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Austerity In America: 22 Signs That It Is Already Here And That It Is Going To Be Very Painful
Austerity In America: 22 Signs That It Is Already Here And That It Is Going To Be Very Painful
Courtesy of Michael Snyder at Economic Collapse
Over the past couple of years, most Americans have shown little concern as austerity measures were imposed on financially troubled nations across Europe. Even as austerity riots erupted in nations such as Greece and Spain, most Americans were still convinced that nothing like that could ever happen here. Well, guess what? Austerity has arrived in America. At this point, it is not a formal, mandated austerity like we have seen in Europe, but the results are just the same. Taxes are going up, services are being slashed dramatically, thousands of state and city employees are being laid off, and politicians seem to be endlessly talking about ways to make even deeper budget cuts. Unfortunately, even with the incredibly severe budget cuts that we have seen already, many state and local governments across the United States are still facing a sea of red ink as far as the eye can see.
Most Americans tend to think of "government debt" as only a problem of the federal government. But that is simply not accurate. The truth is that there are thousands of "government debt problems" from coast to coast. Today, state and local government debt has reached at an all-time high of 22 percent of U.S. GDP. It is a crisis of catastrophic proportions that is not going away any time soon.
A recent article in the New York Times did a good job of summarizing the financial pain that many state governments are feeling right now. Unfortunately, as bad as the budget shortfalls are for this year, they are projected to be even worse in 2012....
While state revenues — shrunken as a result of the recession — are finally starting to improve somewhat, federal stimulus money that had propped up state budgets is vanishing and costs are rising, all of which has left state leaders bracing for what is next. For now, states have budget gaps of $26 billion, by some estimates, and foresee shortfalls of at least $82 billion as they look to next year’s budgets.
So what is the solution? Well, for state and local politicians from coast to coast, the answer to these financial problems is to impose austerity measures. Of course they never, ever use the term "austerity measures", but that is exactly what they are.
The following are 22 signs that austerity has already arrived in America and that it is going to be very, very painful....
#1 The financial manager of the Detroit Public Schools, Robert Bobb, has submitted a proposal to close half of all the schools in the city. His plan envisions class sizes of up to 62 students in the remaining schools.
#2 Detroit Mayor Dave Bing wants to cut off 20 percent of the entire city from police and trash services in order to save money.
#3 Things are so tight in California that Governor Jerry Brown is requiring approximately 48,000 state workers to turn in their government-paid cell phones by June 1st.
#4 New York Governor Andrew Cuomo is proposing to completely eliminate 20 percent of state agencies.
#5 New York City Mayor Michael Bloomberg has closed 20 fire departments at night and is proposing layoffs in every single city agency.
#6 In the state of Illinois, lawmakers recently pushed through a 66 percent increase in the personal income tax rate.
#7 The town of Prichard, Alabama came up with a unique way to battle their budget woes recently. They simply stopped sending out pension checksto retired workers. Of course this is a violation of state law, but town officials insist that they just do not have the money.
#8 New Jersey Governor Chris Christie recently purposely skipped a scheduled 3.1 billion dollar payment to that state's pension system.
#9 The state of New Jersey is in such bad shape that they still are facing a $10 billion budget deficit for this year even after cutting a billion dollars from the education budget and laying off thousands of teachers.
#10 Due to a very serious budget shortfall, the city of Newark, New Jersey recently made very significant cuts to the police force. Subsequently, there has been a very substantial spike in the crime rate.
#11 The city of Camden, New Jersey is "the second most dangerous city in America", but because of a huge budget shortfall they recently felt forced to lay off half of the city police force.
#12 Philadelphia, Baltimore and Sacramento have all instituted "rolling brownouts" during which various city fire stations are shut down on a rotating basis.
#13 In Georgia, the county of Clayton recently eliminated its entire public bus system in order to save 8 million dollars.
#14 Oakland, California Police Chief Anthony Batts has announced that due to severe budget cuts there are a number of crimes that his department will simply not be able to respond to any longer. The crimes that the Oakland police will no longer be responding to include grand theft, burglary, car wrecks, identity theft and vandalism.
#15 In Connecticut, the governor is asking state legislators to approve the biggest tax increase that the state has seen in two decades.
#16 All across the United States, conditions at many state parks, recreation areas and historic sites are deplorable at best. Some states have backlogs of repair projects that are now over a billion dollars long. The following is a quote from a recent MSNBC article about these project backlogs....
More than a dozen states estimate that their backlogs are at least $100 million. Massachusetts and New York's are at least $1 billion. Hawaii officials called park conditions "deplorable" in a December report asking for $50 million per year for five years to tackle a $240 million backlog that covers parks, trails and harbors.
#17 The state of Arizona recently announced that it has decided to stop paying for many types of organ transplants for people enrolled in its Medicaid program.
#18 Not only that, but Arizona is do desperate for money that they have even sold off the state capitol building, the state supreme court building and the legislative chambers.
#19 All over the nation, asphalt roads are actually being ground up and are being replaced with gravel because it is cheaper to maintain. The state of South Dakota has transformed over 100 miles of asphalt road into gravel over the past year, and 38 out of the 83 counties in the state of Michigan have transformed at least some of their asphalt roads into gravel roads.
#20 The state of Illinois is such a financial disaster zone that it is hard to even describe. According to 60 Minutes, the state of Illinois is six months behind on their bill payments. 60 Minutes correspondent Steve Croft asked Illinois state Comptroller Dan Hynes how many people and organizations are waiting to be paid by the state, and this is how Hynes responded....
"It's fair to say that there are tens of thousands if not hundreds of thousands of people waiting to be paid by the state."
#21 The city of Chicago is in such dire straits financially that officials there are actually toying with the idea of setting up a city-owned casino as a way to raise cash.
#22 Michigan Governor Rick Snyder is desperately looking for ways to cut the budget and he says that "hundreds of jurisdictions" in his state could go bankrupt over the next few years.
But everything that you have just read is only the beginning. Budget shortfalls for our state and local governments are projected to be much worse in the years ahead.
So what is the answer? Well, our state and local governments are going to have to spend less money. That means that we are likely to see even more savage budget cutting.
In addition, our state and local politicians are going to feel intense pressure to find ways to "raise revenue". In fact, we are already starting to see this happen.
According to the National Association of State Budget Officers, over the past couple of years a total of 36 out of the 50 U.S. states have raised taxes or fees of some sort.
So hold on to your wallets, because the politicians are going to be coming after them.
We are entering a time of extreme financial stress in America. The federal government is broke. Most of our state and local governments are broke. Record numbers of Americans are going bankrupt. Record numbers of Americans are being kicked out of their homes. Record numbers of Americans are now living in poverty.
The debt-fueled prosperity of the last several decades came at a cost. We literally mortgaged the future. Now nothing will ever be the same again.
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It's funny how all these places are democrat strongholds predominately (New York, New Jersey, Chicago, Detroit, Oakland)....but then again it was FDR's Treasury Secretary Morganthau that said something like "
We will tax and tax, spend and spend, and elect and elect"
This is been the Democrat and sometime republican strategy and now the bill is coming due....or to quote B.O.s pastor...."Americas chickens have come home to roost!!"
I say let it happen and let those responsible suffer....not make everyone else be on the hook!
Nuke it from orbit, just to be sure.
Maybe a rise in private sector police/enforcement for all property crimes? The adverts of the american car insurers seem to be positioning those companies that way. The allstate "mayhem" (zerohedge/fight club reference) and the state farm "poof, we show up" spots.
The car insurers already have extensive databases they could share with the scaled back municipal law enforcement and courts. Could provide jobs for the returning vets who typically go into fire/police work...
EDIT: But the bad part, as already mentioned, is having to pay twice. Taxes stay the same or go up to pay for the stripped down services and the pensions of legacy muni employees. Then you get "optional/$$$" coverages offered by private sector insurers (pinkertons) to show up at the property crime/accident to make sure it is reported fairly between the parties involved in the event. Seems like the worst for both libertarian (you pay taxes anyway) and socialistic (lack of copious government due process & adjudication) interests.
EDIT2: And now that I am thinking about it. who better to run the stoplight/speed/cell phone/texting cameras than the private insurers who have a vested interest in control vehicular accident costs. And the money to implement. The strapped governments do not have the money for the equipment, much less the staff to monitor. Let the insurers do it and send the outcomes to the local prosecutors. Kinda the reverse of how crimes are adjudicated now, where the criminal case goes first and the evidence is handed over to the civil case.
Don't make a mistake, these places will default. Because there is just so much money you can legally get out of a populace to pay for your bond bills. What is happening is the start and when they find out that isn't enough, they will default and/or destroy the municipality pensions for their state workers. These states and local govt. owe just to much money to be able to get it back by raising taxes or fees or whatever, and still keep people in their state. What I see happening is another bailout but for the states and this will amplify the inflation we have now. Also we have trillions of dollars worth of infrastucture that needs to be replaced and/or repaired and it has been pushed down the road because politicians didn't want to spend 100 million or whatever for this or that when they could have used that money for a parties pet project.
The US will become a third world and I think we will be lucky to stay a united country if or when the checks and help stop coming.
This is what happens when you ship your middle class jobs to China.
The housing boom created temporary relief but they also tried to curb the job losses by bloating governments and services. Too bad for services, but they require less and less of our expertise.
Bottom line, we don't recovr until we get manufacturing back.
Greed, greed and more greed. The root cause for most of our problems...
Austerity for the public and riches for Wall Street and government:
1) Giant megaphone on rooftop of High quality Japanese car -- reach and teach all, the facts of life.
2) What good is the Detroit river if you can't cram more trash into it.
3) Start charging for each illicit text message. Watch 48,000 salaries turn negative.
4) 2 very large bulldozers and a heavy chain will do the job.
5) Direct Federal stimulus cash toward arson education. Pay arsonists extra to only work daytime in the target areas.
6) Default.
7) Prichard needs to adopt a pensioner quick-draw contest with the opt-out being total liquidation including functioning organs.
8) Default.
9) Default.
10) Take bullets away from the criminals.
11) Give the remaining Police more bullets.
12) Encourage fires to only be set in neighborhoods withs lots of fat pensions(ers).
13) Convert the bus fleet to run on human waste and install toilets seats for all riders.
14) Make crime illegal.
15) Sell Connecticut to China.
16) Close the parks.
17) Eliminate Medicaid or establish a symbiotic relationship with Prichard Alabama.
18) Convert all those worthless old buildings into whorehouses or shooting ranges. My mistake, already done.
19) Redirect stimulus money and actually build a road somewhere in this crap-ass land properly.
20) Default.
21) Steal the printing press from the basement of the CIA and set it up in front of 75 East Wacker. Free pizza for every Chicagoan.
22) Let 'em all go belly-up.
One could always go after the TBTF's...
No one seems to talk very much about how Blackhawk Ben unilaterally imposed a 100% tax rate on unearned income. By that I mean anyone who heretofore earned interest income, now gets ZIPPO from The Bernanke's ZIRP. Talk about uneven austerity -- Ungentle Ben has ripped off seniors and others on fixed income by deciding to transfer their incomes to housing deadbeats, bankstas, the bankrupt FR and other associated parasitic elements from the people who did the right thing.
The US can't afford asphalt roads. Meanwhile Dubai, a country ruled by some of the laziest most useless human beings ever to walk the earth, just built the tallest (empty) building of all time.
Grotesque.
Austerity is here? Ilene, what are you smoking?
hey now, hey now, don't dream it's over...
Coming to Cambden bitchez!!!!
http://www.youtube.com/watch?v=uiHTd0X0cR0
And at the end, Jeff Goldblum, holy shit!!!!
Meanwhile, the Berkeley city council is working hard to keep health care costs for city workers down:
http://blogs.kqed.org/newsfix/2011/01/18/berkeley-city-council-sex-chang...
"A plan before the City Council to set aside $20,000 a year for city employees who want to have a sex change operation was tabled until February so wording of the proposed policy can be refined."
That's austerity, looney-liberal style.
Everyone needs to be punished and take their medicine. There is no free lunch except for rentiers and welfare/ disability whores.
So what is the solution? Well, for state and local politicians from coast to coast, the answer to these financial problems is to impose austerity measures. Of course they never, ever use the term "austerity measures", but that is exactly what they are.
According to the world's banking elite, doubling the amount of "credit" over the next decade is the answer. My question is, when our debts are doubled, will austerity make any fucking difference at that point? Or will our government and the Federal Reserve become responsible once they no longer have to provide benefits to ordinary people?
Does this mean private security companies now are a booming business? Some cities in South SF bay already have "contracted" policemen where a city will pay police from county on per visit basis, what a way to save money.
All across the United States, conditions at many state parks, recreation areas and historic sites are deplorable at best.
some state parks are already depending on private donations and support groups to stay open
Illinois and Chicago - the obama model for america?
#6 In the state of Illinois, lawmakers recently pushed through a 66 percent increase in the personal income tax rate.
thats mental illness - not austerity
I guarantee if you look closely at the situations in local municipalities and state organizations, the upper eschelons (mayor, gov, legislators, school administrators etc) are not being affected. The cuts will be against labor. As usual.
It's always about punishing labor. The serfs must be made to suffer.
Labour is a drain on resources.
Once this is admitted, well, in a resources declining environment, the conclusion is self evident.
You know, the story of hard work and stuff is only the US way a society has to make sure that when the inputs are abundant, they get all consumed. In order to deprive another society from doing the same. More inputs consumed, less for the others. US business style.
>Labour is a drain on resources.
More nonsense *sigh*
The truth is that labor will always be in demand as long as their is a subjective benefit to further transforming material factors of production.
Labour a drain on resources is non sense?
Please provide one single iterance of labour that does not consume resources.
Labour transforms less useful things into more useful things. Look around you. All the wealth that surrounds you was created courtesy of labour in one form or another.
Or do you think there were more houses, roads, cars, railways, & iPods 3 million years ago?
Once the inner-city denizens of Detroit figure out what austerity means, there's going to be trouble.
"#10 Due to a very serious budget shortfall, the city of Newark, New Jersey recently made very significant cuts to the police force. Subsequently, there has been a very substantial spike in the crime rate."
I followed the links and there was no evidence whatsoever that crime has "spiked".
There was NO measurement of the crime level prior to or after the cop layoffs.
It did not say whether the crime statistics counted the robberies commited against people who travel too great a distance in too short a time. If you count this, I suspect that the crime level dropped.
Take a walk tonight through downtown...report your findings tomorrow. Sure as shit, if you shrink the police force in Newark, crime is going to go up. Vigilantes unite!
maybe they are counting government acts as crime
Governments' are inherently inefficient, wasteful, and coercive institutions...the only solution is to privatize as much as possible, and stop idiotic spending - like wasting billions on a completely failed war against marijuana...and of course stop overpaying government employees (and scrap the davis bacon act)....
But governments had never been a public thing exclusively. Republics were scarce in the past. Most governments were private.
So what?
Where is the charm here? Are governments inherently inefficient? Then why privatize?
Ah, propaganda... Growing older by the day.
>Are governments inherently inefficient?
Yes. Private firms are efficient in that they must strive to eliminate consumers' felt uneasiness in hope of gaining of market gains. If they fail to please consumers, they face market losses. Too many losses, and the firm must be liquidated and the people responsible will be put in a place where their bad decisions can no longer hurt any one.
But governments are different. Instead of pleasing customers who are free to leave, governments obtain revenues primarily through coercion, including threats of force. They need not realize losses when they can just steal and waste more of other people's money.
There is an additional difference. Private firms must compete. If a private firm is extremely profitable, it will attract the attention of speculators and entrepeneurs who will begin to enter the market and compete for a share of that profit. This keeps entrenched entrepeneurs on their toes - they cannot simply rest on their laurels or they will sooner or later become obsolete.
But, in general, competing with government is not possible. Customers will not be willing to pay you if they are already forced against their will to use a monopoly service provided by government. And even if the revenues were available, try to create a business such as a private police force that competes with government and see how long it is before you are kidnapped and put into cage for your "crimes".
Again, this drivel on competition. Hey, buddy, this was debunked one hundred years ago so why not update? The goal of competition is to eliminate concurrence. So competition endures as long there is concurrence and resources to support concurrence.
No, entry to a competition is not determined by the main competitor profiting but the availability of resources to support the newcomer effort. Once a competitor has saturated the resources pool, it means no newcomer can participate.
And this does not answer to the point I made. Government were private in older days. That were not always republics' days so what?
Once a competitor has saturated the resources pool, it means no newcomer can participate.
Give us some examples of this, please. Because from where I'm standing, such monopolies can only exist if they have government (ie, violence) backing them.
>like wasting billions on a completely failed war against marijuana
Hey, the money isn't completely wasted. It helps feed countless judges, lawyers, court clerks, balliffs, jailors, cops, and toxicologists. It helps put food in their children's mouths so that another generation of parasites can be incubated.
When we hear about 50 year old garbage truck drivers retiring with $100k+ annual pensions and lifetime health care for their family, well, screw 'em. While I bust my ass making payroll and having to cut my salary, they should too.
I am incredulous at the lack of response, by anyone who understands our economy, to the plight of the small business person. While huge corporations and banks grow in strength while cutting jobs and producing record revenues because of the cheap capital they have access too, the small business person who takes risks and creates jobs has been all but cut off from capital sources. Give me money at 30x leverage at .25% and I guarantee I will not lose it and will help stimulate the economy. What a bunch of dumb fuckers at the Fed and the Treasury...stick with the broken system that put us where we are. What's the definition of insanity? Doing something over expecting a different outcome? Someone please tell me I'm not nuts or stupid, please!
You're not nuts or stupid. *click* You're not nuts or stupid. *click* There's no place like home. *click* There's no place like home...
Rahm will take care of #21 with his contacts at the Fed and Treasury.
>The financial manager of the Detroit Public Schools... submitted a proposal to close half of all the schools in the
>Detroit Mayor ... wants to cut off 20 percent of the entire city from police and trash services
>etc...
WOOHOO!
This stuff is great news and reason to celebrate.
Mankind's immune system - the market - is slowly working to expel the unwanted, destructive government parasites. Government is to mankind as AIDS is to the human body. Most of these leeches don't even deserve to be paid with the money they've stolen.
In a truly free country, only private organizations that efficaciously eliminate consumers' felt uneasiness will survive.
Wow... I couldn't disagree more. You've been drinking too much chicago school kool-aid my friend.
In a truly free country, the government keeps a handle on economic parasites in order to allow political and social freedom to flourish.
This entire ponzi scheme mess was caused by a failure of regulation, a gutting of oversight, and the capture of government agencies by the private sectors they were supposed to be watching.
Cheer all you want, but you're falling afoul of the typical libertarian fantasy. You want government gone, except the parts that keep you personally rich, safe, and happy. Do you think for a second that if the Oakland police stop responding to crimes there will be any consumers left to have their "uneasiness [sic] efficaciously eliminated"? Or would you replace the police with a private militia made of Xe mercenaries? That's guaranteed to end well.
Austerity doesn't restore productivity. The greater the cuts in a recession, the longer it takes to recover. I'm not saying this to support Bernanke's rip-off "stimulus", because that was just a cash grab for the banks. But this will result in a lot of unhappy, broke, starving people. And people like that will listen to anyone who promises them strength and dignity (Mussolini, Hitler, Milosevic, etc.). If that happens god help us all.
Wax on Wax on Polyana, only Santa Claus wears rose colored glasses. "In a truly free country the government keeps a handle on economic parasites in order to allow political and social freedom to flourish."
How nonsensical is that. Consider just one institution: The FED. Big Regulators, right? Gaining even more power after Dodd-Frank. Consider the depth of their impotence over the last 20 years: Wrong about the dot.com bubble, wrong about the housing bubble and soon to be wrong about the bailout bubble. Mirror, mirror on the wall how do they maintain credibility at all? Why do "Blue Chip" economists get it WRONG 80% of the time? Because the have their noses buried in the ass of the FED: http://www.huffingtonpost.com/2009/09/07/priceless-how-the-federal_n_278... How long must you wait to understand that governmet is at best self-serving and at worst EVIL? Altruistic, benevolent, efficient government. What's not to love about that? Only problem: It lives where tinkerbell lives...never, never land.
I"m for hire.
But my contract requires you to have an attorney on retainer, and I don't take FRNs.
Does that third eye give you the fabled insight?
Wax on Wax on Polyana, only Santa Claus wears rose colored glasses. "In a truly free country the government keeps a handle on economic parasites in order to allow political and social freedom to flourish."
How nonsensical is that. Consider just one institution: The FED. Big Regulators, right? Gaining even more power after Dodd-Frank. Consider the depth of their impotence over the last 20 years: Wrong about the dot.com bubble, wrong about the housing bubble and soon to be wrong about the bailout bubble. Mirror, mirror on the wall how do they maintain credibility at all? Why do "Blue Chip" economists get it WRONG 80% of the time? Because the have their noses buried in the ass of the FED: http://www.huffingtonpost.com/2009/09/07/priceless-how-the-federal_n_278... How long must you wait to understand that governmet is at best self-serving and at worst EVIL? Altruistic, benevolent, efficient government. What's not to love about that? Only problem: It lives where tinkerbell lives...never, never land.
Well said, freedmon
Here's the $64 million question...do we go through years of this bullshit or do we just hit the reset button and let it all tumble down right now and start over tomorrow. Seems to me that the reset would bring a great deal of short term pain, but then we could get things going again. As long as we keep dreaming that city bus drivers should be paid 6 figure salaries and prison guards should make over $300,000/yr with overtime and that corrupt city official back east go on disablity before retiring so they can get total benes well ver $200,000/yr (so they can all join the same country club and golf together); likewise, some stupid fucking trader or financial engineer should not make $10,000,000+ per year if they fucked up (I have no problem with someone making billions if they create something of real and tangible value). I say reset button, level the playing field and let the hardest working and the smartest prove themselves.
Anarchy, baby.
>In a truly free country, the government keeps a handle...
Tell me, how does the government obtain revenues in a "truly free country"?
>You want government gone, except the parts that keep you personally rich, safe, and happy
Where did I say that? I only want the right to not be coerced into paying for things I don't want. How would you feel if you walked into the supermarket and they forced you to buy yucky-tasting brussel sprouts, and shoved them down your throat?
>Or would you replace the police with a private militia made of Xe mercenaries?
I wouldn't replace the police functions of bothering people for growing the wrong kinds of plants.
As far as security goes, private security guards or night watchmen is one option. Another option is self-defense. Or if someone mugs me on the street I can just give them 30% of my paycheck and I won't be any worse off than I am now.