State deficits

To my friends who insist we are in an economic recovery, I submit this piece:

http://www.wnyc.org/news/articles/154198

Especially poignant, and illustrative of the madness of fractional reserve financial systems:

"States can’t go into bankruptcy. They are not included in the bankruptcy code," he says.

Today’s outlook is different from the city's fiscal crisis of the 1970s when the state couldn't find any lenders. Instead, he says, bankers are circling Albany with tempting offers.

"The financial community is ready to lend the state all kinds of money. They have 20-odd schemes they are suggesting about how the state can borrow money," Ravitch says.

But New York has to be careful; borrowing would dig the state even deeper into fiscal trouble. Ravitch says New York is not alone: all 50 states are facing a total of $350 billion in deficits and more than $2 trillion in unfunded pension liabilities.

So Lt. Governor Richard Ravitch believes banks offering "20-odd schemes" of lending the state more money is beneficial? Could these "schemes" include derivatives and interest rate swaps, which have managed to destroy cities, states, and whole sovereign countries (see Greece)? I also like the following editorial comment,

But New York has to be careful; borrowing would dig the state even deeper into fiscal trouble.

Really? That's brilliant insight right there. Welcome to the world of comedic tragedy.

Look, no one says the nation's GDP isn't recovering--it is. But we are bouncing off the bottom. And due to systemic rot in a financial system full of off-balance, unaccounted-for toxic assets, no amount of window dressing of economic data or financial "reform" will result in sustainable economic recovery.