States Going Bankrupt

WND reports that the State’s situation deepens -

The National Governor's Association has reported state revenues across the nation were down 11.7 and 16.6 percent in the first two quarters of 2009, respectively.

The study further observed that state revenues will not return to 2008 levels in real dollar terms until fiscal year 2014, under the most favorable assumptions that the economy has already begun a slow and largely jobless recovery.

Red Alert reports that among the most severe problems facing the states is the outstanding liability of about $2.73 trillion in employee retirement, health and other benefits coming due over the next several decades, of which more than $271 billion is unfunded.

The National Governor's Association presented the reality that "it will take states nearly a decade to fully emerge from the current recession."

Just last week, Red Alert reported that the real unemployment number, including those who have dropped out of the labor force because they have become discouraged after looking for a job for a year or longer, was 22.1 percent for October 2009, not the 10.2 percent reported by the Bureau of Labor Statistics.

Red Alert continues to predict that as the state budget crisis deepens, the Obama administration will propose federal guarantees on state loans, even though the move would add trillions to the contingent liabilities of the United States.

The Real Effect

As I posted back on June 15 -

States will declare bankruptcy, Republicans will point at Democrats and Democrats will blame Republicans.

While it hasn't happened yet, we are at most a one to two years away from this realization. Now the Feds may come in and guarantee that debt and we might see some bookkeeping shenanigans, but the states will be bankrupt none-the-less.

Edited for appearance and labels on 5/4/2010.