Wednesday, January 17, 2018

Into The Poor House

What do the following municipalities have in common?
* Stockton, Ca.
* San Bernardino, Ca.
* Mammoth Lakes, Ca.
* Jefferson County, Alabama
* Central Falls, R. I.
* Harrisburg, Pa.
They all filed for bankruptcy and Stockton had the infamous title of the most indebted until...
The poor "Motor City" can't catch a break and their basketball team can't make a shot. At one time Detroit was the fastest growing city, but it got dethroned. At one time it made the most cars in the world, but it got dethroned. At one time the "Pistons" won the NBA title back-to-back and now, they suck. At one time it filed the highest bankruptcy case, but it got dethroned. So, who is the new infamous king or does it matter?
Puerto Rico
and it does matter and in more ways than meets the eye. The media doesn't even cover it. The government just wants to sweep it under the rug and that is exactly what the leaders of the island want. Al Davis use to say this concept: "I don't care how you do it, 'just win, baby!'" However, a hurricane can overcome any psych job. Even with aid, the debt is off the charts the island's corruption will reveal it is worse because of hidden charges.
The island leaders just want to rollover the debt and continue the game like nothing happened (no harm, no foul). Dear reader, there is serious harm, and technical fouls could be called on the island's government, our government and the cause for these fouls, the Federal Reserve.
Ever since the Fed gave us "funny money" the game stakes keep getting higher and higher. At one time we talked in terms of millions, then billions and now, trillions. This is like the Amtrak train running at full speed into a tight curve. Boom! Don't believe that? Just ask Zimbabwe who actually printed in their currency, a trillion note. Want a second chance? Today, in Venezuela, the president wants a new higher trading note, but the printer won't accept the Venezuelan currency for payment. Our nation will have a debt bill this week. It always passes with a lot of grandstanding. If our leaders really had conviction to keep our nation safe and secure, they should follow through and default. At least this would force a reality check, come up with a plan and activate the plan.
 (See above the spiraling cost with no end in sight.)
Getting back to a truth that cannot be denied.
There is another problem in deficit laden districts, tax flight! That's right. People can move to which only makes the problem almost impossible to correct. Detroit has lost over half of their population. It's spreading! Consider Connecticut. It's top 100 tax paying residents left! It has lost 50% of its taxpayers in 2016. As a result, tax revenue is down $200 million to which gets added to the already projected deficits. It is like a limbo bar, "How low can you go?" Hartford will answer that question as it seeks help in bankruptcy law.
As for the kids in San Juan, they studied LBJ. They have billions off the book, and the gravity of that corruption adds to the Fed's corruption of our gold standard and our currency. The constant printing of money and deficits is setting up dominoes. Just a slight breeze at the end of every month could cause a cascade of collapsing municipalities. As the court files stand, Puerto Rico owes $74b in debt and another $45b off the books in things like underfunded pension liabilities. Sorry, I can't include the hurricane disaster because with no power no one can add up the costs.
Dear reader, it is the last section of that sentence which could become the recurring theme in America during the Trump tenure. We recently heard about the police and fire departments in Dallas. We also know the situation in Chicago to which I predict will soon wear the bankruptcy crown. We will have so many more as the Boomer generation continues to gray. There is no solution that will permanently work except stops on printing money which the gold standard did, accountability in spending which neither party observes and watchdogs for fraud which is running wild. Just like when the stock market goes into a decline, all the fraud cases come to light like Madoff and The Mormon Madoff and many others. Our financial state will be exposed when the next crisis appears.
The situation on the island is no different than Detroit or Chicago. All have excessive government employees and all have underfunded their pensions. In each, there is high taxes, high crime and a lack of jobs. The only solution the present leaders are seeking is to borrow even MORE.
The Puerto Rican contagion will spread due to printing and the consequences of devaluing our dollar. Check this out. The court says the island can only spend $800 million on debt and this year the island has $3.5b due on debt. Can't be done! By the way, if the Fed bails them out, not only will they be setting a bad precedent, but each dollar that is printed, lowers all of our standard of living. This is one crucial aspect in why and how our standard of living keeps falling; Technical, on the Fed! Better yet, EJECTION!