Economic Civil War?

We have all seen the riots in Greece and there is a good chance this scene will replay in Spain and other European countries soon. These riots are from regular people upset that the government is and will be reducing their entitlements, so it is the people against their government. But imagine this scenario, because I think this a possible new type of civil unrest we may see here in the US. Could we experience an ‘Economic” civil war? This would pit neighbor against neighbor as some will be retiring from government and other union backed organizations (politicians, police, firemen, teachers, federal & state employees, autoworkers, etc.).

It is clear that California is pretty much bankrupt, Illinois is in even worse shape financially and there are many more states in serious financial trouble. California is proposing five billion dollar in taxes (although this is extremely unpopular and unlikely to pass – which also means they have no answer to their debt problems), yet Illinois has no such tax increase in the works, so they truly have their heads buried in the sand hoping this will all just go away. Please note that I am not advocating new or higher taxes because I know we need to reduce the size of government, reduce, redo and even better - get rid of – the entitlement programs, and lower the tax burden of the American people. Additionally, we need to toss out ENTIRELY the tax code as it exists today and go to a consumption tax, that way if you buy something (usually because you are living and working here), you pay taxes. That means, even illegal aliens would still be contributing to our taxes – but the tax issue is another issue for another email one day!

So how could there be an ‘economic’ civil war? I can tell you, when one neighbor has to work well into their 60’s or 70’s before they can afford to retire and there are these groups of people retiring in their 50’s and the other neighbor is paying higher taxes for them to not work – I believe their will be civil unrest. When the government goes broke and can’t pay the promised entitlements, those employees will protest like the citizens in Greece are doing, but when neighbors see their neighbors receiving benefits unavailable to them and they have to work longer and pay more taxes to support those entitlements, it could get ugly in the neighborhood! It is estimated that American’s will have to pay 70% in taxes to pay for existing entitlements!

There is an economist (Russell) that just wrote a piece saying everyone better get out of the stock market immediately and get informed because you may not recognize our country by the end of this year. I hope he’s wrong, but…

Have a great day!