You don't have to be a futurist to see the future. Unless we get the right leadership - we are just 5 years from Spain ... and not the good parts.
He depends on government handouts of €530 ($702) a month – less than half the amount he needs just to pay his mortgage – and is convinced that the bank is about to repossess the flat where he lives with his wife and three children.It's only starting, and it's coming here.
“I am legalised here, but for more than five years I’ve not been working,” says Mr Ekenobaye. “We are trying to do whatever we can.”
“In the past four years we have lost 25 per cent of our income,” says José María Fraile, the town’s mayor. “At the moment there’s no liquidity ... The [credit] window has closed.”
Mr Fraile is negotiating with trade unions to fire 190 people, a quarter of the city’s workforce, as a way to save money. One private company responsible for sports facilities has obtained a court order to sequester municipal assets to cover millions of euros of unpaid debts. Valoriza, another company, is owed €80m for years of garbage collection and cleaning.
We know about Detroit - but what about States? The first shoe to drop in the USA is already going; California.
“This year the state will directly spend $32 billion on employee pay and benefits, up 65 percent over the past 10 years,” says Crane later. “Compare that to state spending on higher education [down 5 percent], health and human services [up just 5 percent], and parks and recreation [flat], all crowded out in large part by fast-rising employment costs.” Crane is a lifelong Democrat with no particular hostility to government. But the more he looked into the details, the more shocking he found them to be. In 2010, for instance, the state spent $6 billion on fewer than 30,000 guards and other prison-system employees. A prison guard who started his career at the age of 45 could retire after five years with a pension that very nearly equaled his former salary. The head parole psychiatrist for the California prison system was the state’s highest-paid public employee; in 2010 he’d made $838,706. The same fiscal year that the state spent $6 billion on prisons, it had invested just $4.7 billion in its higher education—that is, 33 campuses with 670,000 students. Over the past 30 years the state’s share of the budget for the University of California has fallen from 30 percent to 11 percent, and it is about to fall a lot more. In 1980 a Cal student paid $776 a year in tuition; in 2011 he pays $13,218. Everywhere you turn, the long-term future of the state is being sacrificed.... I see it in my own town, the taxpayers have become slaves to the public employee retirees - fat boomers tooling around in their Harleys.
"It’s like the housing bubble and the Internet bubble. There were people around who were writing about it. It’s not that there aren’t people telling us that this is crazy. It’s that you refuse to believe that you are crazy.”California did not get there by accident. Their bad idea voters, after they soiled their next - have moved.
He hands me a chart. It shows that the city’s pension costs when he first became interested in the subject were projected to run $73 million a year. This year they would be $245 million: pension and health-care costs of retired workers now are more than half the budget. In three years’ time pension costs alone would come to $400 million, though “if you were to adjust for real life expectancy it is more like $650 million.” Legally obliged to meet these costs, the city can respond only by cutting elsewhere. As a result, San Jose, once run by 7,450 city workers, was now being run by 5,400 city workers. The city was back to staffing levels of 1988, when it had a quarter of a million fewer residents. The remaining workers had taken a 10 percent pay cut; yet even that was not enough to offset the increase in the city’s pension liability. The city had closed its libraries three days a week. It had cut back servicing its parks. It had refrained from opening a brand-new community center, built before the housing bust, because it couldn’t pay to staff the place. For the first time in history it had laid off police officers and firefighters.
By 2014, Reed had calculated, a city of a million people, the 10th-largest city in the United States, would be serviced by 1,600 public workers. “There is no way to run a city with that level of staffing,” he said. “You start to ask: What is a city? Why do we bother to live together? But that’s just the start.” The problem was going to grow worse until, as he put it, “you get to one.” A single employee to service the entire city, presumably with a focus on paying pensions.
I n August 2011, the same week that Standard & Poor’s downgraded the debt of the United States government, a judge approved the bankruptcy plan for Vallejo, California. Vallejo’s creditors ended up with 5 cents on the dollar, public employees with something like 20 and 30 cents on the dollar. The city no longer received any rating at all from Moody’s and Standard & Poor’s.
“Those who have money and can move do so,” Whitney wrote in her report to her Wall Street clients, “those without money and who cannot move do not, and ultimately rely more on state and local assistance. It becomes effectively a ‘tragedy of the commons.’ ”Behold the nation the Boomers have left their children. California dreaming to a nightmare in a generation - all because of their greed. Is that fair? All I know is that the nation that inherited literally and figuratively the most from their parents are, literally, leaving their children the least. I guess they figured that instead of parenting their children, they medicated them enough that they won't care.