When will the recession end? Part 15 Year-end predictions for 2009 starting to come true

Even I was surprised how quickly the economic situation in the US is deteriorating and how some of my predictions made on Dec 28, 2008 for 2009 are already starting to come true in early 2009..for example...

 Global Hot spots?  PREDICTION [...local US state governments will teeter on the verge of bankruptcy and services are drastically curtailed or eliminated. ]

 

REALITY

On Feb 2, 2009 the State of California announced that it was bankrupt, with a $42 billion dollar budget deficit. The news received relatively little national mass media coverage. Local news stations reported:

"Declaring itself officially broke, the state government will begin issuing IOU's instead of check for grants, schools and any other organization or program which was previously receiving funding. Additionally, your California income tax refund check this year will not be sent out until after a balanced budget is passed. Those who have already filed their taxes will get an announcement noting the delay…[…]… residents won't be getting their state tax rebates, scholarships to Cal Grant college will go unpaid, vendors invoices will remain uncollected and county social services will cease. Services and payments will resume once state legislators come to an agreement on the budget. The Governor's plans involve a mix of spending cuts and a temporary sales tax increase, along with streamlining some of the state government's processes…."

CNN reported: "Some 46 states face budget shortfalls, forcing them to slash funding for many services," …[..]… "But California, the largest state in the union by population, faces a deficit that totals more than 35% of its general fund."

 Global Hot spots?  PREDICTION  [Creeping global protectionism increases, replacing globalization and free trade-Watch for new tariffs in India, China, USA and Russia]

REALITY

Remember back in November of last year at the G-20 conference when all the participants plegded not to stir protectionism. HaHa Fat chance. This round of "verbal" trade wars between Canada and the US will eventually be settled,  by the US congress backing down from protectionist threats, simply because the US does not produce enough local steel and does not have enougth steel-making capacity to meet its emerging infrastructure needs. America also needs to import iron ore from Canada to keep its steel mills going. The "Buy American" rhetoric is  designed for local voter consumption and eventual legislation will likely be watered down, taking Canada off the hook. (see  'Buy American' Rider Sparks Trade Debate.

But this won’t be the last hint of protectionist fights. They will continue globally in more subtle forms in every major trading country

 

Walter Derzko, Smart Economy, Toronto

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression features 45 opportunity scenarios.

Related Recession Posts

When will the recession end? Part 14 Four options for America's race to the bottom

When will the recession end? Part 13 Thirteen economic questions that economists can't answer

When will the recession end? Part 12 Bad times are good times for startups

When will the recession end? Part 11 Bank of Canada optimism

When will the recession end? Part 10, The Conformity Trap or Don't count on your economist for advise

When will the recession end? Part 9 Humor will signal recession /depression bottom

When will the recession end? Part 8 Lessons Learned from the last Post 9/11 recession; designing brilliant winning business models

When will the recession end? Part 7 False signals of recovery

When will this recession end? Part 6 The USA Paradox; Cheer vs Fear vs Transformation

When will the recession end? Part 5 Stop Auto Industry Bailouts, start buying Electric

When will the recession end? Part 4 The double dip housing crash in the USA

When will the recession end? Part 3 The coming collapse of the American Middle Class into an Underclass

When will this recession end ? Part 2 Do you listen to the Optimists or the Pessimists in 2009?

When will this recession end?

82 Signposts to the current Recession Depression Summary from 2008

 

© 2005-2009

Walter Derzko -"Changing the world, one idea at a time"©

Author of the soon-to-be-released book: Hard Times Golden Opportunities.. about opportunity recognition in a recession/ depression features 45 opportunity scenarios.

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