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Affluent Investor | June 29, 2017

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Will the US Be Economically Destroyed by It Own PIIGS?

The election has left a lot of people in shock. Conservatives need to end this time of grief and mourning as soon as possible. The fact is that there was a lot more going on in this last election than the decision about who would be President for the next four years. One development that needs immediate attention is the question as to whether or not we are about to learn that the United States has its own “pigs.”

As anyone who reads the news should know, if they are thinking clearly and not buying into impossible “optimism,” the European Union is about to be less or a union or at least involve less of Europe. The major reason for this is that some countries are virtually bankrupt. Since the countries all share the same currency, this has repercussions for all the member states. A term has been developed to describe the countries that are recognized as a problem: PIIGS. These letters stand for Portugal, Ireland, Italy, Greece, and Spain. These countries have deficits, debts, and unfunded liabilities that are, or soon will be, paralyzing burdens. The worst, at least, are far beyond bailing out. And the “austerity” being imposed on them is nothing more than extra-national (and extra-legal) dictate to allow them to continue or go deeper in debt.

But the question we need to ask ourselves: Do we see in this election, the rise of our own PIIGS among the fifty states. I’ve already written about Illinois. In this election, that state won a Democratic supermajority in its government. Illinois has been dominated by Democrats for years. Not even one of its pensions is half-funded. And even those numbers are impossibly optimistic since they are based on the projection of eight-percent economic growth. That bubble age is over.

In this election, we have arrived at a situation where more state governments are dominated by a single party, than has been the case in the last sixty years. Sadly, these states are not all Republican. Along with Illinois, California is now a veto-proof supermajority. Democrats made gains flipping eight state legislators. Still, according to Republican State Leadership Committee President Chris Jankowski, “Republicans are the dominant party in the states holding a majority of state legislatures, governorships, lieutenant governorships, secretaries of state and half of the nation’s attorneys general”

What does this mean? Looking at California’s and Illinois finances, along with the record we see in Democrat-controlled metropolitan areas, I think we need to understand that “Red State” and “Blue State” are not just going to be about the national elections for President, Congress, or Senate.  It will soon come to be seen as an economic divide—a difference between those expecting to be bailed out and those who are expected to shoulder the burden of doing the bailing.

As Democrat-dominated states cause businesses to leave and, over time, start job migration on the part of those who are willing to work, we are going to see them become all the more Democrat-run. Likewise, states with more fiscal responsibility are going to attract Republican voters. The differing spending and borrowing patterns are going to produce crises that are disproportionately made up of Democrat states.

And this means they will be at the forefront of pressuring the United States Federal Government for a bailout. They will want the rest of the nation to cover for their budgetary misfeasance.

So keep your eyes open; and watch out for the American PIIGS.

Mark Horne has been studying the intersection of ethics and the economy since high school. He was raised in Liberia, West Africa and Kwajalein, Marshall Islands, as well as on the Atlantic coast of Florida. He graduated from Houghton College in 1989 and from Covenant Theological Seminary in 1998. He was ordained in the Presbyterian Church in America and has pastored churches in Washington state and Oklahoma, as well as serving as an assistant pastor in St. Louis.

 

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