If Greece has been one of Europe’s major headache, then the US has her counterpart, Minnesota.
From yahoo.com
Time is running out for Minnesota's parks, highway rest stops and public universities, not to mention 36,000 state employees.
If Gov. Mark Dayton and lawmakers don't agree on a budget by June 30, the state government is expected to shut down. The state moved one step closer to this outcome on Friday by sending layoff notices to much of the state workforce.
Should officials not resolve their differences in time, state parks and highway stops could be shuttered over the busy Fourth of July weekend. Forget about renewing a driver's license or taking classes at state colleges. Nonprofit agencies may have to suspend their social services if their state funding disappears.
As for the state workers, they'll have to wait to see who is deemed critical. The rest could lose their pay, and some their health benefits. The unions have already launched a campaign pressuring state officials to pass a budget.
At issue is whether to close a $3.6 billion budget shortfall by increasing taxes or making spending cuts. The decision must be made before the fiscal year ends on June 30.
I know Minnesota is small compared to Greece. But the point is both have been suffering from the same sin—profligate government spending—and now faces the consequences. Reality stares on them.
Yet seen from a relative standpoint, Pimco’s Bill Gross says that the US is in worst condition than Greece or the Eurozone.
Mr. Gross’ recent analysis or outlook squares with mine.
Incidentally Mr. Gross, formerly an apostle of Krugman, has reversed his position, since his uber-Keynesian partner Paul McCulley departed from (or kicked out of?) PIMCO in December 2010.
From CNBC, (bold emphasis mine)
When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco's Bill Gross told CNBC Monday.
Much of the public focus is on the nation's public debt, which is $14.3 trillion. But that doesn't include money guaranteed for Medicare, Medicaid and Social Security, which comes to close to $50 trillion, according to government figures.
The government also is on the hook for other debts such as the programs related to the bailout of the financial system following the crisis of 2008 and 2009, government figures show.
Taken together, Gross puts the total at "nearly $100 trillion," that while perhaps a bit on the high side, places the country in a highly unenviable fiscal position that he said won't find a solution overnight.
"To think that we can reduce that within the space of a year or two is not a realistic assumption," Gross said in a live interview. "That's much more than Greece, that's much more than almost any other developed country. We've got a problem and we have to get after it quickly."
Politicians and their fanatic worshipers think that money printing measures will help solve such dilemma by kicking the proverbial can down the road. They’re dead wrong. [If they have strong enough convictions, they should put all their money in shorting gold]
If Mr. Gross analysis is accurate, then this only shows that socio-economic problem of the US is so remarkably huge. And that if the US obstinately pursues on the money printing path, the scale of such undertaking would equally be colossal. This brings to fore the risks of hyperinflation, which is what US presidential aspirant and candidate Ron Paul has recently warned of and which could also be read as his prediction.
This is also why I have been saying that the next crisis will be even more devastating than 2008, as both the banking system and governments have already been pushed wall. The next crisis will likely see what I call the Mises Moment: either massive defaults by governments and a possible collapse of the banking sector or the worst alternative—hyperinflation. I can't fathom yet how the technology driven globalization will be impacted.
Yet hyperinflation would likely mean the end of the de facto US dollar standard or even the closure of US Federal Reserve as Nassim Taleb predicts or even possibly the disintegration of the Euro too (if the Euro would hyperinflate along with the US).
Finally there are many speculations on the new terminology of money printing or currently known as Quantitative Easing.
Jim Rogers calls sarcastically his version as the ‘cupcake’. Bill Gross sees a price cap on 2-3 treasuries and David Rosenberg calls his the ‘Operation Twist’
At the end of the day, what faces the world is the risk of debt defaults or default by hyperinflation.
