Stealth Austerity Already Hitting the U.S.


Greg Hunter
USAWatchdog.com
June 30, 2010

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Last week, at the G20 meeting in Toronto, there was much discussion about money printing for bailouts and cutbacks for austerity. These were the two main options talked about to deal with the economic malaise facing the globe. The U.S. is firmly in the money printing camp. Europe, on the other hand, is officially taking the cutback and austerity path. Who knows how either will turn out? Phil Davis of Phil’s Stock World sums up the official G20 statement on the meeting this way, “There’s 26 pages of this nonsense but the gist of it is: We promise to keep bailing out the economies but as soon as that’s done then we are right on top of this deficit thing.” (Click here for Phil’s complete article.)

Money printing and austerity are not simply about choosing one or the other. I think both will happen, more or less, at the same time. Like it or not, what I call stealth austerity is already hitting America. Just look at individual state budgets that are covered in red ink. Last Friday, a Bloomberg headline read: “States of Crisis for 46 Governments Facing Greek-Style Deficits.” California alone has a budget shortfall of more than $19 billion, and that does not include the state’s under funded pension liabilities. The Bloomberg story said, “Forty-six states face budget shortfalls that add up to $112 billion for the fiscal year ending next June, according to the Center on Budget and Policy Priorities, a Washington research institution . . . . “States are going to have to cut back spending and raise taxes the same way Greece and Spain are,” says Dean Baker, co- director of the Center for Economic and Policy Research in Washington. “That runs counter to stimulating the economy and will put a big damper on the recovery in the latter half of this year.” (Click here for the complete Bloomberg story.)

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