| beaches in Seattle, you will find a sign saying that "due to budget cuts of 2010" the city government can not afford to clean the site daily ... (Cronista.com) in U.S. states The real problem is evident |
| In FY 2010 the states of the Nation reported, overall, a deficit of $ s 200,000 million, equivalent to 30% of the budgets of all states |
Investors would do well to take this into account. In recent months, the U.S. fiscal mess has acquired an almost surreal. On paper, the country's federal deficit and debt numbers scared But in practical terms, the impact of those zeros that continue to accumulate seems decidedly abstract.
After all, so far the federal government has not cut spending but otherwise, because last year we applied the stimulus package. And the yields of Treasury bonds continued to fall, because Investors fleeing the crisis in the eurozone. The result is that the alarming figures seem a problem created mainly in the world of ciberfinanzas.
But there is one area where reality began to feel their weight, and it is in terms of the finances of the states. Just look at the statistics: a report from the Center on Budget and Policy Priorities U.S. released last month estimated that in fiscal year 2010, states reported the nation as a whole, a budget deficit of around u $ s 200,000 million, equivalent to 30% of the budgets of all states.
Last year, tensions were partially relieved by the stimulus Obama, but this explosion of spending is fading, and it is estimated that in fiscal years 2011 and 2012 have other states combined budget deficits of $ s 260,000 million. And in 2011, in places like New Jersey, Illinois, Nevada and Arizona, the projected deficit will exceed 35% over last year's budget.
So far the municipal bond market has been dangerously complacent about this, as yields on municipal bonds to 10 years remain slightly above 3%. But even if markets are relatively quiet, the key point is that state statistics have a very real, unlike what happens with the federal debt.
aside trivial matters like the Baths of Seattle, Washington is actually a state where the finances are pretty solid. In New Jersey schools, however, have had to cut classes and public sector employees in California are not charging their salaries regularly. In New York City has canceled an extension of the subway and in places like Illinois and San Diego are being renegotiated retirement benefits.
This in turn raises the question of what impact broader economic and psychological. For starters, the cuts appear to be undermining consumer confidence, which adds to the damage already caused by stubbornly high unemployment rate.
- AC AHANAOA
Miguel Leopoldo Alvarado
Founder and President
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