Tuesday, January 6, 2009

Bailout Epidemic Spreads to States

Governors of several states, notably New York and California, have become infected with the virus that destroys the economic centers of the brain.
A group of Democratic governors warned Friday that without as much as $1 trillion in federal assistance, many states will not be able to pay their bills in the next year.

"There are states that are talking as California has of not being able to meet their financial obligations in the coming months," New York Gov. David Paterson (D) said on a conference call with reporters.
Well, they might consider spending less. Both California and New York have been on spending sprees for several years now. (Though, California did reduce the rate for a couple of years.)
"We are not crying wolf. This is one of the worst situations our states have faced,” [Ohio Gov. Ted] Strickland said. "This is a real crisis. These are real problems. And if we don’t get some significant assistance many of those in our states will suffer greatly."
Yeah, so?

Whether the state budgets have been well or poorly managed, it's as irresistible as it is pointless to ask how that becomes the responsibility of the entire country. Why should the Federal Government rush to do anything about it? Yes, that rhetorical question has a depressingly familiar answer these days. But sane people trapped in an insane asylum should never passively accept their fate unquestioningly.


Anonymous said...

"But sane people trapped in an insane asylum should never passively accept their fate unquestioningly."

Yes, stop the earth I want to get off!

Ah well we're in unchartered waters now and it's certainly going to be an interesting year ahead. But Happy New Year anyway...

Ted said...

Sounds like a good time to be in the lending/worthless-fiat-paper-production business!

Jeff Perren said...


Thank you for your comment, and welcome to Shaving Leviathan. And thank you for your good wishes.

I'm not sure what you mean by "uncharted waters." The sickening thing about current events is how awfully familiar they are. We have ample precedent about how to avoid them, how to cure them, and how to prevent them in the future.

Unfortunately, those in authority are not listening to good advice, I'm guessing because in most instances they want crises. Crises are excellent vehicles for pushing for yet more control, their strongest lust.

Jeff Perren said...


If it weren't for those near-zero interest rates, I'd be inclined to agree.

Anonymous said...

Hi Jeff

By 'unchartered waters' i meant that we seem to have entered a period of uncertainty and instability of some magnitude and for me, all bets are off. I guess I see this as a real turning point in history.

You know I consider myself an optimist but also a realist and I'm very concerned for the future. The stability we have enjoyed in the West since WW2 - both economically and socially - may be about to change.

But hey, i'm no expert, just an interested participant and spectator.

Cheers anyway. I'll drop by to read your Wednesday offerings. Lee

Jeff Perren said...


All good points.

There have been a few of those turning points in the past 100 years -- the election of Wilson, then FDR as much or more so, and the summer of '68 come to mind.

They represent what I call the "knee in the curve." In physics, acceleration can be graphed and when there's a sharp bend the rate of change of velocity takes on a substantially new value. In this case, the curve represents the velocity with which we are moving toward or away from statism.

With Obama's election, we just took a serious plunge to the red, in many senses of the word. (Not that things were rosy before, or that McCain would have been radically different.)

Thank you for tuning in, and your commitment to do so in the future.