[Bearwithme]

Actually, the collective governments.. Fed, State, Local constitute 30% of our economy, sorry for the error.)

I have donated thousands of hours to elected boards over the last 10 years.. this is the situation.

Revenues are crashing, and any hopes for a "recovery" are based on just that "hope".

I recall the esteemed Doc saying that tax revenues for both the state and federal govt. are one of the best ways to truly measure the strength of the economy.. well if that is true, we are spiraling down.

According to the Center on Budget and Policy Priorities, http://www.cbpp.org/12-11-01sfp.htm (an older article but very relevant) the last high in state revenue shortfall for the US was 19.5 billion in 1992.
I am sure we are already in the 100 billion neighborhood right now, and probably pushing higher in the future.

I would love to hear from the brilliant stoolies on this one, but it looks like we are already at 5 times the crisis of 1992!

In local municipalities we will have it BOTH ways.. significantly higher taxes AND reduced services.. imagine that! This means fewer teachers and public safety personnel AND higher taxes due to massive dropoffs in state and federal assistance.

Stoolies this is 30% of our economy.. there are no stock index's to give us daily updates on our govt., and as a result, it is being given 10% of the attention it deserves.

My only advice is to wear depends just in case you poop yourself!!

[Jorma]

The numbers for the first two months of the fiscal year are in. The fed deficit was $119 bln. Revenues were down 12.1%. Recall that this is year over year so it is in comparison to post 9/11.

There are a slew of stories now that the defict celing is going to have to be raised by Feb. I have not read them yet. I seem to recall when this dog and pony show was on stage last year they boosted the ceiling $400bln. Ooops, all gone. If I were the GOP I would end this show and just change to law so there is no ceiling. I bet that is what they will do.

The latest Orwellian story from the GOP is that balanced budgets are Rubinomics. Yes, the party of fiscal rectitude now mocks fiscal dicipline, with a straight face.

Fed spending was up 5 something %. The defense portion was over 10% I think. The latest durable goods number was up .1%, with defense up over 10%. Yikes!

State bugets are projected to be $60bln in the red this year. A giant number but chump change in comparison to Uncle Sam, who is doing that every month.

Within this story is the story about the destruction of the Treasury bond market. I am not saying that they will have failed aucttions, only that it could happen. It is the most logical story one can imagine. Interest rates are ultimately set by the market with money changing hands. It's so easy to think it is just an expectation game but in the end it is just another market. All Al's talk about buying at the longer end is ignoring that the supply at the longer end is rising in a parabolic fashion.

Everyone now knows the economy is bad and getting worse. Only the most delusional are calling for a quick snapback. The emperor now has no clothes. All that remains is for someone to say so. Asia has reached the recognition phase I believe. They have all the worlds savings now and are in the drivers seat.

One can bemoan the rising tide of anti Americanism worldwide. Maybe we in fact are Gods chosen people and everyone else is damned and disposable. Still, free markets dont care. If the rest of the world decides to stop lending us money we will have to suffer the consequenses.

[SusanJBear]

Boy you aren't kidding. A few days ago I posted a note about how California seems deeper in the hole every time I blink. Michigan, Arizona, many many other states also hurting.

For a while California blamed energy trading price manipulation for the deficit but it's clear the deficit has grown far beyond whatever impact the surge in energy prices temporarily caused.

Now I wonder, what are the states going to do about their messes.

Somebody posted that even if California laid off all their state workers it wouldn't solve its fiscal crisis.

California in Deep Doo Doo

State governors have been making noise about an Internet sales tax for years. This will probably get fast tracked.

Internet Sales Tax

[Flaming Turds]

Bearwithme that would make a fantastic index of some sort for tracking purposes. We could then chart its progress. Id be happy to host it on my site since it is an extremely important piece of the puzzle. Is there a reliable source for the key data or would we have to piece it together from news reports? We need a good name for it too, how about the bureaucratic blackhole barometer.

[Bearwithme]

Jorma on your comment: "State bugets are projected to be $60bln in the red this year. A giant number but chump change in comparison to Uncle Sam, who is doing that every month."

As a general rule we can look back on "projections" and realize that on average the deficits are twice what the government predicts once we see the final numbers.. I think that is true on both the state and federal level.
Municipalities will be faced with extremely challenging situations which will potentially mean crashing values of homes .. they will have to significantly raise real estate taxes in order to take in the same amount of money.

Flamingturd:
I am sure there are agencies that measure the economic vibrancy of governments at the state and municipal level.. both states and towns have their solvency measured more than anything else perhaps by their bond ratings.

If we take Doc's advice and look at tax revenue as one of the top barometers for measuring the economic health of the good old USA we could be in deep doo doo here.


Jorma: The big difference here, is that states ARE NOT allowed to run deficits into the year 3000 (if necessary) like our federal govt. so they MUST figure out a way to "balance" the budget.
Of course the massive decrease in fed. assistance to the states only exacerbates the problem... you are right in saying that the problem at the states is chump change comared to the federal level, but the big difference is that the states must deal with it RIGHT NOW .. unlike congress they are not allowed to sweep the dirt under the rug.