The way to make this madness stop is to stop spending more than what one takes in. But that would hurt a lot of folks in the short term, and votes would be lost among other things.
What do you do when your revenues no longer generate the cash needed to meet current obligations and you continue to meet those obligations? Borrow... or I should say borrow against the future. Countries do it... states do it... individuals do it.
New Jersey's fiscal probs regarding borrowing are only a piece of its messy puzzle. You have other flaws in strategy such as making unrealistic assumptions of returns on investments that have led to declining revenues, coupled with reducing tax revenues due to population losses etc. etc. on top of which spending has
not adjusted to such lower revenues. Therein lies the rub... New Jersey
is bankrupt. Period. It's a done deal. You continue to spend more than you have and do not make up for it at some point with increasing revenue... at some point you will go bankrupt whether you be a country, a state, or an individual.
Japan's economy is in trouble... heck Britain is headed for bankruptcy if it doesn't stop its "madness"! etc. etc.
There's more to it than government corruption or political agendas. The powers that be in corporations who for the most part are not regulated have
run their companies into the ground for short-term monetary gain strictly for themselves, it's true. And yet plenty of individuals live way beyond their means out of that same materialistic mindset, and borrow borrow borrow in maxing out their credit cards and living in houses they really cannot afford if they were to save for the future sufficiently. And some people just get caught... they don't necessarily live beyond their means but something catastrophic hits them like illness and medical bills that pile up they cannot afford... yet still they too go bankrupt because what they bring in is not enough to pay their obligations off that exponentially increase with finance charges etc etc.
I think we will see unprecedented fallout in 2009. The job losses piling up in the US alone are staggering! Where will all these displaced workers go to work? Population shifts create additional problems for both the exit and entering states. You can dream about "green economies" all you want but tooling up for that takes time so that in the short term it won't put food on a table or shelter over a family's head.
A younger friend of mine is thinking of going back to grad school, as they are facing most likely being let go from their present job. And yet this friend is trying to figure out how to pay for that schooling and have a place to live and something to eat daily without a paycheck coming in. A co-worker suggested taking out a loan (which is fine if you can get one for extending your education) but also getting some credit cards to use??? <head shaking> Enough said.
According to the numbers and generally understood economic benchmarks for depression, the US is not that bad off presently. Yet we are in a very deep recession that for some people does function more or less like a depression... for example people who cannot find work for an extended period of time such as longer than a year and whose unemployment benefits have run out and what now? When you have the size of bubble in the stock market and real estate and incomes there has been AND that has been kept up for so long, when the inevitable downturn finally happens it's not the kind of correction you have with a typical recession. It's a
huge correction and we have
not bottomed out yet... no way.
Truth is... no one can say just exactly when this ride (or the madness) will end. Yet as that great actress Bette Davis said with certainty, playing the character Margo Channing in the movie All About Eve, "Fasten your seatbelts. It's going to be a bumpy ride."
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