There’s One Huge State Budget Crisis That Everyone Is Refusing To Talk About: TEXAS
You know the story and you know the names: states like Illinois, New Jersey, New York, and California are supposed to be in huge financial trouble thanks to bloated governments, business-unfriendly regulations, and strong public sector unions.
After a crisis-free 2010, investors are expected to punish these hotbeds of bad governance in a muni bond market rout, at least if pundits like Meredith Whitney are correct.
But there’s one state, which is fairly high up on the list of troubled states that nobody is talking about, and there’s a reason for it.
The state is Texas.
This month the state’s part-time legislature goes back into session, and the state is starting at potentially a $25 billion deficit on a two-year budget of around $95 billion. That’s enormous. And there’s not much fat to cut. The whole budget is basically education and healthcare spending. Cutting everything else wouldn’t do the trick. And though raising this kind of money would be easy on an economy of $1.2 trillion, the new GOP mega-majority in Congress is firmly against raising any revenue.
So the bi-ennial legislature, which convenes this month, faces some hard cuts. Some in the Texas GDP have advocated dropping Medicaid altogether to save money.
So why haven’t we heard more about Texas, one of the most important economy’s in America? Well, it’s because it doesn’t fit the script. It’s a pro-business, lean-spending, no-union state. You can’t fit it into a nice storyline, so it’s ignored.
But if you want to make comparisons between US states and ailing European countries, think of Texas as being like America’s Ireland. Ireland was once praised as a model for economic growth: conservatives loved it for its pro-business, anti-tax, low-spending strategy, and hailed it as the way forward for all of Europe. Then it blew up.
This is the sleeper state budget crisis of 2011, and it will be praised for doing great, right up until the moment before it blows up.
State bankruptcy bill imminent, Gingrich says
Lisa Lambert
WASHINGTON— Legislation that would allow U.S. states to file for bankruptcy will likely be introduced in Congress within the next month, Newt Gingrich, the former speaker of the House of Representatives and a powerful Republican party figure, told Reuters on Friday.
For months he has championed letting states file for bankruptcy in order to handle their long-term budget problems despite resistance from states and investors in the $2.8 trillion municipal bond market.
“We’re faced with the danger that the states are going to try to show up and say to Washington: You have to give us money,” Gingrich said. “And I think we have to have an alternative that allows us to say no.” Read more…
Chinese Silver Demand Surges Incredible Four Fold in Just One Year
Gold is flat and silver marginally lower despite dollar weakness this morning. Some market participants are blaming the precious metal sell off on speculation that China may take more monetary action to curb surging inflation. This is unlikely to be the reason for the sharp selloff, rather it looks like another paper driven sell off in the futures market by leveraged players on Wall Street with various motives.
The fact that silver is again in backwardation at the front end of the curve suggests that tightness in the physical bullion market continues and may even be deepening. Indeed, the massive increase in silver bullion demand from China (confirmed overnight – see below) suggests that silver’s bull market remains very much intact despite becoming overvalued in the short term towards the end of 2010.
Table Courtesy of Mitsui
Surging inflation in China, India, wider Asia and much of the world is of course positive for gold and silver as it will likely lead to an even greater appetite for the precious metals in order to protect against the ravages of inflation and the further depreciation of paper currencies. Read more…
Iran Escalates Attacks on Christians
Joseph DeCaro
TEHRAN, Iran (Worthy News)– Last Christmas, the Iranian government began arresting Christians, raiding and ransacking their homes as they are taken to prison and interrogation.
Since December 26, anywhere from 100 to 600 Christians, often converts from Islam, have been detained without charge and without access to lawyers or family members for what the governor general of Tehran Province claims is their “corrupting” influence on society.
Along with Christians, other Iranian religious minorities — Zoroastrians, Sufis and Sh’ia — have also come under closer government scrutiny.
Reportedly, Iran’s religious minorities are increasing in large numbers because many of its Muslims will no longer tolerate their government’s intolerable version of Islam.
Arctic Sea-Ice Controls the Release of Mercury
Mercury is the most high profile atmospheric contaminant entering the Arctic because it is a potent neurotoxin that biomagnifies in food webs. In the troposphere (lower atmosphere) it is primarily present in the form of gaseous elemental mercury. 
Photochemical reactions during the Arctic spring (Figure 1) combine salts from sea ice and the gaseous mercury in the air to create an oxidized reactive form of mercury. This mercury is then deposited to snow and ice. These deposition events require salty sea ice and snow crystal surfaces so they are widespread in the Polar Regions.
Mercury (Hg) is the only heavy metal that is essentially found in gaseous form in the atmosphere. Since the industrial revolution, emissions of anthropogenic Hg resulting from the combustion of fossil fuels have exceeded natural emissions. Both anthropogenic emissions and natural emissions (which mainly stem from the oceans and gases released by volcanoes) reach the Polar Regions under the action of atmospheric currents. In this way, fallout from global atmospheric pollution contributes to depositing mercury in Arctic ecosystems, even though these are far away from major anthropogenic emission sources. Read more…
Michio Kaku Warns the World Citizens of Potential Mega Earthquake
Physicist and author of “Physics of the Future” Michio Kaku warned world citizens this morning on Good Morning America about the pending threat of enormous earthquakes.
“In our life time, we could very well see one of these cities destroyed,” Kaku said. “Los Angeles, San Francisco, Mexico City, Tehran, Tokyo.”
Kaku pointed to changes in the physical structures of human civilization, and how the new composure poses many risks. “We are creating mega cities where there used to be fishing villages,” he said.
About the many disasters this year, he said: “Well, look at the Chilean earthquake. You realize it was so big it actually rocked the planet earth. The axis of the earth shifted 3 inches as a result of that 8.8 earthquake. The day is no longer 24 hours, it’s been shortened by one micro-second, That’s how big that earthquake was.”
Bank of America posts loss on mortgage problems
Joe Rauch
and Maria Aspan
CHARLOTTE, N.C./NEW YORK, Jan. 21, 2011 (Reuters) — Bank of America Corp, the largest U.S. bank, reported weaker-than-expected revenue and a second straight quarterly loss after its limping mortgage business triggered writedowns and legal settlements.
As the financial crisis was ramping up, then Chief Executive Kenneth Lewis bought Countrywide Financial Inc for $4.2 billion. Current CEO Brian Moynihan is still coping with the aftermath.
In the fourth quarter, Bank of America took a writedown of $2 billion to recognize the declining value of Countrywide. The bank also set aside $4.1 billion for legal costs linked to home loans it is buying back from investors, or is likely to buy back.
“Countrywide is still hurting them and it will continue to. It’s like a tooth being pulled — it’s only going to feel good when it’s done,” said Matt McCormick, portfolio manager at Bahl & Gaynor Investment Counsel Inc in Cincinnati, which does not own Bank of America shares.
It was not clear how Bank of America’s results compared with analysts’ average estimates, given the profusion of special items in the report. Read more…
Twin suns setting on the Earth?
Tatooine’s twin suns – coming to a planet near you just as soon as Betelgeuse explodes
Twin suns – setting on Earth any day now. Rumors of possible wamp rats and Sarlaac manifestation yet to be confirmed.
- Betelgeuse losing mass
- Explosion will create “new sun”
- May be set for 2012 appearance
IT’S the ultimate experience for Star Wars fans – staring forlornly off into the distance as twin suns sink into the horizon.
Yet it’s not just a figment of George Lucas’s imagination – twin suns are real. And here’s the big news – they could be coming to Earth.
Yes, any day now we see a second sun light up the sky, if only for a matter of weeks.
The infamous red super-giant star in Orion’s nebula – Betelgeuse – is predicted to go gangbusters and the impending super-nova may reach Earth before 2012, and when it does, all of our wildest Star Wars dreams will come true.
The second biggest star in the Orion Nebula is losing mass, a typical indication that a gravitation collapse is occurring.
When that happens, we’ll get our second sun, according to Dr Brad Carter, Senior Lecturer of Physics at the University of Southern Queensland.
“This old star is running out of fuel in its center”, Dr Carter said. Read more…
Violent Seismic Activity Tearing Africa in Two
Cynthia Ebinger, a geologist from the University of Rochester in New York, could hardly believe what the caller from the deserts of Ethiopia was saying. It was an employee at a mineralogy company — and he reported that the famous Erta Ale volcano in northeastern Ethiopia was erupting. Ebinger, who has studied the volcano for years, was taken aback. The volcano’s crater had always been filled with a bubbling soup of silver-black lava, but it had been decades since its last eruption.
The call came last November. And Ebinger immediately flew to Ethiopia with some fellow researchers. “The volcano was bubbling over; flaming-red lava was shooting up into the sky,” Ebinger told SPIEGEL ONLINE. Read more…
USDA admits role in large bird kill
By Brett Michael Dykes
When birds began mysteriously falling from the sky a couple of weeks ago, some conspiratorial minds were convinced that the government was involved. One line of speculation held that the Pentagon was conducting a secret weapons experiment that killed the birds. Another theorized that the feds were covering up the air-befouling practices of a major player in agribusiness or the energy industry.
Now we know that the government did have a hand in at least one of the kills, though this revelation doesn’t seem to involve sinister intrigue.
Yes, the Agriculture Department said Thursday, it did have a hand in the recent mass killing of starlings in South Dakota. According to the USDA, the birds were poisoned in Nebraska to help farmers who had complained about starling flocks defecating into livestock feed troughs. The birds dropped dead en masse after migrating north.
According to the Christian Science Monitor:
“The USDA’s Wildlife Services Program, which contracts with farmers for bird control, said it used an avicide poison called DRC-1339 to cull a roost of 5,000 birds that were defecating on a farmer’s cattle feed across the state line in Nebraska. But officials said the agency had nothing to do with large and dense recent bird kills in Arkansas and Louisiana.
“Nevertheless, the USDA’s role in the South Dakota bird deaths puts a focus on a little-known government bird-control program that began in the 1960s under the name of Bye Bye Blackbird, which eventually became part of the USDA and was housed in the late ’60s at a NASA facility. In 2009, USDA agents euthanized more than 4 million red-winged blackbirds, starlings, cowbirds, and grackles, primarily using pesticides that the government says are not harmful to pets or humans.”
Surely this news will calm all the “aflockalypse” hysteria out there, right? Oh, who are we kidding: Any sign of federal involvement will be seized on as another layer in the elaborate cover-up.
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