Is recievership the only way to save failed states

GOVERNMENT PENSIONS BRINGING STATE FINANCES DOWN

FAILED STATES WILL BE ABLE TO RENOGOTIATE ALL CONTRACTS

 

 

 

While we are living in a relatively stable economic period, the fate of state finances is deteriorating steadily. While Illinois has been in the news it is not the only state in trouble. Connecticut, Massachusetts and New Jersey are considered in worse condition. Most are in danger of having their bond rating lowered to junk status. Pennsylvania is now rated 39th in the country for fiscal health and has had its bond rating lowered. Most of the states that are in trouble have extremely high pension costs and little return on investments. It is an unsustainable situation. While efforts to reform these costs have been attempted there is just not enough will to get it done. That and liberal judges who rule that there can never be cuts to pension programs, of course all those judges are on the same program for retirement.

Most states choose the Detroit Finance Plan of raising taxes to keep the lid on. This is followed by population declining, business relocating, revenues decreasing, followed by, of course, more tax raises.

So it looks like the solution will only come when these states will loose their ability to borrow money, which may be soon in some cases, and these states are declared failed states. Then an administrator is placed in charge by the Federal government. Then all contracts can be renegotiated, the pension may be placed under government control and pay-outs determined by what is left in the pension fund. When this happens, and it seems only then, will real fiscal reform begin.