Let the Bailouts Begin!

The House of Representatives passed a bill to bailout Puerto Rico a couple of days ago.  Will they do the same for states that are just as irresponsible?  According to the Mercatus Center at George Mason University, six states are just as bad as the little Caribbean island with a sweet tooth for spending cash.

With short-term budget troubles and colossal long-term debt, Kentucky, Illinois, New Jersey, Massachusetts, and Connecticut, in particular, are much closer to the basket case economic condition of the Caribbean territory on the Mercatus fiscal health index than they are to states such as Texas, the Dakotas, Florida, or Nebraska, where budgets are balanced and public pension systems may yet be salvaged.

For example, Connecticut, which ranks 50^th out of the states for fiscal health, has run up $67 billion in debt, compared to Puerto Rico’s $118 billion, while both have populations of around 3.6 million. But personal income in Puerto Rico is less than one-third of Connecticut’s. If that seems reassuring, consider that the Nutmeg State’s debt figure grows to $124 billion if you recalculate pension debt, assuming it will all be paid — an assumption one no longer makes for Puerto Rico, which gave up on funding its pension system a decade ago and is now just draining the balance.

Get ready folks.  States that are fiscally responsible will be the one’s holding the bag for a bunch of reprobates.  If bailouts occur, consequences should be meted out.  I believe states should lose representation in Congress and electoral votes for president disqualified until their debt is paid back in full.

Source:

http://watchdog.org/267047/puerto-pension-debt/

House Votes to Bailout Spendthrift Puerto Rico

Washington D.C. elites in the so-called House of Representatives have decided to bailout spendthrift Puerto Rico.  This tiny island has a $2 billion out of a $70 billion debt payment due on July 1^st.  Of course, lawmakers refuse to call it a bailout.  They say the federal government is “restructuring” its debt.  Speaker Ryan declared no “extra” money will go to Puerto Rico.  Yeah, right.

These people act like this hasn’t happened before.  During the 1830’s and 40’s, states ran up outrageous debt by issuing bonds for infrastructure projects.  An economic crisis ensued rendering irresponsible states insolvent and unable to pay back investors.  Foreign governments lobbied Washington D.C.  for a bailout.  They wanted the general government to guarantee states’ debts which, of course, it refused.  Our federalist system didn’t allow such an infringement upon self-government.

Eventually, states paid off their debt without federal government help and were the wiser for it.  Here is an excerpt from America’s First Great Depression by Alasdair Roberts.

“Self-government is no longer a theory, it has been demonstrated,” said John Pettit, an Indiana delegate who had served in both the state and federal legislatures.  And time had shown its frailties: “We have not that perfect confidence in ourselves…and we take our cool and calm moments to bind and restrict ourselves - to protect ourselves against the sudden and dangerous impulses of passion and prejudice…It is to prevent the evils resulting from excitement and passion, that we take our calmer and quieter hours to bind ourselves and our fellow man.”

Many states had, indeed, bound themselves in the years following the crises.  This was manifest in constitutional reforms and new tax policies, but a more important alteration, which both caused these changes and made them durable, could be seen in political culture.  Humiliated by the experience of default or near-default, pressed by angry lenders, and oppressed by new taxes, states had abandoned the internal improvements movement.  They had replaced their sunny views about popular sovereignty with a darker conception of the rationality of political processes.  The economic crisis seemed to have taught them a lesson: that liberty without discipline was a formula for ruin.

Indeed.  Puerto Ricans should have to suffer through a crisis they created; in the end, they will be the wiser for it.  Something tells me the United States will follow shortly.

 

 Source:

http://thehill.com/policy/finance/282895-house-votes-to-rescue-puerto-rico

https://www.amazon.com/Americas-First-Great-Depression-Political/dp/0801478863?ie=UTF8&*Version*=1&*entries*=0

World's Debt Bubble Ready to Burst

Those who pay attention are certainly aware of the dire warnings of an impending financial crisis.  The world is facing a monstrous debt bubble created by central banks, easy money and emerging markets.   

Governments and central banks risk tipping the world into a fresh financial crisis, the International Monetary Fund has warned, as it called time on a corporate debt binge in the developing world.

Emerging market companies have “over-borrowed” by $3 trillion in the last decade, reflecting a quadrupling of private sector debt between 2004 and 2014, found the IMF’s Global Financial Stability Report.

This dangerous over-leveraging now threatens to unleash a wave of defaults that will imperil an already weak global economy, said stark findings from the IMF’s twice yearly report.

Couple that with China and other countries dumping U.S. treasuries on the market doesn’t portend particularly well for us.  I remember the years before the housing bubble popped.  Pollyannaish financial analysts insisted that there was no end to the good times.  Housing prices were going to skyrocket from here to eternity and beyond.  Boy, were they wrong.

Source:

http://theeconomiccollapseblog.com/archives/why-are-the-imf-the-un-the-bis-and-citibank-all-warning-that-an-economic-crisis-could-be-imminent

Grecian Fire Sale Could Happen to U.S.

The Grecian good life does have consequences.  Sooner became later and the can ran out of road.  What happens now is the auctioning off of assets and possible artifacts of a peoples’ heritage.  Billionaires and celebrities are champing at the bit to own a slice of a Mediterranean archipelago.  Greece has a lot of islands and they’re up for grabs.

American business magnate, one of the world’s most successful investors, Warren Buffett has reportedly bought the Greek island of Agios Thomas for 15 mln euro, according to the website of the Greek newspaper Proto Thema and became yet another celebrity with his own piece of Greece.

The newspaper says the deal was made in partnership with Italian real estate magnate, millionaire Alessandro Proto.

The two men closed the deal for a reported 15 million euros last Thursday. The businessmen released a joint statement saying that they intended to invest in the island of Agios Thomas, also referred to as St. Thomas, located on the northwestern side of the island of Egina in the Saronic Gulf.

They plan to “build property in an effort to help the wider region develop.”

The island, 300 acres in size, was earlier available for sale over the internet at 15 mln euro.

If confirmed, this is yet another purchase of a Greek island by a foreign celebrity. Earlier this week Hollywood star Johnny Depp purchased an uninhabited Greek island of Stroggilo for 4.2 mln euro.

The United States isn’t immune to a possible fire sale of its assets.  The federal government has a $211 trillion debt.  China could demand forfeiture of federally owned lands.  Take a look at the following map.  We could lose almost the whole west.

China has a monopoly on the rare earths market.  This would be an additional boon for them.  Hell, it might help American citizens get a job, since the EPA and the Bureau of Land Management would no longer wield its regulatory abuses on us.  I can actually envision job seekers welcoming our Chinese overlords. 

  

Source:

http://www.thedailysheeple.com/the-firesale-begins-tsipras-agrees-to-sell-greek-assets_072015

http://www.infowars.com/warren-buffett-reportedly-buys-greek-island/

http://www.npr.org/2011/08/06/139027615/a-national-debt-of-14-trillion-try-211-trillion

http://www.politifact.com/texas/statements/2015/jul/17/glenn-hegar/glenn-hegar-says-texas-owns-its-public-lands-uncle/

China Owns How Much in U.S. Bonds?

China owns how much of our U.S. bonds?


WASHINGTON (AFP) – China's holdings of US bonds reached $1.16 trillion at the end of December, almost $270 billion more than previously estimated, new data showed Monday.


Beijing, which has converted much of a huge trade surplus with the United States over the past two decades into buying up US treasuries and other securities, held 26.1 percent of the total of $4.44 trillion held by foreigners, the Treasury said.


The figures came as the US government recalculated its data on foreign holdings of US securities from June 2010.


Chinese-held Treasuries have fallen since hitting a high of $1.18 trillion in October, under the revised figures. Japan remained by far the second largest holder of US government debt, with $882 billion in December, around $1.3 billion less than original estimates.


Britain was third at $272.1 billion

We are so screwed. I wonder how long it will be until we have a Tiananmen Square like moment in Lafayette Park.

Source: http://news.yahoo.com/s/afp/20110228/pl_afp/useconomyfinancebondschina

Nancy Pelosi: Private Health Care System Unsustainable

Nancy Pelosi just admitted that it didn't matter if everyone had health insurance and they were satisfied with the quality of their care.  According to her, the cost of coverage was too high and unsustainable; unlike the 14 trillion dollar debt we just incurred.    And never mind that it is government regulations and mandates that is one of the biggest factors in the cost of health care.

Now that the federal government has basically taken over the system, the building of hospitals has come to a screeching halt:

Under the headline, "Construction Stops at Physician Hospitals," Politico reports today that "Physician Hospitals of America says that construction had to stop at 45 hospitals nationwide or they would not be able to bill Medicare for treatments." Stopping construction at doctor-owned hospitals might not seem like the best way to boost the economy or to promote greater access and choice in health care, but that exactly what Obamacare is doing.



Kenneth Artz of the Heartland Institute explains, "Section 6001 of the health care law effectively bans new physician-owned hospitals (POHs) from starting up, and it keeps existing ones from expanding." Politico adds, "Friday [New Year's Eve] marked the last day physician-owned hospitals could get Medicare certification covering their new or expanded hospitals, one of the latest provisions of the reform law to go into effect."
 
I wonder how sustainable Obamacare is going to be when you can't build a hospital.  I guess that is one way to cut down the cost.  You can't treat people if you have no where to go.  Thank you Nancy Pelosi.
 
Source: http://www.weeklystandard.com/blogs/obamacare-ends-construction-doctor-owned-hospitals_525950.html

Charlotte Observer Pimps Welfare for Chronically Unemployed

The editors at the Charlotte Observer have bought into this nonsense that unemployment benefits helps the economy. They quote the voodoo economics of the Congressional Budget Office, a supposed non-partisan entity created by Congress in 1974:

The Congressional Budget Office estimates that every $1 spent on jobless benefits generates up to $1.90 in economic growth. Further, the nonpartisan CBO analyzed 11 options for generating short-term growth - including reducing income taxes - and found that extending jobless benefits was the most effective. (Cutting income taxes was least effective.)


So why hasn't the lame-duck Congress gone ahead and extended the benefits, as it has routinely done in the past? Some 2 million Americans face the end of unemployment checks. More people now have been jobless for longer than 26 weeks (when regular unemployment runs out) than any time since at least 1950. That isn't counting the millions whose checks have already ended, which happens in North Carolina after 99 weeks

I would like to know how the $1.00 in jobless benefits generates $1.90 in economic growth. That makes absolutely no sense to me. You have to take away money from those of us who actually work in order to pay these people.  The Disturber continues:

The answer is that Republican leaders need a bargaining chip with which to pressure Democrats to extend the Bush-era tax cuts permanently, for all income levels, even the wealthiest. Never mind that doing so is expected to add $3.7 trillion to the deficit over 10 years.


Yes, the same deficit hawks who don't want the government to spend $56 billion through 2011 for the unemployed are happy to pile trillions onto the long-term deficit. Apparently not all deficit-creating measures are created equal.

The Charlotte Observer believes that taxing the rich is the answer to all our problems. They fail to see the outrageous spending by the Federal Government coupled with burdensome regulations as the real culprit to our economic woes. No they would rather attack the people who actually create jobs. I’ve never been employed by a poor person; nor have I heard of industries forged by government bureaucrats.

The Republicans are willing to extend unemployment benefits as long as there are cuts somewhere else in the budget. The editors at this august paper fail to mention that; instead they parade out a “victim” to demonstrate the callousness of the GOP. I personally do not trust the main stream media. ABC was just busted for lying about just such a victim, when in fact she is an activist:

Good Morning America's Claire Shipman on Thursday tried to disguise a Democratic activist as just a jobless American who would be hurt by Republican failure to extend unemployment benefits. Shipman sympathetically recounted that Edrie Irvine, who she didn't explain spoke at a Nancy Pelosi press conference on Wednesday, "never thought her very livelihood would depend on a political debate in Congress."


A graphic reading "unemployed" appeared onscreen as Irvine complained, "They are talking about tax cuts for the rich and are holding people like me hostage." Who is Ms. Irvine? According to her bio on the leftist Democracy For America web page, she's a "tree-hugging, bleeding-heart, ACLU-card-t progressive liberal and damn proud of it!"





The Observer ends it pity piece with this rhetorical flourish:

Extend the unemployment checks. All this dithering over whether they should be linked to a permanent tax cut for millionaires is unseemly.


The nation's jobless rate remains painfully high at 9.6 percent. Joblessness in the Charlotte region is even higher: 10.2 percent, highest among the state's large metro areas and higher than the 9.1 percent N.C. rate. For anyone to hint that most jobless workers don't want gainful employment is unconscionable.


Extending the jobless benefits will boost the economy and help 2 million suffering households. Congressional leaders have no credible case for not doing so.

I’ve got news for you Observer; there are people who would rather game the system than have a regular job. What is unseemly is that we have people like you that want to create a perpetual underclass dependent upon government largess. Let's call the extension of unemployment benefits for what it really is:  welfare.

Source: http://newsbusters.org/blogs/scott-whitlock/2010/12/02/abc-disguises-democratic-activist-victim-mean-spirited-gop#ixzz173m44F8P

http://www.charlotteobserver.com/2010/12/02/1879756/help-the-economy-by-extending.html#ixzz173fU76DL

Rep. Larry Kissell 2nd Biggest Porker in N.C.

Congressman Larry Kissell in his first term as representative of the 8th District of North Carolina managed to raid the U.S. treasury at a tune of about $42.5 million dollars. He ranked 2nd among N.C. house members in sponsoring earmarks for the fiscal year of 2009. That is quite impressive for a freshman legislator. He has proven himself a veteran at pick pocketing the American taxpayer. Here is an excerpt from the Charlotte Disturber:


Kannapolis' earmarks are sponsored in part by U.S. Rep. Larry Kissell, a Biscoe Democrat who just won re-election to his second term. Kissell was No. 2 among North Carolina's House members in sponsoring earmarks last year, with $42.5 million, according to the Center for Responsive Politics, which tracks money in politics.


Kissell's spokesman said he would continue to support earmarks as he's able.

Larry Kissell loves patronage. He sees himself as a modern day Godfather passing out favors to those who are willing to kiss his ring. I guess you can say this is organized crime; a crime against future generations of Americans who have to pay for the indulgences of politicians, and others who connive for federal largess.






Source: http://www.charlotteobserver.com/2010/11/30/1875351/earmarks-ban-could-hurt-local.html#ixzz16ua6Zsj0

Charlotte Observer's Hypocrisy on the National Debt

Leave it to the Charlotte Observer’s editorial board to lecture the rest of us on fiscal responsibility. These Haight-Ashbury rejects advocated every big government program that’s put forth by every whack-job socialist on the international, national, state and local scene. Now that the country’s back is against the wall, these spendthrifts are trying to make themselves out to be budget hawks. Here is a commentary on the Bowles, Simpson Debt Commission:


While the specifics deserve a thorough examination, their message and approach were spot-on. Their message: America's profligacy is a real threat to its status as an economic superpower and attacking our enormous debt will be painful for almost everyone. Their approach: About $1 trillion in new revenue, about $2.2 trillion in spending cuts and almost $700 billion in interest savings by 2020.


The reactions were predictable. Nancy Pelosi and the AFL-CIO instantly labeled it unacceptable because of its spending cuts and reining in of Social Security. Republican reaction was mixed but many leading conservatives dismissed the proposal because of the higher taxes.


Well there you have it, and that's why America is careening toward bankruptcy. The United States borrows 37 cents of every dollar it spends. It's putting over a trillion dollars on the credit card every year. At some point, the bond markets will revolt and the financial crisis of the past two years will look like child's play.


Balancing the budget and paying down the debt means dramatic spending cuts and tax hikes. That's not an opinion; that's math. But politicians will not make the difficult choices because voters by and large are not demanding that they do so.


Are you kidding me? What in the hell do you think has been happening in the past two years? Maybe you’ve heard about a grassroots movement called the tea party? We started a march outside your offices last year. Remember that? I believe all of those years of smoking pot have affected their memory. Move away from the bong.

Here are some of  Charlotte Observer's suggestions for balancing the budget and reducing the debt:

A gas tax hike of 15 cents a gallon. Painful? Yes. But it hasn't increased in 17 years. It would generate billions, and push the nation to reduce its demand for oil, much of which we buy from hostile regimes.


$100 billion in military spending cuts. As the biggest discretionary part of the budget, lower defense spending has to be part of the solution.


Reforming Social Security with higher retirement ages, lower cost-of-living adjustments and other changes. Social Security, created in 1935, was never meant to provide income for the final 30 years of a person's life. And raising the income that is subject to the Social Security payroll tax is a no-brainer.


I can agree on the spending cuts in the military, maybe not the 100 billion. But there is waste in every bureaucracy. I can also agree that Social Security was never meant to be the sole income for retirees. Raising the payroll tax and age requirement is not the way to go. The Observer believes that a majority of the people will live to be a hundred. I don’t. Making the eligibility requirement so high that death would be an impediment to collecting, shows that advocates have more of an interest in survival of the program rather than the participates. I believe means testing and privatization is more beneficial.

The gas tax hike of 15 cents a gallon is a job killer. That cost affects everything from groceries to big ticket items. The Observer believes it would generate billions in dollars of revenue, when in fact it would do just the opposite. Do they actually think businesses are going to eat that cost? Of course not, they are going to pass that on to the consumer. People are tightening their belts now, how is another tax going to help?

If we’re really serious about cutting the national debt and balancing the federal budget, then we are going to have to make drastic cuts in the bureaucracies. We need a decentralization of power from Washington D.C. to the states. That means whole agencies must go. We can start with getting rid of the Department of Education; Agriculture; Energy; and the EPA. All subsidies must come to a halt: agriculture; foreign; arts; corporate; you name it…it must stop.


The first place we can make cuts is the Obama Czar machine. I wonder how many millions are wasted on those Marxist bastards. There are plenty of cuts to go around. We just need the will to do it.


Read more: http://www.charlotteobserver.com/2010/11/14/1836909/bowles-simpson-have-gall-thank.html#ixzz15HLzsZOXt

Federal Reserve to Tax the World

The Federal Reserve is about to impose a tax upon the whole world through Bernanke’s quantitative easing scheme. Germany and other countries have been outspoken on the U.S. debt and possible currency crisis:


BERLIN - German Finance Minister Wolfgang Schaeuble lashed out Friday at the United States' move of printing huge money to stimulate its slow recovery, saying that these policies would not help but create more troubles.


"With all due respect, my feeling is that the United States is at a loss," Schaeuble told reporters in Berlin, two days after the US Federal Reserve (the Fed) announced it would purchase 600 billion dollars of long-term government bonds by mid-2011, in a new round of "quantitative easing".


"Saying now that we once again make an additional $600 billion available will not solve any problem." Schaeuble said. The difficulties faced by Americans had nothing to do with " liquidity drain."



“Helicopter Bob” Bernanke should take the advice of Germany’s Finance Minister. After all, I’m sure Mr.Schaeble remembers what his parents and grandparents went through with the Weimar Republic.

Is it Time To Learn Chinese?

It looks like we had better learn to speak Chinese.  And I thought Spanish was going to be our national language.  What in the hell was I thinking? 

H/T:  Gates of Vienna 

Lanny Davis's "Debt Free" House of Cards

Lanny Davis wrote an op-ed piece in which he outlined a plan to eliminate America’s debt in 10 years. His proposal is to cut spending and raise taxes. The means of taxation is a 1% “transaction fee” on every financial transaction. The only exception is the sale and transfer of stocks; isn’t that convenient since Wall Street is the one of the biggest contributors to the Democratic Party.

Rep. Chaka Fatta (D-Pa) introduced bill H.R. 4646 entitled “Debt Free American Act” in February. The bill is different than a VAT tax in that it allows for a 1% tax credit for couples who make $250,000 or less ($125,000 for singles). The Treasury Department will have discretionary powers for further exemptions that may accommodate the poor.

As for Mr. Davis’s optimism on cutting spending, the House of Representatives failed to pass a budget this year; instead they passed the buck onto the National Commission on Fiscal Responsibility and Reform. How can you expect to reduce spending when congress doesn’t have the courage to face their constitutional responsibilities? Do you seriously believe that they will adhere to the proposals of a national commission that would sacrifice their sacred cows? I don’t think so.

The proceeds of the “transaction tax” would be put in a lock box, which a group of “trustees” (more government bureaucrats) held the key. Congress and the Treasury Department supposedly wouldn’t have access to the largess. To ensure that politicians wouldn’t pass a law that would raid the fund (much like what happened to social security), Mr. Davis proposes that future lawmakers are to make a pledge not to touch the mountain of cash until the national debt is paid off.

Mr. Davis do you seriously believe a politician will keep his promise? I must say for a Washington insider you’re either naïve or playing us for a bunch of chumps. Considering your association with the Clintons, I’m betting on the latter.

If we really want to reduce the debt, we have to rediscover our founding fathers and repudiate the progressive movement. We can start by taking power away from special interest in Washington D.C. and bring it back to the states where it belongs. We can start by repealing the 17th Amendment and then abolishing the progressive tax system.

Source: http://thehill.com/opinion/columnists/lanny-davis/107351-a-debt-free-america-yes-its-possible

North Carolina’s Fiscal Chickens are Coming Home to Roost

North Carolina's Fiscal Tsunami

As reported by Civitas

Brian Balfour May 10, 2010

North Carolina's dire fiscal condition will once again take center stage this spring as state lawmakers return to Raleigh to craft a budget for the coming 2010-11 fiscal year. North Carolina's financial woes, however, run much deeper than the daunting shortfall in next year's budget.

While lawmakers will blame the economy, make no mistake: the financial disaster that is North Carolina state government is completely of its own making. Long-term fiscal irresponsibility highlighted by out-of-control spending growth, stunning increases in debt spending and unsustainable financial commitments is to blame.

But just how bleak is the state's financial picture? Outlined below is a summary of North Carolina state government's economic crisis, a "fiscal tsunami" that threatens to overwhelm the state's already-overextended budget in the near and long term.

Dangerous Deficits: $4.3 Billion Structural Shortfall over Next 26 Months (as of May 1, 2010)
State budget writers are facing a real budgetary deficit of roughly $4 billion over the next 26 months. This number represents actual revenue shortfalls (compared to projections), expenses exceeding projections, and revenue streams that will disappear.

• The current state budget is facing a deficit likely to reach almost $650 million.
  
  • General Fund revenue for the current fiscal year (2009-10) is projected to be roughly $391 million below budgeted revenue by the end of the year.¹
    
  • Medicaid expenditures are projected to exceed budgeted appropriations by $250 million or more this year.²
    
• Fiscal year 2010-11 will have $788 million less in revenue than was included in last year's biennium budget.
  
  • Revenue projections made last summer have since been revised down by $703 million.³
    
  • There will also be an estimated $85 million reduction in state revenue due to the one-year estate tax lapse.
    
• State budget finances will drop off a cliff in fiscal year 2011-12: $2.9 billion in lost revenues will need to be addressed.
  
  • $1.62 billion of 2010-11 Federal Stimulus Funds will dry up at the end of the fiscal year.
    
    • This includes $1.04 billion listed as "cuts" and already embedded in the 2010-11 budget courtesy of last year's biennial budget bill, along with another $578 million in additional anticipated federal funds for 2010-11; mostly extra funding for Medicaid.⁴
      
  • The temporary sales, corporate income and personal income tax increases approved in last year's budget will end; leaving a revenue hole of $1.3 billion compared to 2010-11.⁵
    
  • In a nationwide survey, economists project the economy to continue to be very sluggish well into 2011⁶, suggesting slow revenue growth (if any) for fiscal year 2011-2012. More than likely, any revenue growth will fall well short of the lost stimulus and temporary tax revenues.
    
  • The state's rainy day fund is already down to only $150 million, and will not be sufficient to address the state's looming financial problems next year.
    

State Debt: $9.4 Billion and Growing Fast

• North Carolina's true debt burden stands at $9.4 billion. That's an average debt burden of more than $4,000 for every family of four.⁷
  
  • Additionally, the state has authorized –but not yet issued – another $2.2 billion in debt (does not include interest payments).
    
• Per Capita State Debt is up 140% over fiscal year 2000⁸ level.
  
• Debt service in the annual General Fund has more than tripled since fiscal year 2000.⁹
  

North Carolina Owes $3.5 Billion to Federal Government - plus another $153 million in interest payments

• North Carolina has borrowed more than $2 billion¹⁰ from the Federal Government in order to cover statewide unemployment benefit payments. State borrowing is expected to grow to $3.5 billion by the end of this year.¹¹ Funds to repay the state's obligation will likely have to come from increased unemployment payroll taxes.
  
• While there is no re-payment plan yet in place for the principle, the state is expected to begin making interest payments in 2011 on the loan that could total $153 million.¹²
  

Escheats Fund Dwindling: $535 Million Liability by 2012

• The state's Escheats Fund consists of the unclaimed property of citizens, typically abandoned bank accounts, insurance policy proceeds or contents of safe deposit boxes.
  
• The state has traditionally used the interest earned on these funds to finance grants, loans and scholarships to needy college students.
  
• The legislative mandate of using only the interest earned was first violated in the 2008-09 budget when Gov. Easley approved $60 million from the Escheat Fund be directed to financing his new EARN college scholarship program.
  
• This past year, the state continued dipping into the actual fund, dropping the value of the fund from $535 million to $332 million, and is on pace to exhaust the rest of the funds by 2012.¹³
  
  • This would leave the state a liability of $535 million, as the money in that fund is the property of citizens who may claim it at any time.
    

$28 Billion Unfunded Liability for State Retiree Health Benefits

• North Carolina state employees – mostly teachers – are entitled to fully-paid health insurance coverage under the State Health Plan after they retire.
  
• The state pays for these benefits on a pay-as-you-go basis. There is virtually no money set aside to help pay for future obligations, making these future obligations "unfunded."
  
• The cost of providing these benefits for state retirees is projected to explode over the next several years.
  
• Unfunded retiree benefits calculated as of Dec. 31, 2008 were $28.3 billion – up from $23.9 billion in Dec. 31, 2005.¹⁴
  
  • To fully pre-fund liabilities, the state should be contributing $2.7 billion annually (calculated for FY 2009) – with most of that amount set aside into a trust fund to save for future liabilities.
    
  • If state lawmakers continue to ignore this liability, state retiree benefits may be in jeopardy as the costs to insure the growing number of eligible retirees will skyrocket and consume a larger share of the state budget.
    

Pension Fund to Require $650 Million in Additional Funds Over the Next Two Years

• North Carolina's Teachers and State Employees Retirement System (TSERS) is no longer fully funded.
  
• The current state budget is scheduled to appropriate $503 million to TSERS in fiscal year 2010-11
  
• To fully-fund the pension system, the state must appropriate $684 million in 2010-11, and $972 million the following year.
  
  • Doing so would require increasing appropriations by $650 million over the next two years. (The Governor did recommend a $20 million increase to the pension fund in her budget recommendations for 2010-11.)
    
• Current projections also show that budgetary outlays will need to exceed $1.1 billion by fiscal year 2013 to fully fund the pension system – a level more than three times the current fiscal year (2010) appropriation of $364 million.¹⁵
  

State Health Plan: Costs to Rise by $2 Billion in Next Four Years
North Carolina's State Health Plan – which covers state employees and retirees - faces many financial challenges in the next several years.

• Rising premiums are estimated to cost taxpayers an additional $1.8 to $1.9 billion from FY 2011 to FY 2015¹⁶ above current costs.
  
  • For fiscal year 2009, total expenses for the Plan came to $2.6 billion.
    

Federal Healthcare "Reform" to Cost Millions
Federal healthcare reform legislation recently signed by President Obama will burden North Carolina's state budget with hundreds of millions in additional expenses.

• The legislation expanded the eligibility threshold for Medicaid enrollment, a program partially funded by state governments.
  
  • Early estimates from the North Carolina Medical Society suggest that, beginning in 2017, North Carolina's cost to finance the newly-eligible Medicaid population will come to "at least" $245 million, and grow to $490 million by 2020.¹⁷
    
• The federal legislation will also impact the State Health Plan.
  
  • Many details of the federal healthcare reform bill are still uncertain, but State Health Plan Executive Director Jack Walker presented some of the federal bill's projected impact on North Carolina's State Health Plan.
    
    • Programming and administrative costs are projected to rise, by a currently "uncertain" amount.
      
    • The mandate requiring coverage be offered to dependents up to age 26 would add $11 million to $27 million per year in potential claims to the plan.
      
    • A tax on plan enrollment is slated to begin being assessed on July 1, 2012. The tax is scheduled to be $1 per member for fiscal year 2012-13 and rise to $2 per member annually for the following six years until the tax sunsets in 2019. The State Health Plan currently has 661,000 members, meaning this tax will cost the state several million dollars over a seven year span.
      

U.S. Fiscal Policies are Grecian Like

Breaking News from Moneynews.com

Bank of England Governor: U.S. Faces Same Danger as Greece

The United States is facing the same fiscal problems as Greece, says Mervyn King, Governor of the Bank of England.

“Bear in mind King is usually one of the most guarded policymakers in both British and central banking circles. Not yesterday,” the U.K. Telegraph reported.

“It isn’t often one has the opportunity to get such a blunt and straightforward insight into the thoughts of one of the world’s leading economic players. Most of this stuff usually stays behind closed doors, so it’s worth taking note of.”

King’s “frank” comments were definitely not “pleasing” to President Barack Obama and to European leaders, the Telegraph reports.

“He also believes that European Union must become a federalized fiscal union — in other words with central power to tax and spend — if it is to survive. Just two of the nuggets from one of the most extraordinary press conferences,” the Telegraph reported.

King is not the only leading opinion-maker worried about the parlous fiscal state of the United States.

Nouriel Roubini, appearing on Fox News, notes that the fiscal crisis started in 2007 with too much debt in the private sector.

Now, the United States and Europe have socialized the debt. Trillion dollar deficits are not sustainable, however.

“What has happened in Greece could happen in the U.S. We could have serious problems," says Roubini, the former Clinton White House economist, and professor at New York University.

"We have the debt of the federal government. Many state and local governments are bankrupt. There are unfunded liabilities for social security. There are unfunded liabilities for state pensions

Senator Predicts U.S. Could Have Grecian Like Debt Crisis

Breaking News from Moneynews.com

Sen. Gregg: U.S. May Follow Greece Into a Debt Crisis

By Frank McGuire

Sen. Judd Gregg, R-N.H., says the United States is in danger of being in the same dire situation as Greece in seven years if the nation doesn't slash its debt and control spending.

“We are on a path which will go to where Greece is, there's no question about that, if we don't adjust our present financial house,” Gregg says.

“If we continue to spend much more than we take in," he says. "We'll double our debt in five years and triple it in 10 years and essentially be where Greece is in about seven years,” he said Monday night on the Fox Business Network.

"So we know we are headed in that direction unless we do something about reducing the level of debt and reducing the level of our spending.”

The national debt of Greece is 113 percent of the country’s gross domestic product. The current U.S. debt amounts to roughly 50 percent of the gross domestic product.

Asked when he expects that the U.S. debt situation will reach the crisis level that Greece is currently facing, Gregg said, “we're looking at maybe the outside 10 years, probably closer to seven years before we hit the wall, so to say.”

The Republican senator said that the signs of a crisis are already here – pointing to recent downgraded ratings of U.S. debt.

Asked how Americans will know that the crisis has hit, Gregg responded: “Well, when people stop buying our bonds.”

“Basically, when they tell us that they don't have any confidence in our debt being repaid and they force us to pay a much higher interest rate, something that is unsustainable,” he said.

“They essentially say to those of us in the United States, just trying to sell debt to finance our daily operations of government, we do not believe you can repay the debt or can repay it in a way to make us buy your debt at a reasonable price.”

World Wary Of Coming U.S. Financial Meltdown

Senator Judd Gregg warns of a coming financial meltdown of the U.S. economy. He expects this crisis to hit in 5 to 7 years. The signs are all there. Since Obama took office, the dollar index has plunged 17%.

Several countries including China and Russia are calling for an alternative currency. Dominique Strauss-Kahn, the head of the International Monetary Fund, believes in time that an international currency will replace the U.S. dollar.

The world is apprehensive about the fiscal policies of the democrats. The stimulus package, along with bailouts of businesses, and attempted take over of the health care industry has raised eyebrows from those who buy America's debt.

Fannie Mae and Freddie Mac have received $111 billion in bailouts. That number is expected to increase to $188 billion by the fall of 2011. These two G.S.E.'s own or guarantee 31 million home loans worth $5.5 trillion. Freddie Mac revealed that 4% of their loans are 3 months past due, and could go into foreclosure. Fannie Mae is requesting an additional $15 billion, after reporting losses of $74 billion last year.

The U.S. dollar has been a refuge of certainty for the whole world. It was regarded as a safe investment. It looks like those days are coming to pass. Now will the world believe that the United States is too big to fail? Don't hold your breath.

source:
http://moneynews.com/StreetTalk/davidson-dollar-markets-aftershock/2010/02/25/id/350964?s=al&promo_code=9809-1

http://moneynews.com/StreetTalk/US-US-IMF-Reserve/2010/02/26/id/351082

http://moneynews.com/Headline/US-Earns-Fannie-Mae/2010/02/26/id/351102

Greece Loses E.U. Voting Rights

This is what needs to happen if California gets a bailout.


As reported by the U.K. Telegraph: http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7252288/Greece-loses-EU-voting-power-in-blow-to-sovereignty.html

The council of EU finance ministers said Athens must comply with austerity demands by March 16 or lose control over its own tax and spend policies altogether. It if fails to do so, the EU will itself impose cuts under the draconian Article 126.9 of the Lisbon Treaty in what would amount to economic suzerainty.

While the symbolic move to suspend Greece of its voting rights at one meeting makes no practical difference, it marks a constitutional watershed and represents a crushing loss of sovereignty.

"We certainly won't let them off the hook," said Austria's finance minister, Josef Proll, echoing views shared by colleagues in Northern Europe. Some German officials have called for Greece to be denied a vote in all EU matter until it emerges from "receivership".

The EU has still refused to reveal details of how it might help Greece raise €30bn (£26bn) from global debt markets by the end of June. Investors are unsure whether this is part of Kabuki play of "constructive ambiguity" to pressure Greece and keep markets guessing, or reflects the deep reluctance by Germany to be drawn deeper in an EU fiscal union. Greek bonds sold off as ten-year yields jumped to 6.42pc, but the euro rallied to $1.3765 against the dollar as broader issues resurfaced in currency markets.

Jean-Claude Juncker, head of the Eurogroup, hinted that ministers have already agreed on a support mechanism, should it be necessary. It will most likely involve by bilateral aid by eurozone states. He said proposals for an IMF bailout - backed by Britain - were "absurd" and would shatter the credibility of monetary union.

Many Germans disagree, including Otmar Issing, once the backbone of the European Central Bank. He said an EU rescue for Greece would be fatal, arguing that unflinching rigour is the only way to hold monetary union together without political union.

Tuesday's EU verdict amounted to a thumbs down on Greece's earlier austerity efforts, viewed as too reliant on one-off measures and too light on spending cuts. Greece must reduce its deficit from 12.7pc of GDP to 3pc in three years. Greek customs officials expressed their anger by kicking off a three-day strike, the first of many stoppages set to culminate in a general strike next week.

However, premier George Papandreou has won support from key political parties and a majority of the people. Greece may yet surprise critics by mustering its Spartan Spirit.

Lessons To Learn From Greece

Greece’s financial woes should be a lesson to everyone. Instead of heeding the warnings of a meltdown in the European Union, the politicians in the United States are on an unprecedented spending spree. Government at the federal, state, and local levels expanded an astonishing 66% in just one year.

Greece has to make austere cuts in their budgets and the public sector employees are raising holy hell. Farmers who want more in subsidies have also joined the strikers.

The communist party once banned is now on the rise. They are capitalizing on the plight of government workers:

"It's a war against workers and we will answer with war, with constant struggles until this policy is overturned," Christos Katsiotis, a representative of a communist-party affiliated union, told the Associated Press.

Services are suspended such as non-essential health care as reported by the Guardian:

Non-urgent hospital appointments have been cancelled, and schools across Greece will remain closed. Air traffic control staff are also taking part in the dispute, meaning flights in and out of the country will be heavily disrupted. Greece's largest airline, Aegean, has suspended all its services, while British Airways has cancelled three scheduled flights from Heathrow to Athens.

Yeah we really want government health care when this can happen.

Without a responsible fiscal policy, Greece could get kicked out of the European Union. A Poll shows that 67% of Germans are against bailing them out.

This should be a lesson to all of the Keynesians on Capitol Hill. If you think China is going to put up with all your profligate spending and keep on buying our debt; you had better pay attention to what is happening over in Greece.

source:
http://www.reuters.com/article/idUSTRE61D0ZC20100214

http://www.guardian.co.uk/business/2010/feb/10/greek-workers-strike-eu-bailout

Senator Kay Hagan's Disturbing Economic Philosophy

Senator Kay Hagan gave an interview with the Kernersville News in which she articulated her economic philosophy. Folks it is very disturbing.


Senator Hagan bemoaned the uncertainty of the democrat’s health care legislation. She believes that the public is misinformed on the specifics of the bill:

"One misconception about healthcare is that people are concerned about the cost and the debt. I want to assure people that the cost that was identified, the increases were paid for," Hagan said.

"This was a piece of legislation where anything we put in was paid for by insurance companies, pharmaceuticals or levies. What we put in place would affect the debt in a long-term, positive way. We would see a $132 billion reduction in deficit over the first 10 years and a $1.3 trillion reduction in the 10 years after that."


Notice that she plans on paying for this monstrosity by demonizing and extorting money from targeted industries. I believe Senator Hagan is a student of Saul Alinsky.

She omitted how they really plan on paying for socialized health care, as stated here in The Hill:

“CBO Director Doug Elmendorf presented Reid with this preliminary cost estimate in a letter Saturday.Those costs are more than offset during the 10-year budget period by $483 billion worth of spending reductions in Medicare and $614 billion generated from an excise tax on high-cost health insurance plans, taxes on healthcare companies, penalty fees paid by employers who fail to offer insurance coverage and individuals who fail to purchase it and other tax effects of the bill.

The bill would require nearly all legal U.S. residents to obtain health coverage, extend Medicaid benefits to everyone earning up to 133 percent of the federal poverty level and provide subsidies on a sliding scale to people earning between 133 percent and 400 percent of the federal poverty level.”


So Senator Kay Hagan not only extorts money from companies; but those who fail to purchase or offer health insurance are to be penalized to the full extent of the law. That means insurance is mandatory for everyone. I would like to know where in the Constitution; Senator Kay Hagan gets the authority to fine, and throw people in jail for not buying a product.

The Congressional Budget Office also says this about the assertions of Senator Hagan:

“As the budget office has throughout the year, it emphasizes that this will only occur if Congress allows those cuts and tax hikes to take full effect and expresses skepticism that they will. “These longer-term calculations assume that the provisions are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation,” the letter says.”


We all know the outcome of that.

Senator Hagan gave special exemptions for small businesses. They are to receive a sliding scale depending on the number of employees. They also are to receive a handsome tax credit for joining a STATE EXCHANGE:

“Tax-exempt small businesses meeting these requirements are eligible for tax credits of up to 25 percent of their contribution. In 2014 and beyond, eligible employers who purchase coverage through the State Exchange can receive a tax credit for two years of up to 50 percent of their contribution. Tax-exempt small businesses meeting these requirements are eligible for tax credits of up to 35 percent of their contribution.”


She just can’t wait to get people into the “system”. If you have doubts that Senator Kay Hagan isn't a statist, then you are not paying attention. This woman wants to dictate how businesses operate and how people shall live.

Again, in her interview with the Kernersville News, she states that she is fiscally conservative, because she was chairman of the state budget and had to balance the budget every year; that meant accounting for every dollar. Well of course you did! But there is one big difference from North Carolina’s state capitol and Washington D.C.: YOU DIDN’T HAVE A PRINTING PRESS IN THE BASEMENT.

Senator Hagan remarks on the debt ceiling that was raised:

"You have to put the bill calling for an increase in our debt ceiling into perspective," Hagan said. "It's like putting something on a credit card and having to pay that off.


Increasing the debt ceiling is not authorizing new spending; it is ensuring we have the capacity to pay for things we have already spent money on.”

Wow! She’s right...it is not authorizing new spending. It is paying for all the crap you guys doled out the past year. And you’re going to have to raise it again in the fall. Unbelievable!

I say it’s time to take the credit card away from this spoiled brat. I wonder if she would have spent her $17 million in assets like she’s doing with the taxpayer’s money. That answer should be self-evident; otherwise she would be a pauper.

Senator Kay Hagan is a perfect example why we need to repeal the 17th amendment. Or at least have North Carolina pass a law to recall her.

Source:

http://hagan.senate.gov/?p=news&id=451

http://thehill.com/homenews/senate/73079-cbo-health-bill-spends-871b-reduces-deficit-by-132b