Before becoming part of the EU these states had more options in time of emergency because they had their own currency and their own printing presses. Now, just as here in America, they are controlled by a central bank that issues a common currency. Their options are limited to selling bonds, raising taxes, cutting services and asking for handouts.
Since raising taxes or cutting services runs the very real risk of social disorder the real options are reduced to bonds and handouts. As their economies become weaker they are forced to offer higher yields on their bonds to attract buyers which only increases the risk of collapse because they won't be able to pay back the bonds without tax increases or cuts in services.
So, here in America, just as in Europe, the states are going to run to the central government (bankers) and demand to be bailed out. The central governments are in no better shape than the sovereign states but they do have printing presses. So they'll print more money, creating more debt. And in the end they'll give that money to the states, for a price. The price will be the sovereignty of the states.
Never let a good emergency go to waste.
Because the citizens have become so enslaved to the government they can't make the hard decisions necessary to retain their freedom. Slashing government programs will allow the states to avoid bondage to the central governments. All of the "safety nets" that have been put in place are going to cause the ultimate collapse of our society. Families and communities are where charity starts and where it should stay.
To defend our state sovereignty and our personal freedom we must do the hard things. We must become responsible for ourselves and our communities. We can no longer redistribute wealth from those that have to those that need unless it is done through free will acts of charity. Government long ago exceeded it's rightful authority in creating a socialist welfare state and it must be returned to it's true function. If we don't make these hard choices we will collapse.
We'll collapse into the welcoming arms of an all caring and all powerful central government. It will pull the strings and we'll do the dance. We will return to what has been the natural state of government for all of human history, up until the last 240 years of the American experiment. And if we fall back, we will never climb out of the hole again.
"With unemployment still at a severe high, a majority of states have drained their jobless benefit funds, forcing them to borrow billions from the federal government to help out-of-work Americans.
A total of 33 states and the Virgin Islands have depleted their funds and borrowed more than $38.7 billion to provide a safety net, according to a report released Thursday by the National Employment Law Project. Four others are at the brink of insolvency."
CNN
"Give people their money. It's the rallying cry of lawmakers around the country pushing back against states that are delaying tax refunds to shore up their budgets.
Holding on to the refunds allows states to use the money for other purposes, earn interest on it or simply wait until there's enough cash to cover the checks. But the cost can be an unhappy public.
"It's not the state's money, it's the people's money," said Missouri Rep. Jason Smith, R-Salem. "It's money they've overpaid to the state, and they deserve to get their money back in a prompt time."
MSNBC
"The aftermath of the financial crisis is poised to bring a simmering fiscal problem in industrial economies to the boiling point", said the Swiss-based bank for central bankers -- the oldest and most venerable of the world's financial watchdogs. Drastic austerity measures will be needed to head off a compound interest spiral, if it is not already too late for some.
..."The question is when markets will start putting pressure on governments, not if. When will investors start demanding a much higher compensation for holding increasingly large amounts of public debt? In some countries, unstable debt dynamics -- in which higher debt levels lead to higher interest rates, which then lead to even higher debt levels -- are already clearly on the horizon."
Telegraph
"California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink -- budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.
...Some economists fear the states have a potentially bigger problem than their recession-induced budget woes. If investors become reluctant to buy the states' debt, the result could be a credit squeeze, not entirely different from the financial strains in Europe, where markets were reluctant to refinance billions in Greek debt.
"If we ran into a situation where one state got into trouble, they'd be bailed out six ways from Tuesday," said Kenneth S. Rogoff, an economics professor at Harvard and a former research director of the International Monetary Fund. "But if we have a situation where there's slow growth, and a bunch of cities and states are on the edge, like in Europe, we will have trouble."
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