When it comes to state budget crisis, California gets most of the headlines. When it comes to states that are going bankrupt the quickest, Obama’s state of Illinois has taken the lead.

 “The state is in utter crisis,” said Representative Suzie Bassi. “We are next to bankruptcy. We have a $13bn hole in a $28bn budget.”

  The state has been paying bills with unfunded vouchers since October. A fifth of buses have stopped. Libraries, owed $400m (£263m), are closing one day a week. Schools are owed $725m. Unable to pay teachers, they are preparing mass lay-offs. “It’s a catastrophe”, said the Schools Superintedent.

  In Alexander County, the sheriff’s patrol cars have been repossessed; three-quarters of his officers are laid off; the local prison has refused to take county inmates until debts are paid.

 Collectively the states have a $156 Billion hole to fill this year. There will be a lot of pain to go around.

  Because of the Republicans new found concern for budget deficits, 1.2 million American families will be cut adrift today.

 Nearly 1.2 million unemployed Americans – including 27,000 in Wisconsin – face an imminent cutoff of government unemployment checks if Congress cannot pass emergency legislation to extend federal benefits before funding expires Sunday.

  Senate Majority Leader Harry Reid (D-Nevada) pushed this week for Senate passage of a stopgap 30-day extension of jobless benefits, which also includes a 30-day extension of a federal COBRA health insurance subsidy for the jobless. But as of late Thursday, Sen. Jim Bunning (R-Ky.) objected to each attempt to bring the issue to a Senate floor vote, balking that the measure would further inflate the nation’s debt.

 Remember, this is the same Congress that took less than a week to bail out Wall Street banks for $700 Billion. There were no questions at that time about where to get the money for their criminal friends in banking.

  The Unemployment extension bill is $10 Billion.

   When I wrote this essay a lot of people asked me, “What should we do about it?”

 It’s a good question, but its also a trap. I’m not so arrogant as to believe that I know the perfect solution to our economic problems. Anyone that tells you they know is either a fool or a liar.

 However, that doesn’t mean we can’t discover where we went wrong once you apply a little logic and data to the situation.

 For instance, if you realize you have taken a wrong turn, it makes more sense to turn around and go back to the corner where the mistake was made, than it does to drive in a general direction and hope you can find your way home.

 When it comes to the economy, its pretty easy to discover when the wrong turn was made – 1972.

“Behind every great fortune lies a great crime.”

    –  Balzac

  Capitalism hasn’t failed. What has failed is the economic system in place today.

No amount of government taxes, trade barriers, or regulation caused it to fail.

  No investigative reporter, or congressional oversight committee, or regulatory watchdog, exposed the massive fraud and corruption in the financial system today. All of the safeguards put in place to protect the public, and the current system from itself, failed.

  The global financial crisis came to light because what amounts to a falling out amongst thieves. They simply stopped trusting the ability of each other to pay their debts. Once lending stopped, credit creation froze, and the Ponzi-scheme that parallels our financial system broke down.

 This so-called “Great Recession” isn’t cyclical, it’s secular and the problems are systemic. We didn’t get here by accident. Choices were made by very wealthy and powerful people, thus those choices can be reversed.

 It’s important to understand that we aren’t fighting Adam Smith’s Invisible Hand. We are fighting against the Money Trust.

   Today the Federal Reserve began raising interest rates. Quantitative easing efforts (read: monetization) are also coming to an end.

  The central banks are worried about inflation due to the massive money printing of the past two years. Should they be worried? Probably not.

 David Rosenberg from Gluskin Sheff said lending has fallen by over $100bn (£63.8bn) since January, plummeting at an annual rate of 16pc. “Since the credit crisis began, $740bn of bank credit has evaporated. This is a record 10pc decline,” he said.

  Mr Rosenberg said it is tempting fate for the Fed to turn off the monetary spigot in such circumstances. “The shrinking in banking sector balance sheets renders any talk of an exit strategy premature,” he said.

 Bank lending is the money multiplier in a fractional-reserve banking system, and banks aren’t lending.

  All those trillions of dollars bailing out Wall Street was meant to fix the credit markets, which means to get the banks lending again. This effort was a complete and total failure…unless you count banker bonuses.

  Once again, the Federal Reserve is going to come to the rescue of Wall Street. Once again, it will be in the name of helping out “us”.

 The idea behind giving the banks cheap money was that the banks would lend it to consumers and businesses.  Unfortunately, that hasn’t happened: Since the start of the crisis, bank lending has fallen off a cliff.  The banks are, however, lending to the Federal government, which needs to fund record deficits by borrowing more than $1 trillion a year.  The combination of the Fed’s desire to stimulate lending via cheap money and the government’s desire to stimulate the economy by running a huge deficit has made it a great time to be a bank: Banks can borrow from the government at artificially cheap rates and then lend the money back to the Federal government at higher rates, pocketing the difference.

And now it’s going to get even better to be a bank.

  A strategist at the Deutsche Bank had something interesting to say last week regarding the economic crisis in southern Europe.

 “The problems currently faced by peripheral Europe could be a dress rehearsal for what the U.S. and U.K. may face further down the road,” Jim Reid, a strategist at Deutsche Bank in London, wrote in a research note today.

 It seems impossible that what is going on in Greece has anything to do with America. After all, Greece has defaulted on its debts so often over the last two centuries that you could almost set your watch to it. It was always contained in the past because Greece’s economy is so small, so why would this time be different this time?

 And yet, it isn’t contained this time. It is spreading and no one knows how far it might go.

  The president had some bold words for the American public earlier this week. He said things that some people didn’t want to hear. He talked about responsibility and sacrifices.

“We simply cannot continue to spend as if deficits don’t have consequences, as if waste doesn’t matter, as if the hard-earned tax dollars of the American people can be treated like Monopoly money, as if we can ignore this challenge for another generation.

 “. . . It’s time to save what we can, spend what we must and live within our means once again.”

– President Obama, 2010

 After saying these bold words he then presented Congress with a plan for the largest deficit in American history. I guess politicians are immune from irony.

  On January 29, 1911, a small band of 18 revolutionaries marched into Mexicali and seized the town, practically without firing a shot. Thus began one of the most unusual and controversial episodes in Mexican history.

 These revolutionaries were not the typical warlords that Mexico was used to seeing. These revolutionaries had American volunteers, but not the sort of filibusters that Baja California was already very familiar with. In fact, this revolutionary movement had little in common with anything Mexico had experienced before or since.

 These revolutionaries weren’t interested in just overthrowing the corrupt and repressive government, they wanted to overthrow society as well.

  As a people we like to mark the anniversaries of important events in our lives. This is true for nations, individuals, corporations, and political groups.

 The labor movement has been mostly left out of this tradition. This is my effort to change that. For instance, this Wednesday is the 160th Birthday of Samuel Gompers, founder of the AFL.

For this essay I would like to concentrate of events, such as this Tuesday is the anniversary of the very first worker’s compensation agreement.

  Insolvency is no longer just for California. The dreaded word “bankruptcy” is now being whispered in Chicago.

 While it appears unlikely or even impossible for a state to hide out from creditors in Bankruptcy Court, Illinois appears to meet classic definitions of insolvency: Its liabilities far exceed its assets, and it’s not generating enough cash to pay its bills. Private companies in similar circumstances often shut down or file for bankruptcy protection.

  “I would describe bankruptcy as the inability to pay one’s bills,” says Jim Nowlan, senior fellow at the University of Illinois’ Institute of Government and Public Affairs. “We’re close to de facto bankruptcy, if not de jure bankruptcy.”

 Suppliers in Illinois are not being paid (an average 92 day delay in payment), worker salaries are unreliable, and the University of Illinois may not be able to make payroll this spring.

“You saw those cars coming, and you knew who those men were. They wanted you to see them. They wanted you to be afraid of them.”

 – Lillie McKoy, former mayor of Maxton talking about the KKK

 By the mid-1950’s the Civil Rights Movement was gaining momentum and the KKK decided they had to fight back. Their campaign of terrorism swept through many of the southern states, but largely fell flat in North Carolina.

  James W. “Catfish” Cole, the Grand Dragon of the Ku Klux Klan in South Carolina, decided he was going to change that. Cole was an ordained minister of the Wayside Baptist Church in Summerfield, North Carolina, who regularly preached the Word of God on the radio. His rallies often drew as many as 15,000 people.  As Cole told the newspapers: “There’s about 30,000 half-breeds up in Robeson County and we are going to have some cross burnings and scare them up.”

 Cole made a critical mistake that couldn’t be avoided by a racist mind – he was completely ignorant of the people he was about to mess with.