Greece is a stick of dynamite, then America can be thought of as a nuclear bomb.  Ticking.

Obama's first stimulus bill of just under $800 billion in 2009 had about $150 billion in cash going to state governments to focus on "stimulus" projects.  Most astute financial observers said at the time that the money would stimulate nothing and would be used to fill budget deficits at the municipal level.

This is exactly what has occured.

Those same financial observers anticipated the money would run out by the fourth quarter of 2010 and the states would be back at the President's door with hat in hand.

It appears that the money has run out far sooner.

This past Saturday night, like a theif in the night, Obama was at work trying to ram through a $50 billion stimulus bill targeted toward "saving" the states.  From the Washington Post:

President Obama urged reluctant lawmakers Saturday to quickly approve nearly $50 billion in emergency aid to state and local governments, saying the money is needed to avoid "massive layoffs of teachers, police and firefighters" and to support the still-fragile economic recovery.

In a letter to congressional leaders, Obama defended last year's huge economic stimulus package, saying it helped break the economy's free fall, but argued that more spending is urgent and unavoidable. "We must take these emergency measures," he wrote in an appeal aimed primarily at members of his own party.

The bill appears to be moving through with ease as politicians look to win the hearts of public employees across the country at the year end elections.

The $50 billion will be a small down payment for what the states will ultimate need to survive.  As the economy rolls over, tax receipts continue to plunge at a time when many states are reluctant to cut spending.

The Greek American States will continue to suck the life out of the productive portion of the economy and Obama stands ready to provide whatever funding is necessary.

The biggest question many are asking is, "who is going to fund Obama?"

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