Being on the hook is not going to be pretty when interest rates
are raised back up, and debts come due. At a personal level, it will mean more
stress and juggling to make ends meet. For the larger economy, it will mean
cities and states unable to meet obligations or balance their budgets – ending
in bankruptcy, and bailouts. Meanwhile, millions of people are relying on that
money to keep coming in order to survive. Something is going to go very wrong.
Relying upon government to function and send you money is not a
secure plan.
The mathematics are terrifying and dismal, and so is being
caught up in these collapsing states.
In the next phase of the financial crisis, the debt supercycle
will become the most defining feature of the big hurt that will fall on nearly
everyone.
That’s
the dire warning that Goldman Sachs issued about what
they termed the Third Wave of the global collapse. But it hasn’t come, at least
not yet:
This wave is characterised by
rock-bottom commodities prices, stalling growth in China and other
emerging-markets economies, and low global inflation, Goldman Sachs analysts
led by Peter Oppenheimer said in a big-picture note.
This triple whammy has its
roots in the response to the first two waves of crisis — the banking collapse
and European sovereign-debt crisis — and it is all part of the so-called debt
supercycle of the past few decades.
Unfunded liabilities for pensions and other state benefits are
threatening the security and future of an entire generation of retiring,
hardworking Americans.
The debt will be shifted for as long as possible… but eventually,
someone will have to come to terms with it. The black hole totals up to huge
sums of money; no one can pay; and the system is bankrupted, or services
rendered become inadequate and farcical.
Forbes contributor William Baldwin describes the
acute problem of “death spiral states,” which could actually be as bad as it
sounds. It affects dozens of cities and municipalities as well.
Does your state have more
takers than makers? Check it out.
California
has a powerful economy, with 14 million private-sector jobs. It also has
burdens: welfare recipients (12.6 million), generously paid government
employees (2.1 million) and people collecting government pensions (1.3
million).
Add up the
numbers. There are 114 clients drawing from the government for every 100 people
chipping in by working outside the government and paying taxes. We’re calling
this the Feedme Ratio. Six states have a number over 100.
These states are at risk of
going into a downward spiral in the next recession. The burdens will remain but
too many of the providers—employers in the private sector—might shrink or
decamp.
Right now, the biggest risks for a bankruptcy or collapse is in
the these states, based upon the ratio between what Baldwin terms “makers” and
“takers.” Basically, the socialist state is enveloping all prosperity:
• New Mexico – 148 dependents
per private sector worker
• West Virginia – 116
dependents per private sector worker
• California – 114 dependents
per private sector worker
• Mississippi – 111 dependents
per private sector worker
• New York – 108 dependents per
private sector worker
• Arkansas – 103 dependents per
private sector worker
Detroit and Chicago top the lists of cities who wouldn’t be
healthy in the ratio of makers/takers either, and would crumble in a debt
crunch.
You can check on your state via this interactive map, though it
is dated slightly to 2015.
A score
under 100 means that the state has a net number of providers, and is
theoretically on more solid ground. However, the pressures are endemic n the
system, and no state is immune. For instance, Texas has a healthy score of
66.7; yet, the city of Dallas just announced that it is suspending pensions payments to city
rescue workers and employees. There’s a serious disconnect.
Once things go downhill, violence, crime, looting, riots and the
like become chronic problems. The police state presence is also an issue, and
society goes on edge.
Everyone can feel the sinking depths, and order is about to
implode. When things go primal, you do not want to be around to get caught up
in it.
Being inside a major city on the day that the ATMs stop spitting
out cash, or EBT cards don’t work will be an incredibly dangerous day. Relying
upon government bureaucracy and functioning technology to meet your vital needs
is a good position to be in during an emergency situation – be it economic
crisis, hurricane, power grid failure or something else.
Joel
Skousen described in great detail how to avoid the
urban areas that will become completely dysfunctional nightmares at the first
sign of a major emergency.
Your retreat should be strategically chosen to lay outside of
certain regions, military targets and fragile climates. Knowledge of the back
roads is essential to planning a route that won’t leave you stranded on the
highway in endless gridlock.
Above all, it is advisable to avoid mass populated areas,
especially big cities on the East and West Coast. People are prone to panic,
and will be easily cut off from essential services become desperate. There are
far too many bad apples in that ratio for any good to result.
Avoidance is key – and that is why living in a “death spiral”
state like California or New York could be a major liability during a crisis,
or alternately a prolonged collapse.
CalPers pension… a massive black hole that is merely carving a
path for many failed states to come.
The future is austere if this equation isn’t balanced out:
Tom Chatham warns
about the abrupt change that is coming home to roost in America. Things can get
really bad, really quick.
But really, most of us don’t know how bad it will get:
Americans that have only known
the post WWII prosperity are ill equipped and educated to deal with depression
level living. Easy credit and instant gratification have created a
nation of whining, self absorbed, entitlement minded people with no moral or
mental toughness.
Doug Casey believes we are
headed for what he calls a super depression created by the ending of a debt
super cycle. The bigger the debt cycle the bigger the depression that follows.
That’s how reality works and most people are not prepared for reality.
When this depression, which has
already started, gets momentum, it will overwhelm the
plans of a society that is expecting to get things like social security,
pensions and payouts from retirement plans they have paid into
for many years. All of those things will disappear almost overnight and leave
society gasping and stupefied over what to do.
The big reveal is coming: inside that great big old lock box… is
just another I.O.U.
Are you prepared for the future, and all the economic
uncertainty it could bring?
https://www.lewrockwell.com/2016/12/mac-slavo/living-death-spiral/