FinancialGuy Writes!

In my recent post about when this recession might end, I mentioned that I fear there will be a recession in the public sector which will cause problems for all those already facing financial problems.

As if by magic, I see on the BBC website that the city of Chicago has started to shut down – only for a day now – in a bid to save money. This cannot save them enough, of course, but it is evidence that belts are being tightened and local level politicians are trying desperately to balance their books.

It seems logical to me that since the early signs of the banking collapse were seen in the US that the first signs of a public sector recession should be seen there. That said, who suffers and when will relate more to how councils and governments are managing their money – and have managed their money in the recent past.

Me thinks there will be a lot of this to come. Worldwide.

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  1. Interesting post. The state of California has also had to institute some fairly radical cost cutting in its public services – including closure of some of its public parks.

    In a similiar spirit, the Irish government recently commissioned an academic economist to find €5bn worth of savings in the public sector (which is quite a chunk given the size of Ireland’s budget).

    Closing police stations, abolishing state agenices and shedding staff across the board are amongst the recommendations – as well as a 5% cut in social welfare payments.

    The public sector certainly won’t be spared, the pain has just been delayed…

    [WORDPRESS HASHCASH] The poster sent us ‘1055386704 which is not a hashcash value.

  2. Thanks Gary. FT.com is leading today with an article about public finances in the UK, their poor state of health and the potential problems that they face. Read it here.

    [WORDPRESS HASHCASH] The poster sent us ‘1055386704 which is not a hashcash value.

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