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State Bailout

January 23, 2011

I think its clear by now that state budgets are a disaster. States are raising taxes, like in Illinois where HR rep’s at various companies sent out emails to the effect of: “Starting next wee 3% of your paycheck will disappear”. Obviously the second ramification are cuts in services, be it snow plowing (Like in NYC) or schools (Detroit) or Police (as previously posted here).

I dont think there are enough cuts that can be done or taxes that can be raised to close many of these gaps. Now that states are being forced to implement their “fixes” expect people to start getting pissed, scared, and confrontational.

The other major issue is will the Fed bail out states. So far Ben said “No” but is there really any reason to doubt that the government will do it? Sure, the government is going to wait, and raise taxes and costs on the people until its totally clear that a bailout has to be made. So lets say the gov bails out California, what would a solid-er state like Texas have to say about that? We’re Out?

Its going to get ugly, because there is no way for the people to no be really, slap in the face affected here.

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