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No cheer here!....nor in the forseeable future

With Xmas there is supposed to be good cheer. Many would say that the GFC is slowly a thing of the past. But, all is not rosy in the garden. In fact, the prognosis on the economic front going into the new year is quite shaky in many countries around the world.

The Washington Post reports:

"The recession's jobless toll is draining unemployment-compensation funds so fast that according to federal projections, 40 state programs will go broke within two years and need $90 billion in loans to keep issuing the benefit checks.

The shortfalls are putting pressure on governments to either raise taxes or shrink the aid payments."

And:

"Currently, 25 states have run out of unemployment money and have borrowed $24 billion from the federal government to cover the gaps. By 2011, according to Department of Labor estimates, 40 state funds will have been emptied by the jobless tsunami."

In the very same edition of The Washington Post a piece "Ireland's deep budget cuts, an omen for a heavily indebted United States?" makes for sobering reading:

"Like other heavily indebted nations around the world, Ireland is borrowing vast sums from foreign investors to plug its budget deficit. Fearing that the country will buckle under the weight of so much debt, the Irish have an answer: Put the government on a diet.

More than $4 billion in cuts coming into effect after New Year's Day will slash salaries for 400,000 government workers while making painful reductions in benefits for such groups as widows and single mothers to the blind and disabled children. A tax targeting rich Irish nationals living overseas -- dubbed the "Bono Tax" in the Irish press -- will help restock empty coffers at home. Even Prime Minister Brian Cowen, who earns about as much as President Obama, is taking a 20 percent pay cut.

Such drastic steps have put Ireland on the front lines of a global battle against runaway government spending and exploding budget deficits in the wake of the financial crisis. The world's richest nations, according to the Organization for Economic Cooperation and Development, are more indebted than at any time in at least the past 50 years.

Budget deficits in the world's industrialized nations have more than tripled during the financial crisis. Nations have injected huge amounts into bank bailouts and stimulus packages, even as tax collection has collapsed. With borrowing still soaring, the OECD projects that by 2011, wealthy nations could owe investors more than the value of their gross domestic product."

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