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.