I don't know how it is on the other side of the pond, but I'm not particularly impressed by our governements workforce. They may not be so well paid, but they are certainly overpaid for the amount of work they conduct. I bet that if you would force them to actually work the hours they are supposed to (instead of arriving at 9.30 and leaving at 16.00) and restrict their coffeebreaks, daily strolls to the park, endless "meetings" etc, you could easily fire 30% of them and not notice the difference.
That little frustration aside, I think this tread touches something which might become very important this year. The US states and municipalicities are IMO the 500 lbs Gorilla that is hiding in the economic attic.
The US cannot afford to loose its AAA status on federal debt. The debt load is barely maintainable at current rates let alone at higher rates. If you look at the money that would be needed to rescue the states if this situation escalates, you're looking at numbers in the $500 to $1000 bn region. That would almost certainly invoke a downgrade.
The choice for the administration is thus to have the states default, or risk a nationwide default.


