07/11/12 Government finance at all levels seems to be unraveling. The city of Stockton, California declared bankruptcy. North Las Vegas, Nevada would be in the same boat if the state of Nevada allowed for it. Michigan’s state government has taken over the management of four cities, and the state’s largest city — Detroit — has a $200 million deficit and has made a deal with the governor for the state to have a hand in fixing the city’s financial problems. On the federal level, the bond rating agencies — S&P and Moody’s — have dared to downgrade the government’s debt.
On the other side of the pond, Greece is an accident that keeps on crashing. Spain’s government is propping up its banks with European Union help, so that these banks can keep proping up the government by buying the government’s bonds — the equivalent of two drunks holding each other up. And the sad fact is Italy, Portugal and possibly France are not far behind.
Over here, the day of reckoning for the US may not be far off. Alan Hall, writing for the May edition of The Socionomist, writes that the era of big entitlement spending in America is over. Since the Great Depression, government entitlements have exploded, up 17-fold, as a percentage of total personal income. Hall uses Elliott Wave nomenclature to describe the phenomenon:
“advance in entitlements from the Great Depression fits within a classic parallel trend channel drawn off the lows of waves 2 and 4. Elliotticians will also observe that wave 4 in entitlements is testing the upper parallel of the channel and needs only one more decline and rally to complete the pattern.”
Read more: Democracy Reaches Its Limit http://dailyreckoning.com/democracy-reaches-its-limit/#ixzz20PsTbOdD
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