USA is heading for a crash like the 30s as all the states fight to pay bills they cannot afford & now Standard & Poors have downgraded USA credit. With party polics not helping the US needs to boot out more admin staff; stop printing money they cannot pay back; lift up taxes and can benfits from thosde lazy people who get fatter on govt welfare. You cannot create jobs as China and Asia get bigger and can compete more. The world is living on a time bomb that cannot be reversed.
USA LOOKING BAD AS STATES FIGHT TO TRY TO BLANCE BUDGETS
Whats happening in the USA as at July 2011???"Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So whats the USA doing about it? Less than nothing.
Approx 30 cash-strapped US states counted on federal stimulus money, but got rejected: A deficit-weary Congress said NO to billions of $$$$ in additional aid. California is tightening faster than Greece. State workers have seen a 14pc fall in earnings. Governor Arnold Schwarzenegger cut pay for 200,000 state workers to the minimum wage of $7.25 an hour to cover his $19bn (£15bn) deficit then got emboiled in his marital affairs & hes now back making movies to pay his alimony to his wife. Arizona has faced budget deficits for two years, and it's the same story for the state's new budget. State analysts are projecting deficits that range from $368 million to $1.3 billion, even before the spending starts.States will be forced to divert cash from other programs to shore up Medicaid, which has swelled to a record enrollment during the economic downturn. In Alabama, where the Legislature has already passed a $1.6 billion budget that included $197 million in additional Medicaid money, devastating consequences will occur if the money is not restored. This will mean potential cuts to medical care for children or a reduction of nursing home beds for the elderly as the Fed cuts interest rates and leaves them at 0%. USA cannot rein in its spending and must look at tax increases, benefit cuts etc in 2011 as it defaults, prints money it cannot afford and the 400 or so rich US individuals keep on squandering $$$$ for themselves.
Illinois? deficit of $12bn and is $5bn in arrears to schools, nursing homes, child care centres, and prisons. "It is getting worse every single day," We are not paying bills for absolutely essential services. That is obscene."
Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment rate is not exploding to a post-war high.Let us be honest. The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP.
Eight million jobs have been lost. The average time needed to find a job has risen to a record 35.2 weeks. Nothing like this has been seen before in the post-war era.
Republicans on Capitol Hill are filibustering a bill to extend the dole for up to 1.2m jobless facing an imminent cut-off. Dean Heller from Vermont called them "hobos". This really is starting to feel like 1932. Washington's fiscal stimulus is draining away. Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a printing press. By increasing the number of U.S. dollars in circulation, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services.
The housing market is already crumbling as government props are pulled away. The expiry of homebuyers' tax credit led to a 30pc fall in the number of buyers signing contracts in May. Federal tax rises are automatically baked into the pie. The Congressional Budget Office said fiscal policy will swing from a net +2pc of GDP to -2pc by late 2011. The states and counties may have to cut as much as $180bn. America's recovery will stall just as Asia hits the buffers. China's manufacturing index has been falling since January, with a downward lurch in June to 50.4, just above the break-even line of 50. Momentum seems to be flagging everywhere, whether in Australian building permits, Turkish exports, or Japanese industrial output, NZ property & tax rises.
What will be the effect on Thailand & Asian countries who are not tightening their belts.
It is obvious what that policy should be for Europe, America, and Japan. If budgets are to shrink in an orderly fashion over several years as they must, to avoid sovereign debt spirals then central banks will have to cushion the blow keeping monetary policy ultra-loose for as long it takes. The Fed is already eyeing the printing press again & arguing internally about QE2. Central banks have the tools to head off disaster. The question is whether they will do so fast enough, or even whether they wish to resist the chorus of 1930s liquidation taking charge of the debate.
Its wake up time America.
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