Now that it looks like the federal government is going to step in and prevent reality from falling on the mortgage market, Kentucky policymakers holding out hope for a federal bailout of our public employee fringe benefits mess have to know the cavalry isn't coming:
"In choosing inflation over the collapse of the real estate market, which a Freddie and Fannie bankruptcy would immediately produce, the government is trading lower home prices for higher consumer prices. However a real estate price collapse is inevitable. Either nominal prices will fall sharply, or real prices will be crushed even more. The government has predictably opted for the latter. So buckle up, and prepare for a dollar collapse and soaring consumer goods prices, as the direct consequences of this “bailout.” In the end, even those getting the bailout, holders of Freddie and Fannie insured mortgages, will lose, as the value of the dollars in which these bonds are denominated go up in smoke." – Peter D. Schiff, Euro Pacific Capital
In the midst of all this national turmoil, Kentucky is going to have to work out its own solution to our problems. And soon.
2 comments:
Past & Present Ky stewards have been in financial denial for decades!
In 1994 Governor Jones who spent more---as was traditional---and siphoned tax dollars from Kentucky Road Fund to balance Kentucky's bloated budget, caused formation of two very good task forces to study Kentucky's financial plight.
Commission On Quality & Efficiency studied appropriations while Commisison on Kentucky Tax Policy studied state's resources.
The easiest recommendations have been enacted but the hard recommendations dripping with political anilation were left undone till now.
To establish a budget that is fair, stable, consistent in 2008 and 2009 legislators must significantly reduce appropriations while raising resources, period!
That was the same mandate given by Ron Carson of Long Term Policy Research Center in 1994 to legislators; i.e., average growth rate of appropriaitons was 6% and tax resource growth rate was 5.3%!
They did nothing then!
dash
Kentucky leadership doesn't have the courage or will to solve real problems. All they can do is point the finger and chew up critical time. If you do what you've always done you will get what you always got. That summarizes leadership's approach and the special interest folks are happy with that. Too bad Kentucky public sector leaders don't have to perform like private sector leaders, who are accountable, and who do have to make tough, unpopular decisions in the real world. File it under too tough to handle for Kentucky's leaders - a true lose-lose for Kentuckians.
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