Schools and local governments in Florida who routinely deposited excess money in a state run investment fund were stunned today when the state suspended withdrawals.

This is because the nimrods who ran the fund were “investing” in extremely risky SIVs. Word got out, there was a run on the fund, now the state has slammed the door shut.

It is a certainty they did this because the fund is taking huge losses and not only do they not want to liquidate at a loss, they can’t, because there are no buyers for the garbage they own. That’s right, this stuff is so toxic that no one wants it.

Bloomberg TV just had an interview with a school official in a Florida town who said, I’ve got a $850,000 payroll for 230 employees to make tomorrow and no money to do it with because the state froze the money. He sounded practically in tears.

We are talking billions of dollars here that will evaporate. And there will be many more stories like this in the coming months.

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The small, locally own oil refineries in China called “teapots” revolted when the government froze gasoline prices. Since they couldn’t make money with the new pricing because the price of crude was rising, they simply switched to producing non-regulated products.

They didn’t have to wait long to bring the mighty Chinese economy to its knees.

Shortages broke out, the government was forced to raise the oil price cap, and ramped up production hugely at their mammoth state-owned facilities and canceling maintenance.

As we in America should know by now, delaying refinery maintenance will come back to bite. Whether a 10 percent increase in retail prices will be enough to slow consumption and encourage increased production remains to be seen.

Interesting, isn’t it, that in a nominally communist county with 85% of the refinery capacity owned by the government, that the little capitalist teapots have such a profound effect?

In a few years, the Chinese will be selling themselves 10 million new cars a year.

Someday soon we in America will be facing shortages, gas lines, and rationing.

The chances are the revolt of the teapots is a harbinger of things to come.

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Red Squirrel details the enormous tension and conflict in Venezuela now, with the referendum vote on Saturday. Things are getting extremely polarized, with fighting in the streets, murder, and probable CIA intervention.

Venezuelan counterintelligence just released a document they say is a CIA memo outlining destabilization plans. Imagine the pressure-cooker atmosphere the release of the document must have created. And what it will be like if the lid blows off.

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The vanguard Marxist ideologues of SWP continue doing a stellar job of destroying of what was once a solid and promising left party.

“Never attribute to malice that which can be adequately explained by stupidity.”

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Two out of three middle class American families on shaky financial groundMore than half of middle-class families have no net financial assets whatsoever.

Only 13 percent of middle-class families are secure in their asset levels- meaning that they have enough to cover most of their living expenses for nine months should their regular income cease; 79 percent are “at risk” in this category, meaning they could not cover the majority of their expenses for even three months.

This is the middle class they’re talking about. Thus, things are even more dire for those with less income. How did things get so desperate?

And it’s about to get much worse (see next post)

Tip: C&L

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Are we headed for an epic bear market?The credit bubble is just starting to unwind, a credit-derivative insider says. And while U.S. borrowers are being blamed for the mess, they were really just pawns in a global game.

When asked if we were in the third inning on this, insider Satyajit Das, author of a 4,200 page book on credit derivatives, just laughed, saying we’re still listening to the national anthem, the game hasn’t even started yet.

The real problem is the credit crisis, and a bear market will make credit even harder to get. This will affect people as well as businesses as the economy slows down, factories close, and banks blow up.

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