What will eventually happen to states that are broke

[nick1985]

California, Illinois, etc.

What happens in the end? They cant print money like the federal government, and they are billions and billions in debt. Can they keep borrowing money somehow? When will they just have to shutdown the state government and not pay any bills? Would it ever get to that point?

 

[MotF Bane]

My guess is the feds will bail them out.

 

[nick1985]

My guess is the feds will bail them out.

How long can this cycle continue before the entire economy collapses under the weight of our debt and we have a chaos in the streets and anarchy? Would/could that ever happen?

 

[nageov3t]

all ur monies are belong to them.

 

[Homerboy]

My guess is the feds will bail them out.

correct most likely. But whatya gonna do?

 

[Homerboy]

How long can this cycle continue before the entire economy collapses under the weight of our debt and we have a chaos in the streets and anarchy? Would/could that ever happen?

In the immortal words of the great Kevin Garnett "Anything is possiblllllllllllllllle!"

 

[PokerGuy]

One of two things will happen. One, the federal government will start being a guarantor for the state debt, thus enabling the state to continue it's irresponsible and unsustainable spending habits. Two, the federal government could just print up some more billions and hand them to the states to spend.

Either way, the spending will continue until the federal government itself is no longer able to borrow money because of the immense debt burden. At that point, all bets are off and the economy is due for a full reset.

 

[Jaskalas]

You could find your answer NEXT MONTH if California does not sign a budget.

 

[StageLeft]

One of two things will happen. One, the federal government will start being a guarantor for the state debt, thus enabling the state to continue it's irresponsible and unsustainable spending habits. Two, the federal government could just print up some more billions and hand them to the states to spend.

Either way, the spending will continue until the federal government itself is no longer able to borrow money because of the immense debt burden. At that point, all bets are off and the economy is due for a full reset.

this

 

[Vette73]

Same as any business owner/home owner. They will default on their debt. Most State debt is not secured so their credit rating drops and also employees and some services will shut down.
In VA when money got tight we shut down rest stops as one cost cutting item.

 

[rudder]

They will merge with the District of Columbia and suddenly have $18,000 to spend on each student per year.

 

[DesiPower]

These states should issue more bonds and sell them to China. Afterall, the things they are trying to do like 30% electricity from renewable sources by 2020, these things will be a boost to Chinese economy. Eventually they will be the one selling solar panels and Lithium and stuff like that...

 

[Anarchist420]

I guess the Federal Government will continue to bail them out, but what they should do is cut spending.

 

[QuantumPion]

When they run out of money they elect a responsible adult to put their finances back in order and tell the union children "NO." ala Chris Christie.

 

[Jaskalas]

When they run out of money they elect a responsible adult to put their finances back in order and tell the union children "NO." ala Chris Christie.

California tried that. They elected a governor and then turned around and cut his balls off the next election, never did they elect a responsible legislature. One governor in a system of government is quite powerless.

 

[QuantumPion]

California tried that. They elected a governor and then turned around and cut his balls off the next election, never did they elect a responsible legislature. One governor in a system of government is quite powerless.

Doesn't NJ still have a democrat-controlled state legislature as well? Maybe they are just less retarded then the California democrats, I don't know where the difference lies. Maybe it is because the people of NJ actually realized the mess they were in and the only option to fix it. Or perhaps Cali has a much larger un-taxed voting population?

 

[nageov3t]

we still have a democrat-controlled legislature, but the NJ governorship is one of the most powerful in the union thanks to line item veto powers.

 

[theeedude]

CA political system is messed up. There is 2/3rds requirement to pass a budget, so anyone can block or corrupt changes without taking any responsibility for it. This is where we are headed on national level with the filibusters. Power without responsibility leads to this.

 

[ShawnD1]

we still have a democrat-controlled legislature, but the NJ governorship is one of the most powerful in the union thanks to line item veto powers.

Do these spend-happy retards act the same way in their personal lives? I always wonder that.

"Hmmm well I want this expensive leather couch and I refuse to cut any of my other spending. I think I'll just buy it on credit and make the bare minimum payments until I'm dead"

 

[nageov3t]

Do these spend-happy retards act the same way in their personal lives? I always wonder that.

of course.

see also: the entire housing bubble/crisis

 

[WhipperSnapper]

I'd like to see what would happen if a state declared bankruptcy. Could a state then be forced to give land and other assets to the debtors? Could a state be forced to sell land and assets to pay its debts?

 

[kranky]

Do these spend-happy retards act the same way in their personal lives? I always wonder that.

"Hmmm well I want this expensive leather couch and I refuse to cut any of my other spending. I think I'll just buy it on credit and make the bare minimum payments until I'm dead"

It's more like "I want this expensive leather couch and my budget won't allow it and I'm at the limit on my credit cards (=state budget ceiling). If they won't raise my limit, I could think about cutting back in non-essential areas but that will cause me problems with my family (=people who financed my election and need paybacks). In that case, I have no choice but to stop feeding my family (=lay off teachers and police) until they cave in to my demands, because they won't let my family starve.

They always trot out the "have to lay off teachers and police" threat because that's what will galvanize the public to pressure on the legislature. That way they don't have to make any tough choices.

 

[Jaskalas]

CA political system is messed up. There is 2/3rds requirement to pass a budget, so anyone can block or corrupt changes without taking any responsibility for it. This is where we are headed on national level with the filibusters. Power without responsibility leads to this.

I hate to agree with you on this, but I do. If the simple majority got what it wanted then we'd at the very least move along and see what works and fails first hand.

 

[Binarycow]

I say sell half of those failed states to China then balance the budget of the other half with that money.

 

[Slew Foot]

Fed bailout, duh, its an election year, and Obama and the dems need the votes.