Economic Redux

Zero Hedge brings up that the US was close to a technical default -

On December 24, the Senate passed a vote by a razor thin margin (with not a vote to spare) to raise the Federal debt ceiling from $12,104 billion to $12,394 billion. The actual debt ceiling increase took effect on December 28. And as the chart below shows, the Treasury’s cash flow projections were spot on: 3 days later, and the debt subject to limit surged to $12,254, a jump of over $200 billion in 2 days, and a whopping $150 billion over the old debt ceiling.

Three days is all the buffer the administration’s reckless spending spree has afforded this country to avoid bankruptcy. Had one more Democratic vote dissented from the stopgap measure, the US would now be in technical default.

From the Wall Street Journal, bankruptcies rage -

Overall, personal bankruptcy filings hit 1.41 million last year, up 32% from 2008, according to the National Bankruptcy Research Center ...

American Thinker reports the following -

There are only three possibilities with respect to meeting 2010 funding needs:

* The Fed continues its QE beyond their planned cessation in March 2010.
* The Fed raises interest rates to levels that would attract the capital necessary to fund government operations via conventional credit markets.
* No Fed action is taken. That would cause the government to default on some of its obligations.

Treasuries are sliding -

Treasuries were the worst performing sovereign debt market in 2009 as the U.S. sold $2.1 trillion of notes and bonds to fund extraordinary efforts to bolster the economy and financial markets. Investors in U.S. debt lost 3.5 percent on average through Dec. 30, according to Bank of America Merrill Lynch indexes, the biggest annual slide since at least 1978.

States can't squeeze blood from a rock -

New US census data show that state and local government tax revenue continued their year-long plunge in the third quarter, falling by 7 percent from the same period last year. In response, governments are cutting spending on social programs, infrastructure and education, and are laying off or cutting the wages of government workers.

From the San Francisco Chronicle:

California's political leaders, who are facing the daunting challenge of closing an estimated $20.7 billion budget deficit this year, are looking to Washington for help. Just don't call it a bailout.
Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he plans to head to the nation's capital "early and often" seeking federal assistance. Gov. Arnold Schwarzenegger already has put the federal government on notice that he wants billions he says the state is owed.
Steinberg said he wants a "dynamic partnership" between the federal government and the states, led by California, to spend money for infrastructure.
"No one is looking for a bailout. We're looking for an investment," he said, adding that the state needs to "fight" for more money.
"It's in the national interest because California is an economic engine, and if we continue to be bogged down in deficits that are largely the result of the recession, then the country is going to have a hard time recovering," he said.
California already has received just over $8 billion in federal stimulus dollars that helped the state close the budget deficit last year. On Friday, Schwarzenegger will release his initial budget proposal for the next fiscal year, and the Legislative Analyst's Office already has called on state leaders to "aggressively seek new federal assistance" to help close the projected deficit.

The Real Effect

Several things merit mention.

1. Notice the "to big to fail" mentality?
2. They already spent $8 billion in stimulus.
3. They are now looking at $21 billion gap?

Alright, let's do the math $21 billion is biiiiiiiger than $8 billion so the problem is getting...(better, better, better!)...
WORSE!

States are addicted to spending (Sugar, sugar, SUGAR!!!), citizens are addicted to handouts, corporations are addicted to bailouts.

How can we, as a nation (I say it even though I despise collectivist thinking) begin to compete when we embrace a national policy of "Non-responsibility". Did the past communist failures of the 20th century, which arguably claimed more live than the bulk of any other tragedy, not matter to anyone? Have we learned nothing? Have our forefathers died in absolute vain?!?

Yet it is these same individuals who will quickly foist the American flag upon the petard of their ignorance and claim that if we fail to act, we are sentencing the Republic to certain demise.

No sir, you ensured that death by your reckless actions years ago.