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IPFS News Link • Economy - Economics USA

State and Local Budget Crisis Black Swan

One stunning statistic that hit this week regards California’s unemployment insurance claims being paid out. California is paying out some $100 million per day in unemployment benefits. Even with 99 weeks of unemployment insurance between federal and state, extensions, and other emergency support programs we have a sizeable number of people reaching the end of their rope. This shows how pervasive and deep this economic crisis has hit average Americans. I tend to look at unemployment insurance payouts as a good measure to see how quickly the economy actually recovers.

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Comment by Ross Wolf
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If Congress keeps printing and borrowing money to extend and pay unemployment benefits to persons not producing, the dollar could become worthless.

It is expected Obama might try to offset U.S. Government's huge deficit spending and borrowing by inducing inflation, effectively stealing Americans savings. Seniors and others on fixed incomes would be thrown under the bus. Inflation added to the current huge interest cost paid on U.S. accumulating debt would strangle Citizens and the U.S. economy with unfathomable higher taxes; unprecedented unemployment would follow, as Citizens’ discretionary income evaporated to purchase goods and services that create jobs.

While the press has not discussed it, Obama’s health care bill will force unaffordable health insurance costs on Americans that will increasingly disqualify home buyers getting home mortgages. Many homeowners will not be able to pay both health insurance premiums and their mortgage. Obama claims he wants to stop the huge number of home foreclosures, but costs of forced health insurance will destroy most Americans’ largest single asset, their home equity as values drop because individual health insurance costs will disqualify millions of new home buyers getting loans. That could prove disaster because qualified mortgage borrowers are needed to stabilize homes values that now secure $Trillions in bank held mortgages. Consequently county governments will increasingly see lower property values causing less collected property taxes and will have to increasingly layoff government employees to stay within declining budgets.