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In the #News #Economy #Politics - US and Globe On The Brink Of A Crisis

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“If you don’t read the newspaper, you’re uninformed. If you read the newspaper, you’re misinformed.”

“Whenever you find yourself on the side of the majority, it is time to reform (or pause and reflect).”

― Mark Twain

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US and Globe On The Brink Of A Crisis

Please join the US Bonds Report and Economy & Stocks Report for further discussion. You must separate from the majority in 2025.

The financial situation of Los Angeles is dire, according to City Controller Kenneth Mejia. The city is facing a $140 million revenue shortfall this fiscal year, with an additional $73 million decrease expected next year. Overspending is projected to be $300 million over budget. The city’s budget problems are compounded by less revenue and higher expenses. Council Budget Chair Katy Yaroslavsky emphasized the need for changes, including possible cuts, as the city also deals with the aftermath of January’s fires. The fire department faces $100 million in overtime costs, and urgent upgrades are needed for facilities and equipment. Additionally, concerns over wasteful spending, such as untracked funds for homeless services, have been raised. The city is not only trying to fix the current budget but also addressing long-term fiscal challenges.

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Los Angles is not the only city in trouble in the US.

The city of Seattle is also in trouble, though mainstream media won’t touch the story.

Seattle faces a potential $260 million budget deficit, exacerbated by inflation and rising wages. To avoid severe cutbacks, city leaders relied heavily on the Jumpstart payroll tax, designed to fund pandemic recovery and affordable housing. However, the tax revenue has fallen short, coming in 11.5% below forecasts, with a $46.8 million shortfall for 2024. This decrease follows a period of over-performance in 2023, and the city’s Office of Economic and Revenue Forecasts will continue to monitor the situation.

Mayor Bruce Harrell acknowledged the fragile nature of the economic recovery, noting that some major employers have moved high-paying jobs out of Seattle. Critics, including some business groups and political challengers, argue that the Jumpstart tax was never meant to fund ongoing operations and should focus on capital projects like housing. These groups also warn that the tax’s reliance on a small group of businesses makes it volatile.

The city’s budget challenges stem from rising costs, including wage increases for workers and a new deal for police officers, as well as inflation. Despite the tax shortfall, Seattle officials are exploring additional revenue sources and potential expense reductions to address the deficit while maintaining essential services.

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The growing financial troubles of major US cities is not restricted to Los Angeles or Seattle

Top five cities in trouble include:

1. Chicago, Illinois

Chicago has faced serious fiscal difficulties due to a combination of high pension obligations, declining property values, and sluggish economic growth. The city’s pension funds are severely underfunded, with the gap running into billions of dollars.

Chicago has raised taxes in recent years, including sales and property tax increases, but still faces budget deficits and is struggling to manage its pension liabilities.

2. Detroit, Michigan

Detroit faced a historic bankruptcy in 2013, which was driven by declining manufacturing jobs, population loss, and overwhelming debt. Though the city has made some progress since then, it still deals with high levels of debt and pension obligations.

The city has seen some revitalization efforts, but high crime rates, and a shrinking tax base remain challenges for the city’s financial health.

3. New York City, New York

New York City, one of the largest cities in the U.S., faces fiscal problems related to high public sector costs, pension obligations, and a fluctuating tax base. The city relies heavily on property taxes and income taxes, which can fluctuate with economic cycles.

The city was hit particularly hard by the COVID-19 pandemic, which led to job losses, declining revenues, and rising demands for services, particularly in healthcare and public safety.

4. Baltimore, Maryland

Baltimore faces significant fiscal issues due to declining population, high crime rates, and a struggling economy. Additionally, the city has substantial pension liabilities, which have worsened over time.

Baltimore has faced fiscal crises that have led to service cuts, and the city is working to restructure its finances, but economic revitalization has been slow.

All of these concerns are made worse by underfunding and growing insolvency of pension funds across numerous States.

The Pension Crisis

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Use your Subscription Level Access Code to access the full review.

The US, including local State and federal level, faces significant financial challenges into the 2030s. While the Federal Reserve can create money to address debt, states cannot, leaving them reliant on highly unpopular budget adjustments such as spending less and taxing more. Look at the backlash the Trump Administration and Elon Musk have faced when spending is reduced only fractionally. Numerous States are at risk of default due to high debt, unfunded pension liabilities, weak economies, and shrinking populations. States like Illinois, Kentucky, New Jersey, California, New York, and others have severe pension issues, while Connecticut and Massachusetts face extremely high per-capita debt levels. Alaska, Louisiana, and Hawaii are vulnerable due to falling tourism and stubborn green movement away from fossil fuels. Nearly all States, especially high tax ones, are facing population loss.

The main leverage to avoid default, raising taxes regardless of the economic backdrop, is becoming ineffective. As long as money and people are mobile, especially high worth individuals and corporations, raising taxes to fuel their social agendas above everything else, produces unexpected shortfalls as populations shift. Seattle is learning this lesson real-time. Although most local and State governments should survive this economic down cycle, it’s highly unlikely they will survive the next one. Please watch the Economy & Stock and US Bond Reports for further discussion about timing.

People inherently know something is wrong. Simple things like groceries have become a luxury for young people, with many struggling to afford necessities. Fortune describers how parents are stepping in to cover expenses, contributing an average of $220 per month toward their adult children’s grocery bills. Older generations have no concept of the financial problems facing younger generations. No doubt, some young adults are making irresponsible choices, but millions more are grappling with the fallout of a deeply broken economy (03/11/25 Report — Shit Show Has Arrived), shaped by decades of reckless policies set in motion long before they were born. In addition, parents are also covering other costs like cell phone bills (73%), health insurance (69%), rent or mortgage (66%), and tuition (57%). While parents are supporting their Gen Z children, they’re sacrificing their own financial future in the process. Spending more on their children ($1,589/month) than on their own retirement savings ($673/month) illustrates a similar Ponzi scheme described in The Pension Crisis.

Households struggling to support their children often find it difficult to support themselves. Living “paycheck to paycheck” describes situations where essential expenses consume over 95% of a household’s income, leaving little room for savings or discretionary spending. A 2024 Bank of America Institute survey found that nearly half of consumers feel this strain, while another analysis indicates that about 25% of Americans face this reality. This trend has been exacerbated by rising costs of necessities such as groceries, car insurance, and childcare.

While lower-income households are more likely to live paycheck to paycheck, even some higher-income families are affected due to high housing costs, such as large mortgage payments. Housing expenses are typically difficult to reduce, making it hard to break the cycle of living paycheck to paycheck.

This financial strain can be detrimental to one’s well-being, as these households typically have little savings and are vulnerable to financial shocks, like inflation or job loss. If these shocks occur, people living paycheck to paycheck are forced to cut spending sharply, which can also impact the broader economy.

The minority, which ideally includes all subscribers, stays ahead by recognizing underlying instabilities in the old system before they become evident to the majority. This group strategically offloads assets at risk of collapse in a zero-bid environment and reallocates toward safer, more neutral, or “transitional assets” that serve as a bridge between the old and emerging financial systems. We will delve deeper into this trend in our reports on Bitcoin, Gold & Silver, the US Dollar, Commodities & Energy, and other key Reports. These reports provide ongoing analysis of the market backdrop, timing, and trade life cycles.

Follow me on ð• or Facebook for further discussion.

———————————-

The Matrix provides market-driven trend, cycles, and intermarket analysis.


Source: http://www.edegrootinsights.com/2025/04/in-news-economy-politics-us-and-globe.html


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