In today’s Post, E.J. counsels Gov. Paterson, Lt. Gov. Ravitch, and the state legislature to “freeze wages now,” observing that “[f]or the first time in nearly 20 years, New York state is running short of cash to pay its bills.”

The $2 billion in annual savings New York would achieve from a wage freeze, which has historical and court precedent in New York State, would help Albany adjust spending to a world in which “their old business model — rake in ever-larger tax windfalls from Wall Street and spend like crazy — is broken for good,” E.J. writes.

Relatedly, in the Financial Times, NYU’s Nouriel Roubini helps indirectly to explain why Albany should be feeling queasy about Wall Street again — and provides more evidence why New York should feel a new urgency to act.

Roubini notes that from international investors’ perspective, negative interest rates in the U.S.* plus massive government intervention in certain markets

is … feeding a new US asset bubble. Easy money, … credit easing, and massive inflows of capital into the US … makes US fiscal deficits easier to fund and feeds the US equity and credit bubble. … But one day this bubble will burst, leading to the biggest co-ordinated asset bust ever.

The new blow-out bubble is exactly what New York doesn’t need right now, as an illusion of speedy financial-market recovery feeds yet more complacency in Albany and Washington and causes more confusion in the real business world.

Some evidence for this complacency: of the 640,000-odd jobs that Washington’s $787 billion has purportedly created or saved, half of them were in education, the Times and other outlets have reported.

As E.J. notes in his piece, this is particularly true in New York: “federal stimulus funding over a two-year period has only served to prop up education and health-care spending that the state expanded during the boom years and can’t afford to sustain after the stimulus expires in 2010.”

*Rates are effectively negative because if you’re, say, a European institutional investor, you can borrow in dollars at near-zero rates, but expect that as the dollar falls, you can repay your nearly free debt back in even cheaper dollars.