Today, New York State Governor David Patterson held a press conference with the same tone as California did about a month ago. "We are broke and we'll need federal assistance"An article about it can be found here. Since New York State derives a whopping 20% of it's revenues from Wall Street which is obviously not making the money it once was, the State find itself much like a welfare recipient told that he will have to go to work or sell the bimmer. The falling revenues have ballooned the deficit projection for the state to $12.5 Billion. So here's my question for the day....if this was your household and you found out that next year you'd be severely in debt, what would you be expected to do? Probably sell your belongings, get another job, move from your home and reduce your standard of living. And when a government faces extreme debts? We just ask for a loan, a grant or assistance from the federal government's checkbook from the Bank of China. Is it any coincidence that the first two states to publicly acknowledge their financial turmoil are irrefutably and by far the two most socialistic and big government run liberal homesteads? Eh....don't think so.
So what should these states do? Perhaps some welfare reform, perhaps some funding cuts for their ultra-liberalized education system and less government bureaucracy. I don't think New York or California deserve any more federal grants. In 2006, New York received 5.9% of the entire country's budget. ($144 Billion dollars in government assistance) What American in their right mind would let the State get away with asking for more? Trim some fat people.....
So what did we learn today?
#1.Socialism and Capitalism don't mix. You can't have it both ways. If you're going to spend the money, you'd better have it to spend before you write the check. However, there is always the US Government which has opened the door and given itself to become the "Sugar-Daddy" of the new century.
#2. If you're going to ride the liberal high tide of spending on government social programs on the backs of Wall Street investors in the good times, then you'd better think twice about denouncing the "evils of American Capitalism" in the bad at the risk of appearing to be a financially illiterate kool-aid drinker.
#3. Diversify your investments and save 10 percent of your income for a rainy day. These "ideas" have been around a while. If NY knew that 20% of it's income depended on securities who hedged that the overinflated prices of 600 sq. ft. Manhattan apartments averaging $1.67 M would continue to rise, don't you think you'd have a back-up plan if Wall Street had a period of repricing? That never happens though..I mean look at history......or not. And just because you have the money doesn't mean it needs to be spent. It rains in New York right?
This is one socio-economic policy whose merits the Manhattan liberals would have a hard time explaining. (Notice a couple of the links are to the unbiased NY Times?)