States in financial trouble – Don’t move there

While we concern ourselves with the state of the federal government, perhaps we should really be as much or more concerned with the financial stability of the state in which we live. This will determine how the basic safety of our family and ourselves fare. Fire, police and schools are impacted. Here tis:

Most people don’t consider this, but you should really look into the financial stability of any state that you’re thinking about moving to. If worse comes to worse, and the economy collapses, you want to make sure that the state you live in is fiscally responsible. States that have high debts and low credit ratings are living on the edge. Any major economic event could push them into bankruptcy.

That means pensions could go unfunded. Public services like law enforcement and firefighting would be understaffed. The infrastructure of the state would crumble, and public education would be decimated. Taxes would likely be increased, which would only exacerbate the financial problems of the state because businesses would leave, leading to more unemployment and a smaller tax base. Obviously, all of these factors could contribute to the risk of civil unrest.

So which states should you avoid? There are three factors you should look out for. There’s the amount of debt as a percentage of the state’s GDP, the amount of debt per person (debt per capita), and the state’s current credit rating.

The 10 states with the worst debt to GDP ratios are:

New York-22.71%

South Carolina-21.31%

Rhode Island-19.40%

Washington-18.83%

Florida-18.65%

Kentucky-18.50%

Illinois-18.45%

Connecticut-17.52%

California-17.18%

Pennsylvania-17.17

The 10 states with the most debt per person are:

Massachusetts-$11,337.63

Connecticut-$9,297.33

Rhode Island-$8,919.27

Alaska-$8,516.41

New Jersey-$7,517.15

New York-$7,040.97

Hawaii-$6,194.64

New Hampshire-$6,152.00

Delaware-$5,962.86

Vermont-$5,259.69

And perhaps the most important factor is the credit rating of any given state. This gives you a good idea of how investors think a state will fare financially in the future, as opposed to a state’s current financial woes. According to credit rating agencies like Standard and Poor’s, as of last year the states with the five worst credit ratings are: (Has interesting stats as well)

  • Illinois-BBB
  • New Jersey-A
  • Kentucky-A+
  • California-AA-
  • Connecticut-AA-

More at Preppers Blueprint

Department of Labor to ban financial advice from the airwaves?

Anyone out there who might have a clue how the Department of Labor controls what programming we have on the radio or television? Really, we know what this is about. Beginning of the Ministry of Thought Control being granted the purview to eliminate programing by ‘Rule.’ First the airwaves, soon the internet. Follow the link at the bottom of the post if you wish to get into the weeds and the politics of the issue.

Radio stations which carry money-related broadcasts like Dave Ramsey, Clark Howard and others will force the hosts to stay away from individual calls. Even telling an individual or family that it would be a good idea to put away the plastic and get out of debt is technically a form of “financial advice” that ultimately affects their ability to retire comfortably (or at all).

A proposed 33-page rule applying to investment advisers emanating from the Department of Labor would redefine the fiduciary relationship between investment advisers and their clients investing for retirement, which is the predominant objective of most investors. According to the Wall Street Journal, the rule “could be released as soon as this month.”

One side effect of the rule is that it could mark the beginning of the end of financial talk radio and TV broadcasts. Since such programs tend to lean center-right (there are exceptions, including Suze Orman), it seems mighty convenient for the government and its regulatory army that the press, particularly the Associated Press, has paid no visible attention to this apparently imminent rule.

DOL’s rule, once in effect, would require advisers to act in their clients’ “best interests,” a stricter standard than the current requirement that they place their clients in “suitable” investments.

More at Newsbusters

Banks forced to buy government debt -time bomb!

It sure  doesn’t take a genius economist to figure out where this is taking us. Keeping interest rates low is a requirement in keeping the charade going. I gather thus, if any of the PIGS countries default, the result will take the banks down as well as their poor customer’s money down with them. Now this is the ultimate time bomb. The secret is out.

US and European regulators are essentially forcing banks to buy up their own government’s debt—a move that could end up making the debt crisis even worse, a Citigroup analysis says.

Regulators are allowing banks to escape counting their country’s debt against capital requirements and loosening other rules to create a steady market for government bonds, the study says.

“Captive bank demand can buy time and can help keep domestic yields low,” Lorenzen wrote in an analysis for clients. “However, the distortions that build up over time can sow the seeds of an even.bigger crisis, if the time bought isn’t used very prudently.”  More at CNBC

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