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Shocking Estimate: Expect 2 MILLION Layoffs By State and Local Governments

Mac Slavo
June 22nd, 2010
Comments (19)

(Video follows excerpts and commentary)

Thus far, we’ve been seeing the private sector taking the brunt of the unemployment numbers, with government reportedly the only producer of jobs during this crisis.

According the Meredith Whitney, who was one of the first to warn of an imminent collapse and crisis in 2007, there is no doubt that things are about to get much worse.

Government on all levels is going broke, and we’re hear about it in the form of budget cuts, which means people are about to start losing their jobs in droves. Whitney’s shocking estimate: 2 Million.

As far as the United States are concerned, Obama has proposed a $50 billion bailout package for the states, but the states are underwater $200 billion. So, it’s really a drop in the bucket. I have no idea if it goes through or not, but there’s structural problems that make it very difficult for the economy to move forward.

You have real structural employment issues and I don’t see that getting better anytime soon.

As of the most recent BLS report (May 2010), there are 15 million people officially unemployed in the USA. If Ms. Whitney’s estimate of 2 million to be laid off from public sector jobs is correct, we would see an instant 13% increase in the number of unemployed.

In addition to losses suffered in the primary income stream of Americans through unemployment, we’ve also lost what has become our secondary income stream for the last two decades – credit.

Home equity loans and credit card loans have not been available.

Credit card loans have been cut by $1.5 trillion. We think that goes up another trillion.

Whitney also says she “has no doubt” that the real estate market will double-dip.

There’s not a lot of mortgage activity out there. And you think, how can a home price grow or how can a mortgage market grow? In fact it shrunk for the 8th consecutive quarter.

There’s no other way to look at it. They’re [home prices] going down again.

And in regards to the positive consumer spending numbers and sentiment we’ve seen on and off for the last year? According to Whitney, much of that spending came from people who chose to spend their money on necessities and retail items rather than paying their mortgage. But that’s about to change:

What happened over the last year has been that the government and banks have provided a lot of mortgage modification programs. And a lot of consumers have been smart enough to say ‘ok well, if I wait, I can get a better deal on a modification program in two, three, six months, so I’m going to pay the things, the bills that I need the most – my credit card bill, my auto bill, even my home equity bill to a certain extent.’ And they’ve been not paying their mortgage bill.

The thing that’s happening for the first time in a year… is banks are actually accelerating their foreclosure programs, accelerating their short sell programs. So, you’re going to see people who weren’t paying their mortgage have to pay rent and that’ll be a jar to the economy.

After watching Meredith Whitney, do you still have any doubt as to where we are headed?

Watch the CNBC interview:

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Author: Mac Slavo
Date: June 22nd, 2010
Website: www.SHTFplan.com

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  1. One smart woman……..


  2. Dave says:

    State & local governments are laying off employees?

  3. MadMarkie says:

    This isn’t going to go over very well with the effected govt. employees. These people are the ultimate ‘Welfare Kings & Queens’. They are used to being paid high wages and provided with excellent benefit and retirement packages for doing very little, other than to harras their fellow Americans in one way or another. The Federal Government employees don’t participate in the poor ol’ broke so-called Social Security System either. They have their own retirement plan that the government hasn’t ‘borrowed’ the so-called ‘surplus’ from.

    And while I don’t wish anyone any ill will or harm; perhaps it’s time that these folks learn about how their ’employers’ (the taxpayers) live.  My wife and I haven’t been able to secure employment that has provided benefits for the past 6 years. She speaks four languages fluently and I have a degree in Business Administration.

    Welcome to the ‘hand-to-mouth-club’ all you former government employees. Good luck and God Bless.

  4. wheedle says:

    Many American workers in the private sector have loss their jobs, their savings,and are literally losing the roofs over their heads.
    Now more government workers are going to lose their jobs,savings,pension funds,health insurance,,,,,,,.
    Many of the riots in Greece, and Europe in general, have risen out of protest and strikes by ‘government’ employees.Since many government employees have a greater standard of living than the average private sector employee, you can expect them to become the ‘angriest of the angry’.
    Don’t be surprised if civil unrest and violence leads to U.N. peacekeeping forces entering major cities across the U.S. as police and soldiers begin to walk away.The Powers That Be will attempt to carve this country up like a pie.
    Gear up folks. You might have to load your cart and move to a ‘Free State’ if  disunion occurs.These are truly sad times for many. 

  5. BleakoEcobamics says:


  6. BleakoEcobamics says:

    HEY!  somehow by browser just grabbed my non-comment and posted ..

    I do agree that governments are bloated and many workers are well overpaid, especially when considering the pensions they are “entitled” to.  But, two points:

    1)  if this kind of massive layoff happens it won’t be without effect to the private sector and the rest of America.  Net wages plus multiplier effect could easily shave a percent off of GDP.

    2) Also, many of the workers laid off will not be the incompetent administrators in the DMV or SSA offices.  Where I am, a LOT of teachers have just been laid off — teachers who are not unionized and who have willingly taken pay cuts and other cuts in the last year or so.  In my county, nearly 75% of the public were in favor of, or at least neutral to, raising millage to keep the teachers.  But they were an easy target.  Not that I’m a fan of public schools, but the point is, the cuts won’t necessarily get the gov’t scum you would hope would be cast into the street. 

  7. Patriot One says:

    The Gravey Train is about to run off the tracks. City, State and Towns have the same number of building inspectors as they had in 2007. They are just driving around doing code enforcement to generate revenue.

    I’m sorry, but I for one will not feel sorry for the SOB’s that loose their jobs. Welcome to the real world, Produce or Perish. 

  8. Jack says:

    I believe there is much more pain to come in the job market. dailyjobcuts dot com , you can see a slow down, but  we will have to see if it is just that, a temp. slow down

  9. manos says:

    I agree with you guys, about non-producing public servants. In the private sector, an employee will be fired without any regret or whatever.
    I have a rhetorical question though. These people were hired, to serve some purpose; productivity, votes, bribery, nothing,  etc.
    so it’s not their fault totally. We must also, turn against those we signed the hiring documents, no matter how high they may be.
    My concern is that we live in a network of lives. Every person who loses his/her job, affects somebody else directly or indirectly. More or less like the butterfly effect.
    I think the subject is more complicated than it looks.

  10. Comments…..The ‘people’ who work for the government are in many cases not employable otherwise.  Many found their way in through affirmative action programs,  etc.  Most have no real work ethic or actual business skills.  These are the ‘liberals’ that everyone reads about, yet wonders who or where they are.  They’re about to get a dose of  ‘Main Street’ reality.

  11. schaef says:

    Interesting how she brings up the way that Americans are putting food on the table and contributing to the economy right now (by not paying their mortgages). How much longer does this last folks? Its not just the government that implements band aid fixes that only work on a temporary basis. The public obviously does it too. Once all of the savings accounts have been drained and all the homes have been foreclosed on and there is no more “discretionary income” flowing into this economy then what do we do? Once the government can no longer afford to extend unemployment benefits regardless of the fact that the unemployment rate continues to rise then what do we do?

  12. schaef says:

    I’ll answer my own question. WE PRINT THE MONEY TO LIVE ON. That’s what we do. Welcome to Zimbabwe

  13. bruno says:

    The Treasury Department sold $40 billion in 2-year notes on Tuesday at a yield of 0.738%, the lowest ever for the security. Investors offered to buy 3.45 times the amount of debt being sold, the highest since October.


  14. grannyb says:

    @ bruno – please explain…are those numbers encouraging or depressing? And what do they indicate is happening? And were these legit investors or did the Fed buy their own notes again?

  15. grannyb, essentially, every one and their mother is rushing out of equities and into what they perceive is the last bastion of safety: the US dollar.

    This is something I’ve discussed in previous articles and is to be expected. As it becomes evident that the world economies are not in recovery, we will see those treasury yields drop even more because investors will be unloading other asset classes and running to the dollar. The US dollar is not yet dead, but in my view could very well be on its way. We can expect extreme volatility in pretty much all asset classes going forward, including gold. This means that we will see wild swings in everything.

    I once compared this to a motor engine:

    • Visualize a car engine. When there is enough motor oil, the pistons are firing up and down rapidly and the system runs efficiently. When the oil dries up, the engine begins to deteriorate. It’ll go for a little while longer. And it’ll become much more violent and volatile each time it fires. Invariably the engine seizes up and fails.

    So, the US dollar may look good for a while. The event I am personally looking for that will start the dollar on a new downward decline is the coming bailout of state governments. Basically, it’s going to be Greece times 100. Our states have way more debt than Greece and the only way to prevent complete collapse and default of State public sectors is via federal bailouts – which means we have to print more money.

    This will be the signal for the rest of the world that the US really is screwed. And all of those people flooding into the US dollar right now will be rushing out of it just as quickly.

    My personal view on the matter is that we will see 30 year Treasury yields near early 1980 levels, which means we can expect interest rates on things like mortgages to be sitting at 10% – 15%. The US dollar will get hammered eventually.

    Right now, deflation seems to be the name of the game because there is so much bad debt in the system that is collapsing, and the printing of money is not big enough to off set it. How long it will go on is hard to predict, but the US dollar may remain strong during this period… months, perhaps another year or two or three.

    First the States will need bailouts. This WILL happen. They will try to cut spending by killing public sector jobs, but this will not be enough… there are too many obligations (healthcare, pensions, etc.). None of this will be enough. So DC will come to the rescue and keep kicking the can.

    The final blow will come when the US Federal government needs a bailout.

    Once the world realizes we will NEVER pay off our debt obligations and that we are unable to service our debt (treasury payments) without more loans, it’s game over for the US dollar. (Actually, I think savvy investors known this already, but they will play the US dollar in the short term and make a solid profit.)

    No one will bail us out. The only way out for us is going to be flat-out default, which is unlikely but cannot be ruled out OR massive quantitative easing (we ain’t seen nothing yet) which will completely debase our currency (hyperinflationary effect).

    It will be the end of what George Soros has referred to as the “super bubble.” Incidentally, it is George Soros who put forth this strategy of massive monetization and stimulus in his book The Crash of 2008 and What it Means. He suggested that because we are in a deflationary collapse, we need to create the opposite by massive money creation – essentially, create inflation. He warned however, that if we did this, it may be very difficult to counter the inflation once it starts by pulling back all the excess money in the system.

    This is just my view, but keep in mind that there are lots of variables, namely what the US government will do going forward.

  16. CFM says:

    I worked in defense aerospace until my layoff in 1991.   I was unemployed and in school for a while because I could not find work that paid a living wage.

    I now work in municipal government.  The money ain’t that great,  the people I work with are all dedicated,  work hard and work long hours.   Due to mis-management by the mayor and city council we had to take eight furlough days this year.   Most of us will not have jobs this time next year.   My point is that my years in aerospace saw the biggest waste of taxpayer money I’ve ever seen and the most inflated wages.   My years in municipal government have seen the most dedicated people and the greatest disproportion in wages.   So,  if you want to be angry about something and blame someone take a hard look at Defense.   There’s where your money is being wasted.