Walmart's New Health Food Push: Is It Too Hard to Swallow?
Bonds Are a 'Safe' Investment: A Big Lie Gets Even Bigger
Just last week I reported about the insolvency problems in New Jersey to Walletpop readers, see: The snowball starts in New Jersey. Now, that nasty old snowball has streaked across the country and landed in the California suburb of Vallejo, wreaking havoc on the local government there. CNBC reports that Vallejo Councilwoman Stephanie Gomes states "Our financial situation is getting worse every single day". Ask not for whom the bell tolls, it tolls for the heavy handed labor unions which have coerced sweet pay and benefit packages for the 30% of our workforce which is supported via tax dollars produced by the rest of us who actually make things.The insolvency of Vallejo should come as no big surprise, and in fact Vallejo is just the leader of what will become a very large pack. Before the end of this year I envision the entire state government of California will be in tears due to a lack of spending cash. You've been warned, it's to become a nationwide trend.
We just can't expect that private sector declines will leave the government sector untouched. The toughest part is that there's nothing government agencies can do about it, except to cut spending or raise taxes. Local governments are in the business of taking constructive dollars from the people who created them and then throwing them into the bottomless pit of entitlements, waste and graft. Now, the chickens have come home to roost, and they're big, mean, ugly chickens at that.
So, cry me a river Vallejo. You'll soon be joined by the rest of your once hearty state.
Boondoggled naysayers have been laughing in my face for years while claiming that local governments can't go bankrupt. You cannot however, collect taxes from people who aren't working, and foreclosed properties don't generate much in property taxes.
Guess who's laughing now.
Goldman Earnings Sink After Buffett Dividend
Johnson & Johnson's Income Falls 23%
Burberry Shares Leap on Sales Update
Reader Comments (Page 1 of 1)
2-28-2008 @ 6:13PM
william lindblad said...
There are only two kinds of government in the U.S. that are constitutional, Federal and State.
All others are charter. Charter government does not enjoy constitutional protection and in some severe cases of mis-management have been taken over by the State. This leads to an interesting premise. If any go insolvent does the State have an obligation to come to the rescue? Since We the People, are both the government and the populace this answer is self-evident. The only question left to be answered is where will the money come from?