Doomsday Fear Mongers Get It Right Again: 'The Credit Card is Maxed Out. It's Over. It's Over.'

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By now, you’ve
likely come across the recent 60 Minutes segment titled
State Budgets: Day of Reckoning. If you have yet to view
it, you can do so below.

Millions of
Americans who have been told that our economy is now in a period
of recovery may be surprised to learn that most states are so broke
that they are left with no other choice but to cut spending on literally
everything. Governor Christie of New Jersey is, according to 60
Minutes, the canary in the mine:

We spent
too much on everything. We spent money just crazily. The credit
card’s maxed out. It’s over. It’s over.

For readers
of this web site and other alternative news and contrarian outlets
this report was to be expected. We’ve been reporting on, and our
readers have been contributing their insights via comments for quite
some time – at least a couple of years now – about the
fundamental problems facing our country. For those who have questioned
their own sanity, or have had their sanity questioned by friends
and family when trying to spread the message of preparing for the
Greatest Depression, Governor Christie just proved that you’ve been
right all along:

Where am
I getting the money? I don’t have it. I literally don’t have it.

It’s not
like you can avoid it forever because it’s here now. We all know
it’s here. And the Federal government doesn’t have the money to
paper over it anymore either for the states. The day of reckoning
has arrived. And it’s going to arrive everywhere.

Unlike the
federal government, states don’t have the ability to issue debt
and print as much money as is needed via the digital presses at
the Federal Reserve. They are left with no choice but austerity
measures via spending cuts. And, as Charlie McGrath pointed out
recently, Austerity
will hit America like an Eight Pound Sledgehammer
.

Earlier this
year, we discussed the Collapse
of Dysfunctional States as Another Step To The Federal Bubble Detonation
,
and according to mainstream reports as of late, we’re well on our
way to complete destruction of the way of life as we have come to
know it in our spend and consume society.

If you thought
the housing bubble was bad, consider what financial analyst Meredith
Whitney has to say about state and local governments. Take note
that it was Whitney who blew the doors open on the problems in housing
and the excessive leverage in the banking system – which led
to the collapse that has left us where we are today. And while investment
houses and ratings agencies are still promoting municipal bonds
as a great way to preserve wealth, you might want to sleep on Whitney’s
latest comments before you go all in:

It has tentacles
as wide as anything I’ve seen. I think next to housing this is
the single most important issue in the United States and certainly
the largest threat to the US economy.

When asked
why no one is doing anything about it, Whitney provides an answer
that is as true today as it was before the housing bubble pop:

Because they
don’t pay attention until they have to.

It is only
at the precipice of disaster that people, especially politicians
and vested interests, are willing to change.

The worst thing
about all of this, is that, as Meredith Whitney suggested, the states
will likely find a solution to their problems. Our view is that
this solution will come down to massive, unprecedented bailouts
from the Federal government. Not billions – not trillions more
will be printed.

We maintain
our
previous forecast
, though we can’t put a specific timeline on
it, that the collapse of state governments will eventually lead
to the largest bubble detonation in history – financier George
Soros
refers to it as the Super Bubble and trend forecaster
Gerald
Celente
calls it the Government Bubble:

How long
will this be?

It’s hard
to say, but in terms of the states, we’re likely looking at sooner
rather than later. States are already broke, with California,
Illinois and New Jersey already showing serious fiscal strain.
In the near future we’ll begin seeing states requesting bailouts
directly from the federal government. Eventually, we suspect that
the majority of states will be standing in the welfare line looking
for handouts.

For now,
the US dollar remains fairly strong given our economic problems.
In fact, any time a financial emergency spreads across the globe,
investors seem to be running to US bonds for safety, so there
is still confidence in the US government’s ability to service
our existing debt.

However,
we believe that once the states begin to require federal involvement
to pay government workers, emergency responders and pensioners,
we will be much closer to a serious collapse of not only our economic
system, but the monetary system as well. It’s only a matter of
time before the rest of the world realizes that we’re completely
broke and takes action accordingly.

The states
blew a government spending bubble, and that bubble is about to
pop. The federal debt bubble will not be far behind.

Naturally,
there will be skeptics. In fact, most are skeptical of the possibility
of a complete collapse of the US Dollar and our way of life, but
it is in process as we speak.

Just like the
states, the federal government will soon be on the precipice.

Meredith Whitney
says that municipal bond defaults will start occurring in scores
over the next 12 months. We’ll see what the federal government does,
but our guess is more bailouts – hey it worked before!

But who will
bail out the $150 Trillion (official figure) government debt bubble?

Any takers?

Yeah,
we didn’t think so.

View 60 Minutes' State Budgets – Day of Reckoning:

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