Many still believe their states are still safe and although this may be true temporarily, the problem is that government pretends and lies that socialism is to take care of the poor. The fact is that it is a pool of money in a cookie jar and they have their hand in the cookie jar before anyone else. The crisis stems from the fact that they have been giving themselves pensions with outrageous benefits like healthcare for life in many states which often includes their family.
The way states have operated (domestically and internationally) is that they simply assumed that there was a never-ending bucket of taxpayers to squeeze for money. The problem is that the population growth has declined, the pensions systems have been a Ponzi schemes from day-one, and they are running out of other people’s money (OPM).
All the studies show that the Baby Boomers counted upon government and do not have enough saved for retirement. The average person has just $300,000 tucked away.
The low interest rates have killed their profits and most have not yet returned to the stock market after losses from 2007-2009. Everything has been destroyed by low interest rates to save banks at the expense of pension funds and private investment. The public has been brainwashed to think that government debt is “safe” when it is the most risky in the field.
They have not invested wisely because most remain ignorant of how markets even function. Nothing can be sustained going forward under this model. Make no mistake, this Sovereign Debt Crisis is not just a foreign issue, it will positively be local to many, if not most USA states as well. It is global, it is inevitable and irreversible. Even Draghi in Europe now realizes that there is a pension crisis and he is really to blame for 10 years of low to zero interest rates that have utterly failed to save the economy. A market crash and burn will eventually occur on such a massive global scale civil unrest will be the least of your concerns. The first signs should be starting in 2018.
The good new is that US Markets is where money will flee too, so we "should" see US Markets rise for some time. How long will they rise? When do they turn south? When is does the collapse start? Where should your retirement money be invested for best growth and preservation? Most people have not clue and will pay the piper losing up to 80% of their retirement value when they don't have to.
The best advice is to prepare for the worst and hope for the best. Under no circumstances ASSUME that any government or corporate pension, local or otherwise will actually be paid over the long run, at least not close to what they promised you.
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Livio S. Nespoli has been a broker, registered investment advisor, and financial publisher since 1985.