Thirty Three States Run Out Of Unemployment Cash

Thirty three states--well over half the count--have run out of cash to fund unemployment. Lending will fill the gap...but for how long?

The unemployment crisis, which has been going on for about the last three years or so depending on where you are--and in some places, it feels a whole lot longer than that--has taken on a whole new wrinkle: states are running out of cash to fund it.  In fact, thirty three states have officially run out of the necessary loot to keep the unemployment checks going out, and have thus turned to federal loans to keep the programs going.

California, easily in the worst shape of all, has so far borrowed just over eight billion bucks to keep unemployment going, while the next two worst-off states (Michigan and New York, interestingly!) both together total less than that at about three billion each.  Nine others took out about a billion each, and the remaining states took less.

This by itself is a graphically disturbing development.  Not only does it represent huge amounts of people who are out of work, out of cash, and can't be sold to (though that's a distant consideration in light of the human cost, but it's a consideration that MUST be taken into account, especially if you're operating a small business to boost your savings), but it also represents states that are literally desperate for cash. 

Will this result in an increase in some bond rates?  It might; if they're desperate enough to go a-borrowing from the cash-strapped spendthrifts in Washington they might be desperate enough to offer you five percent on cash you loan them.  It's definitely worth keeping an eye on, even if state bonds might get kind of risky if they're having these kinds of problems. 

 

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