Peacenik hasn't posted anything about the economy for a while. Peacenik has been watching in disbelief as the stock market continues to rally. Meanwhile insiders are selling like crazy. Revenue in New York State collapsed by 38% in the last quarter. State after state is unable to balance its budget. The big banks in the states are still being kept afloat by shady accounting and public tax dollars. And California is paying its workers with IOU's.
But the market goes up and in Canada the housing bubble keeps bubbling along. Of course the Canadian banks just got another handout from the feds. And mortgage rates are artificially low. And federal and provincial deficits across the country have exploded. And unemployment and underemployment is growing. And pension plans, big and small, are unable to keep either their promises, nor their legal obligations. But all is good. Until the Minsky Moment arrives. Then watch out.
Paul Harris
Los Angeles, 2009: California may be the eighth largest economy in the world, but its state government is issuing IOUs, unemployment is at its highest in 70 years, and teachers are on hunger strike. So what has gone so catastrophically wrong?
But the market goes up and in Canada the housing bubble keeps bubbling along. Of course the Canadian banks just got another handout from the feds. And mortgage rates are artificially low. And federal and provincial deficits across the country have exploded. And unemployment and underemployment is growing. And pension plans, big and small, are unable to keep either their promises, nor their legal obligations. But all is good. Until the Minsky Moment arrives. Then watch out.
Paul Harris
Los Angeles, 2009: California may be the eighth largest economy in the world, but its state government is issuing IOUs, unemployment is at its highest in 70 years, and teachers are on hunger strike. So what has gone so catastrophically wrong?
Patients without medical insurance wait for treatment in the Forum, a music arena in Inglewood, Los Angeles. The 1,500 free places were filled by 4am. Photograph: John Moore/Getty Images
California has a special place in the American psyche. It is the Golden State: a playground of the rich and famous with perfect weather. It symbolises a lifestyle of sunshine, swimming pools and the Hollywood dream factory.
But the state that was once held up as the epitome of the boundless opportunities of America has collapsed. From its politics to its economy to its environment and way of life, California is like a patient on life support. At the start of summer the state government was so deeply in debt that it began to issue IOUs instead of wages. Its unemployment rate has soared to more than 12%, the highest figure in 70 years. Desperate to pay off a crippling budget deficit, California is slashing spending in education and healthcare, laying off vast numbers of workers and forcing others to take unpaid leave. In a state made up of sprawling suburbs the collapse of the housing bubble has impoverished millions and kicked tens of thousands of families out of their homes. Its political system is locked in paralysis and the two-term rule of former movie star Arnold Schwarzenegger is seen as a disaster – his approval ratings having sunk to levels that would make George W Bush blush. The crisis is so deep that Professor Kevin Starr, who has written an acclaimed history of the state, recently declared: "California is on the verge of becoming the first failed state in America."
Read on...
But the state that was once held up as the epitome of the boundless opportunities of America has collapsed. From its politics to its economy to its environment and way of life, California is like a patient on life support. At the start of summer the state government was so deeply in debt that it began to issue IOUs instead of wages. Its unemployment rate has soared to more than 12%, the highest figure in 70 years. Desperate to pay off a crippling budget deficit, California is slashing spending in education and healthcare, laying off vast numbers of workers and forcing others to take unpaid leave. In a state made up of sprawling suburbs the collapse of the housing bubble has impoverished millions and kicked tens of thousands of families out of their homes. Its political system is locked in paralysis and the two-term rule of former movie star Arnold Schwarzenegger is seen as a disaster – his approval ratings having sunk to levels that would make George W Bush blush. The crisis is so deep that Professor Kevin Starr, who has written an acclaimed history of the state, recently declared: "California is on the verge of becoming the first failed state in America."
Read on...
