Friday, February 06, 2009

New reserve currency and bankrupt U.S. States?

In his speech at the opening of the World Economic Forum in Davos, Vladimir Putin reminded the that “just a year ago, American delegates speaking from this rostrum emphasized the US economy’s fundamental stability and its cloudless prospects. Today, investment banks, the pride of Wall Street, have virtually ceased to exist. In just 12 months, they have posted losses exceeding the profits they made in the last 25 years.”

With another swipe at America’s failed economic leadership, and greeted with a roar of applause, Putin also said it is time to get rid of virtual money, false financial reports, and dubious credit ratings. Putin proposed a new reserve currency system to “replace the obsolete unipolar world concept.”

Meanwhile, in the United States, there are currently 46 states of the 50 U.S. States with high budget deficits, many of which could file for Chapter 9 bankruptcy.

Many States are already scurrying to cut State-funded programs, raise taxes, not issue tax refunds to their citizens, and borrow money just to survive in 2009. And unfortunately, many of the same banks the Fed bailed out are refusing to loan money to the States and their Treasury agencies.

It’s very possible we’re about to experience the end of the United States as we know it.

[Source: CNN and Center on Budget and Policy Priorities]

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