State bunkruptcies?

Originally published at Notes from the bunker…. You can comment here or there.

Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.

Wow. And that’s an understatement.

I was listening to someone talk about public employees pensions and the current state of the economy the other day. As I was listening I had a vision appear in my head. Imagine, if you will, a gallon bucket. Fill it with a gallon of water and lets call that water “general funds” or something similar. Now, get an ice pick and punch a hole in one side of the bucket near the bottom. Call that hole “pensions”. Punch a few more holes and give each one a name..”bonds”, “social services”, “schools”, and that sort of thing. Now, as the water goes out of those holes the level in the bucket is dropping, right? Okay, you have two choices – plug some of the holes or add more water. Lately it seems like no one plugs the holes, they just add more water. Head to the faucet (lets call it “taxes”) and get more water. As long as you can keep putting water in the bucket faster than its leaking out of those holes youre okay. But, as we are seeing, theres a bit of a drought going on..when you turn on the tap not as much water is coming out and its getting harder keep putting water into that bucket fast enough. So, you plug a few holes or pinch them off a bit. But unless you either find more water to put in that bucket, or you plug up some of those holes, or you do a combination of both….youve got a problem.

You saw that Camden NJ laid off 1/3 of its public employees, including the cops? Yeah…its like that.

i suppose its worth pointing out that some of the people getting water out of the holes in that bucket will not take kindly to someone plugging those holes up..