Get ready for the next "too big to fail..." chapter: Michigan, California, New York.

[4starrecruit]

Will the Federal Government need to bail out some big states? How about cities? Or, should we just let them go and let happen what will happen if New York City, LA, Detroit and a few more go bankrupt?

It's probably going to happen. What should the nation do?

I say there will be no choice except to crank up the printing press and start bailing like crazy. Beat deflation. The nation will need to inflate it's way out of this crisis that never seems to end.

[Dr.Don]

This belongs on the Off Topic Board, please move it, admin.....

[4starrecruit]

I agree: that is where I wanted to put it, but somehow posted it here. Please move this to the off topic board. My apologies and my bad...

[Dr.Don]

No problem, 4star.....it is simply this, when people are earning less money, or unemployed, there is less disposable income to be taxed via fees and sales tax, etal. It is truly a domino effect. Less money to spend results in less income for all levels of government, results in less money spilling throughout the entire system. Today's economic situation in not just based in the USA, it is global economy. What goes around, comes around. We will get through this, the question is, how long will it take? I don't have a clue.

[Ski U Mah Gopher]

A bunch of referenda have passed in the last several years guaranteeing funding for certain programs without dedicating any funding.

Now that the economy has gone south, these programs voted on in elections cannot be cut, but there is no money to pay for them.

Also the voters put in a clause where it takes a 2/3 majority to raise taxes.

So, blame the voters of California for their problems.

[Dr.Don]

IMO, we need to start at the bottom... when my $250 stimulus comes via my Social Security, I will do what is intended. I will spend it. If everyone on fixed incomes does that, the ball will start rolling. I will not save it...I will spend it. and I will spend it on something I would not ordinarily spend...such as a fishing trip. Gas, food, lodging, bait, 2 beers, 2 more beers, then rinse and repeat.

[4starrecruit]

It may be the voters of California's fault, but, is California too big to fail? What would happen to the State of the Union if California shuts down? Michigan? New York? Are any states not too large to fail? And cities? What happens if Los Vegas goes belly up? New York City? Detroit?

It won't be great, but we must inflate, I fear. If deflation reigns supreme and states and cities are bankrupt, and the vital services are shut down in some major cities, and the schools close their doors and the hospitals don't get paid for Medicaid and Medicare services and have to close their doors, what will this country look like? Who would pay the police force? Do we have enough National Guardsmen and Reserves left in this country and not on active duty in Iraq to deal with the hazardous duty stations such as LA, NYC, Detroit...Minneapolis?

Could Minnesota join the "watch list" of states too big to fail?

We do not have the option of letting states and major cities fail, I would have to say.