State finances in disarray

I had a most pleasant weekend off - the first in a very long time - and spent some of it pondering an unusual recent event.

We are raising turkeys, five very large, gorgeous bronze birds. Last Thursday they started making their alarm sounds, meaning that something was not right. Rushing out, I saw that "Skunky McGee", our ancient resident neighborhood skunk, was in their pen toodling around. He's nearly all white, we know his habits quite well, and his appearance at 9:30 in the morning was a bit late for him to be out and about.

It took me far too many beats to realize he wasn't toodling around looking for errant food scraps, he was chasing our turkeys in an unbalanced, tippy version of the skunk waddle. As I stared in wonder, he caught one, and began, well, chewing on it. You see, skunks are not usually predators of anything larger than a lawn grub, so he was incapable of really doing much more than begin a long process of gnawing. He started near the tail.

It was at this time that the word finally popped in my head: "rabies".

It's at times like these that having a .22 is a must. I sent Skunky McGee off to the great beyond and immediately called the local animal control officer to come and test the animal for rabies.

Imagine my shock when the town official who answered said, "We don't have an animal control officer anymore - the budget was cut. Do you have a shovel? Maybe you could bury it."

So here I am, in full possession of the knowledge that trillions of dollars are being lavished on a defective banking and financial services industry, while my locality was unable to contend with a dangerous communicable disease.

I let them know that this was an unacceptable option to me. Finally my town located an animal control officer from a neighboring town that could come and deal with the situation. No word yet on what the disease was that afflicted Skunky.

To me, this experience encapsulated what our Horizon I future has in store: the steady erosion of local and state services, even as a bloated federal government provides larger and larger handouts for large corporations and other political insiders.

While I am generally an advocate of smaller, more cost-effective government, the speed of this collapse is creating a condition where gigantic decisions must be made under the pressure of collapsing revenues, often with predictably bad results.

Facing Deficits, States Get Out Sharper Knives
LOS ANGELES — Two short months ago lawmakers in California struggled to close a $15 billion hole in the state budget. It was among the biggest deficits in state history. Now the state faces an additional $11 billion shortfall and may be unable to pay its bills this spring.

The astonishing decline in revenues is without modern precedent here, but California is hardly alone. A majority of states — many with budgets already full of deep cuts and dependent on raiding rainy-day funds or tax increases — are scrambling to find ways to get through the rest of the year without hacking apart vital services or raising taxes.

In Michigan, to reduce overtime costs, fewer streets will be salted this winter. In Ohio, where the unemployment rate is above 7 percent, the state may need a federal loan for the first time in 26 years to cover unemployment costs. In Nevada, which is almost totally dependent on sales taxes and gambling revenues, a health administrator said the state may be unable to pay claims in a few months.

In California, Mr. Schwarzenegger, a Republican, and state legislators are preparing to do battle over a proposed 1.5-cent sales tax increase, while in New York, Mr. Paterson, a Democrat, has proposed $5.2 billion worth of savings, principally cuts to Medicaid and education.

Even states where until recent months natural resource production has provided a buffer — and fat surpluses — are experiencing a sudden reversal of fortunes as oil prices have declined.

“Frankly, I thought 2001 was really awful,” said Scott D. Pattison, the executive director of the National Association of State Budget Officers, referring to the last big economic downturn. “It is even worse now.”

He added, “This fiscal year will be really bad, and what is unfortunate is that I can’t see how 2010 won’t be bad too.”

And I'll be honest - my local efforts to alert my town administrators to this looming crisis, back when we could have done something about it a year or two ago, were completely rebuffed.They were either "too unlikely to consider" or "not actionable". Of course, now we have fewer options and less time to fashion our response to a now obviously severe funding crisis.

My impression was that local governance had become completely tuned to growth, and that any predictions that spoke of a sustained period without growth had virtually no resting place, either in the belief systems of the administrators or the decision making processes themselves. My assessment is that my community, like many others, may have lost the 'muscle memory' required to effectively manage in a world of declining resources.

But this is not a failing of my town or its people. This merely reflects the fact that our entire culture and economic system is built around growth. It is reinforced constantly, and there is no "other way" for many people. Growth is a given. It is such a constant that it is almost never questioned.

See if you can spot the growth assumptions baked into this article posted to Bloomberg today:

Obama-Pelosi Stimulus May Fail to Reignite Economy
Nov. 17 (Bloomberg) -- President-elect Barack Obama and House Speaker Nancy Pelosi may throw as much as half a trillion dollars worth of stimulus at the economy -- and have little or no growth to show for it.

The forces arrayed against recovery, including the credit contraction and cutbacks by consumers, are so powerful that they may overwhelm the record sums of spending and tax cuts being discussed in Washington. The only consolation, economists say, is that without the stimulus, things would be even worse.

"It's hard for me to imagine we'll have a return to positive growth before the fourth quarter of 2009, even with a $500 billion stimulus,'' says Barry Eichengreen, an economics professor at the University of California, Berkeley.

Mark Zandi, chief economist at Moody's in West Chester, Pennsylvania, says the economy may contract 2 percent next year without a package of at least $300 billion. With it, "we could get growth pretty close to zero,'' he adds. That would still be the worst result since 1991.

"Stimulus," "growth," "recovery," "credit contraction"...the message is clear, unambiguous, and unanimous - our economy requires growth. There is no Plan B. Unfortunately, we are in "Economy B" and the sooner we get our heads around that, the better. In the meantime let's hope that we end up cutting wisely, and not in a manner that leads to serious diseases going unmanaged and untracked.

And let's all wish Skunky McGee a lawn full of grubs, wherever he may be.



This is a companion discussion topic for the original entry at

this article is excellent–I really had to find out why the skunk was acting funny.

But what I wanted to write about is simply an editorial comment. I just finished slide four of your class and so far this is great! about first year college level or advanced High School, and that’s fine with me ; I’m not up for college level economics right now anyway. OK, enough intro. Since you are so good at cutting to the chase, I just wanted to offer a quick comment to make slide four even better. I missed the "doubling" part of the magic water dropper, just didn’t listen well enough. had to go back and see if that’s what you said. I suspected so, since I could tell where you were going, having some math knowledge. I just suggest that you repeat the word "double" the drop in the example of Fenway Park, because that is key! Double every minute. 2 drops, four drops, six drops. spell it out for us. (yes I heard the dime part but didn’t know how it got bigger!) OK I’ll tell you when I see other places to help the communication. Of course you probably know you are an EXCELLENT communicator. I am interested in communication. bye!

"The Skunky McGee Effect" - a term used to describe the phenomenon whereby local and state governments are forced to cut necessary services because of the great economic contraction going on in the US, a contraction made worse by the excessive and careless multi billion dollar "contributions" of taxpayer funds made to the Financial Sector that created the 21st Century Depression.

Odd…several years ago I had the exact same situation in my front yard…a wandering skunk obviously impaired by rabies or another neurological problem. I actually called the Dept. of Natural Resources first and they, too, asked if I had a shovel. Why…they couldn’t come out but suggested that I kill it with a shovel! What else did they have to do at that time other than protect a citizen from rabies?

I had to shoot it and bury also.

Also in MA.




"This merely reflects the fact that our entire culture and economic system is built around growth."

  • And greed.

Excellent illustrative story. Thank you Skunky. Namoamidabutsu.

A lot of services - including some very big ones will soon vanish. The fires of Southern California highlight that it is very nearly a desert (defined as 10 inches or less of rain per year) and that Los Angeles exists as a megalopolis only due to the surplus energy that oil brougt. Energy to pump water (itself a depleting resource now) from the Sierra Nevada mountains, Colorado river, Owens Valley aquifer, and even some water which comes 444 miles from northern California and is pumped over the Tehachipi Mountains. Similar situation in much of the southeastern US (as Atlanta’s recent water crisis illustrates).

So it is indeed a perfect storm and includes finance to be sure, but also peak oil, other resource depletion issues, population pressures, and global climate change.




You wish the decline of services will be gentle and slow. Makes for time and energy to change things around.

Get ready, it is way to late to change this Titanic, mob ruled, collective suicidal human world population for consuming ourselves to death. Only our children to be excused.

After the 500 T dollar bust they will declare martial law and the net will brake down for most people but those who are located in the green zones, alike Irak task force, central command. US Army militants will make war on homeland, now under the war on dope, Katrina or terror…later out into the open.

We have 2 or 3 years to make it with plan B, prepare for civil war against our government elite, might be best to go for a shelter deep in nature and return when you cannot defend what is yours against the chaos and panic, hunger and cold that are our fate. I cannot see how we can stall for another 5 years.

Like you proposed, prepare for the worst, brown out that is permanent. Army will be self sufficient. You will need to be such as well. For years, maybe a decade or so.

The elite will flee and die abroad, south america or be killed by own army…they will not be able to hold the US together, they will end same as most of mankind. There is no people that can avoid this crash but the hunter gatherer, even they will be damaged by extra competition.

After the troubles a new future, start from wood, schools and make it work without insanity, our internal dialogue that brought us this disaster. That brings us, humanity, face to face with our own internal struggle, the petty persons we have become by talking to ourselves on a basis of self pity…is what it is. Solution is to learn how to save energy and claim our own true personal power, our own natural selves.






It’s funny you mention state services. I have one that’s better. It’s called Homeland Security. It’s been a BS service since it’s start. I read a report on how it’s totally underfunded on the Canadian border, and over-funded for cities that don’t even allocate the money for Homeland Security purposes. This was a year after 9/11
No telling what the status of funds for this joke of a department is now. But I tell you what I am more worried about than terrorists crossing the Canadian Border. It’s the breakdown of law enforcement and prison system. That skunk will seem like the salad days compared to this happening. I mean, if states run out of money do you think the police and fire departments will work for free? Or how about the prisons? What will they do? Open the doors and let everyone leave? Or just kill all the prisoners and be done with it. Is a plan in place for this? I doubt it.
We got lots of interesting events coming

My state trooper friends say they will certainly not be at work if no pay. Even with pay are you going to leave your wife and kids alone? As for prisoners they may turn them lose in big cities then stand at key points "bridges" picking off anyone running for their life, "New Orleans, Katrina." Modern Day barbarism will make all former periods of evil look like Eden. "Unless the days are shortened no flesh will survive." Yeshua


REX 84: lovely places for nonviolent citizens. Uganda has over one hundred such places, they are called displacement camps.

Krogoth, reduction of services is part of the potential future issue for sure, however I think it is only half the story.

The other half is having a "bank holiday". Reduction in services plus an extended bank holiday would be the two events that could send us into full depression, looting and rioting.

Most people are not ready for an extended time frame without credit or banks to get access to money for food and other needs.

In my opinion, most households have about 1 to 3 weeks worth of food on hand. Assuming utility services (electricity, gas, water) are available.

In addition to that, our just in time system for food delivery would drastically reduce the amount of food and other needs from the stores shelves within the 1st week. Even if you have money after the 1st week, you may not be able to get food.

This scenario is a potential event so let’s just not complain but look for a solution set and what we may be willing to plan for.

What we need to prep for is my opinion; I would like to hear yours as well.

Scenario #1: Bank holiday with utilities available

2 weeks: Need 2 weeks of food on hand or money to buy 2 weeks of food ((bought in the 1st 3 days)). Public Environment Assumption: maybe some looting and minor rioting in major cities.

3 weeks: Need 3 weeks of food on hand or money to buy 3 weeks of food ((bought in the 1st 3 days)). Depending on area may need to have home defense ready. Public Environment Assumption: Looting will increase, those that did not plan will start to get desperate, rioting will escalate in major cities national guard may be needed.

4 weeks: Need 4 weeks of food on hand or money to buy 4 weeks of food ((bought in the 1st 3 days)). Depending on area may need to have home defense ready. Public Environment Assumption: Looting will increase, those that did not plan will be desperate and seeking food, rioting will escalate in major cities and move out to the suburbs national guard will be needed.

5 weeks plus: Need enough food to last winter or money to buy food for winter ((bought in the 1st 3 days)). Home defense will be needed. Public Environment Assumption: Looting will increase, those that did not plan will be desperate and seeking food at any cost, rioting will escalate in major cities and suburbs national guard will be needed.

Scenario #2: Bank holiday with lose of utilities

1 week: Need 1 week of food on hand or money to buy 1 week of food ((bought in the 1st 3 days)). Need way to cook food, sterilize water ((or have water on hand)), keep home warm. Public Environment Assumption: maybe some looting and minor rioting in major cities.

2 weeks: Need 2 weeks of food on hand or money to buy 2 weeks of food ((bought in the 1st 3 days)). Depending on area may need to have home defense ready. Need way to cook food, sterilize water ((or have water on hand)), keep home warm. Public Environment Assumption: Looting will increase, those that did not plan will start to get desperate, rioting will escalate in major cities national guard may be needed.

3 weeks plus: Need enough food to last winter or money to buy food for winter ((bought in the 1st 3 days)). Need way to cook food, sterilize water ((or have water on hand)), keep home warm. Home defense will be needed. Public Environment Assumption: Looting will increase, those that did not plan will be desperate and seeking food at any cost, rioting will escalate in major cities and suburbs national guard will be needed.

Do you think that these scenarios are realistic? Perhaps there are more that could happen?

Which will you plan for if any?












I guess this skunk thing is a common event. Several years ago there was a skunk roaming around our back yard. It’s back legs seemed to have lost all coordination. I called our state environmental conservation officer, but he wasn’t in. His wife answered. When I explained the situation, she asked if I had a gun (I did) and suggested I shoot and bury it without touching it. I did. Later I described the situation to another conservation officer who replied that there was a 95% chance the skunk had rabies and a 5% chance it had distemper. In either case, I did the right thing.

My take at the time was that conservation officers are very busy people. Nothing since then persuades me otherwise. I’ve gotten to know several conservation officers in the course of my work and various volunteer activities. They work their butts off and have to cover large areas, particularly during hunting season. Also, rabies is a relatively common occurrence in the wild. They simply don’t have time to respond to every one of these calls. And, that’s during good economic times.

There was a publicized rabies outbreak locally not that long ago. Almost overnight all those racoons that visited campfires in a local state park disappeared. Although there was no news about it, the truth was that conservation officers killed virtually all racoons in the park until the outbreak subsided.

My point is that conservation officers are busy enforcing conservation laws and dealing with significant public threats from wildlife. They are first and foremost law officers and are trained along side state patrol officers. I don’t think it’s reasonable to expect them to respond in person to every call they get. This seems to me to be consistent with small efficient gov’t. We, particularly in rural areas, have to be a little self sufficient.

BTW, the local animal control person is, by experience, a dog groomer and deals almost exclusively with dogs roaming loose and making sure all dogs are registered and vaccinated. Not qualified to deal with rabid wildlife.

Speaking from a desk in local government, I can tell you that they are strapped for cash as much as the next guy. With few options out there, and an inability or unwillingness to make dramatic cuts in spending, more changes will be on the way, and infrastructures will suffer.
Talk of government privatization has been out there for some time now, and many state and local functions have already gone to the private sector. The most popular areas for this type of cost-cutting are legal affairs, insurance (vs. self-funding), security for public buildings, and the contracting out of facilities management (repair, maintenance, janitorial services, etc.). In a bigger scope is the use of private prisons, and the combining of police services to form ‘regional’ police. But this may not be totally necessary, as the new administration has mentioned plans to reclassify the Gestapo - err, I mean the Department of Homeland Security, to a status of Homeland Police. This means that they would have national arrest powers, act without regard for state and local jurisdictions, and there would be no requirements for acts of civil unrest or nature disaster in order for them to take any action. Think of how much safer we will all be, and how much money Washington will save us!
So you see, privatization and consolidation are good things.

Well lucky for me I have had years of training where I was raised in Florida, and over here in Taiwan where I work now. The last big storms to hit Florida tore my roof off completely, moved a truck I had into the neighbors yard, and pretty much shut down the area I lived in for over 3 weeks. Over in Taiwan, we just had 3 typhoons in a period of 1 month, so it’s pretty crazy here as well.

I think your plans are solid, and when any hurricane approached us in Florida, we filled both tubs with water, added some Clorox to keep it fresh, and had a solid supply of 3-4 weeks of food. Generators for emergency use, lots of charcoal (very important) for backup cooking, at least 3 full propane tanks for cooking, the other usual stuff, batteries, 2 radios, first aid kits and such. The things you usually miss the most are the things you take for granted. If you have a decent grill in Florida, you can live off it. Everything from Coffee in the morning, use your pans right on the grill, sterilize water if necessary, etc. Loads of dry and canned food, pasta or any other high carbohydrate food that can be stored dry. Beans, canned vegetables, etc. Also make sure you have a good supply of any medications you need for you or your family for diabetes or high blood pressure, etc. Get a few cases of beer as well to relax everyone, or have some hard alcohol on hand.

The mistakes most people make is forgetting most of the refrigerator food will go bad. Not preparing enough ice (it can last for awhile if you have a deep freezer in the garage, but is a huge generator burden. So you just run it for a couple of hours, freeze everything, and shut it down for a couple of hours. That’s if you want anything cold to drink. I know, cold drinks sound stupid, but go through a hurricane, lose your roof, have it replaced by a plastic tarp and have a few weeks of 95-100 degree weather and you will realize how important ice is.
Now with the last hurricane season I spent in Florida, we got lucky. within 2 weeks trucks were coming to us from the city with loads of ice and water. When Andrew hit years ago, basically it was a war-zone. Lots of looting and lots of homes leveled. I remember the strangest feeling being in that area and actually not knowing where I was because it literally looked like a gigantic bomb hit and tore everything down. No signs, no lights or anything. In that scenario a lot of people were armed and protecting what was left of the shells of houses they used to have. The Army was also called in to restore order.
The worst thing I remember besides the extreme heat was the boredom. Don’t believe me? Go outside your home on Saturday or a day you have off and sit for 12 hrs. doing nothing. You will go nuts. Have some books or things to do. Remember the kids as well if you have them. No video games, computer or TV will drive most kids today into insanity.

So a combination of these suggestions plus yours are pretty much the same. Prepare like you are preparing for a natural disaster for 3-4 weeks. Always prepare for the worst, and load the weapons if you got them. Also, put a big sign in front of your home letting people know you have weapons. That keeps most people away. Have some friends you trust come over, because if rioting or looting are happening, that means 24 hour watch, and rotating people with weapons to guard the others when they sleep. Make a plan with some friends or family to accomplish this, and group as many as you can in 1 area. That’s about all I think is necessary.







Off subject but thought others may be interested.



New Zealand


Volcker issues dire warning on slump

Paul Volcker, the former chairman of the US Federal Reserve, has warned that the economic slump has begun to metastasise after a shocking collapse in output over the past two months, threatening to overwhelm the incoming Obama administration as it struggles to restore confidence.

By Ambrose Evans-Pritchard
Last Updated: 10:39PM GMT 17 Nov 2008

"What this crisis reveals is a broken financial system like no other in my lifetime," he told a conference at Lombard Street Research in London.

"Normal monetary policy is not able to get money flowing. The trouble is that, even with all this [government] protection, the market is not moving again. The only other time we have seen the US economy drop as suddenly as this was when the Carter administration imposed credit controls, which was artificial."

His comments come as the blizzard of dire data in the US continues to crush spirits. The Empire State index of manufacturing dropped to minus 24.6 in October, the lowest ever recorded. Paul Ashworth, US economist at Capital Economics, said business spending was now going into "meltdown", compounding the collapse in consumer spending that is already under way.

Mr Volcker, an adviser to President-Elect Barack Obama and a short-list candidate for Treasury Secretary, warned that it is already too late to avoid a severe downturn even if the credit markets stabilise over coming months. "I don’t think anybody thinks we’re going to get through this recession in a hurry," he said.

He advised Mr Obama to tread a fine line, embarking on bold action with a "compelling economic logic" rather than scattering fiscal stimulus or resorting to a wholesale bail-out of Detroit. "He can’t just throw money at the auto industry."

Mr Volcker is a towering figure in the US, praised for taming the great inflation of the late 1970s with unpopular monetary rigour. He is no friend of Alan Greenspan, who replaced him at the Fed and presided over credit excess that pushed private debt to 300pc of GDP.

"There has been leveraging in the economy beyond imagination, and nobody was saying we need to do something," he said. "There are cycles in human nature and it is up to regulators to moderate these excesses. Alan was not a big regulator."

Even so, he said the arch-culprit was the bonus system that allowed bankers to draw forward "tremendous rewards" before the disastrous consequences of their actions became clear, as well as the new means of credit alchemy that let them slice and dice mortgage debt into packages that disguised risk.

Prepare now for survival

Thanks Kogroth, plan for the worst, and hope for the best. I work with a guy that used to live in a hurricane area. He has lots of good ideas as well, most you have already stated.
What I fear most is in areas that are not used to going through hardships like this(large natural disasters), that are used to hand outs or a just in time life when they want it; How fast will neighbors become enemies? How fast will the "Brute" leave the dark places to get what it wants or needs?

I take your words to heart and continue my plans. Thank you again.


No problem mpelchat,

I think the city people are the worst off, so hopefully you don’t live in one.





just wait for all the unfunded pension liabilities ‘come due’

– unlike GM, the LAW requires that "gov’t" pensions be paid in full

---- and many of these (think NY, CA, IL and other likely suspects) have negotiated very comfortable pakages -

– that’s a ways off, but catching up to ‘adequate’ funding of the pensions is here now – ouch



No state money, no federal money, no government pensions, it’s that simple. The government does not care. Let them line up for a multi year class action and go up against them.

I almost spit out my coffee when I saw them talk about this on CNBC. Watch them backtrack as fast as they could.

If true, which no evidence supports this or has been uncovered, they have a lot of shit to plunge in the coming months. CNBC is starting to look like FOX news or something. Backtracking, saying statements like we are not acknowledging this officially. CNBC is living in the 1998 Market, where nothing can go wrong long term. It’s almost sickening. Is it possible? Sure, the government has done much worse and more covert crap than you want to know.