*California officially out of money*, page 1
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Topic started on 2-2-2009 @ 02:45 PM by Dbriefed
Edit: Can't quite get some of these URLs to work right... sorry.
abclocal.go.com.../state&id=6636740
California officially out of money
Monday, February 02, 2009 | 11:45 AM
SACRAMENTO, CA (KGO) -- The State of California will consider issuing IOUs rather than writing checks that are almost guaranteed to bounce.

California's $42 billion budget stalemate is forcing the state controller to put off paying some bills for 30 days, like income tax refunds and college grants.

The governor and other legislative leaders failed to meet a self-imposed January 1st deadline for resolving the state budget stalemate.

Now, payments required by law, like funding for grade schools, are being made. But, other payments are being deferred and it is having a large impact.

College students, for instance, will not be getting $13 million worth of Pell grants. The UC and CSU systems are deferring university fees for most affected students to help them weather the crisis. But, at SJ State University there are still 500 students worried about not getting cash this month for housing and transportation.

"Many of the students went through the winter break not knowing whether they were going to be able to make their rent payments, whether they were going to pay for the gas they need for their cars, or whether they could eat out at McDonalds today because maybe that might be too much tomorrow. We had a number of students in our own office who had lots of concerns and questions about the situation," said Pat Lopes Harris with the university.

Schools are helping students on a case-by-case basis.

The Department of Social Services will not be getting $424 million from the state this month. That will affect everything from public assistance for seniors and the disabled, to cuts in mental health services and food stamps. The state will also hold onto a whopping $2 billion that should be paid out in February as income tax refunds.

This will hit many families hard.

"People are living on a tight budget. Mortgages are a lot bigger in California. They use that refund in order to pay their real estate taxes," said Gael Knight of Knight & Company.

Knight thinks the effects of this will trickle down, affecting a number of agencies from the city level all the way up to the state level.

California is not yet issuing IOUs, but that could become necessary in March or April.

Right now there is simply not enough money to pay all the bills. They are electing not to pay the bills they do not have to, at least for the month of February.



[edit on 2-2-2009 by Dbriefed]


reply posted on 2-2-2009 @ 03:01 PM by MOFreemason
reply to post by wutone


It is interesting to hear from a Californian's perspective. I'm sure there has to be much frustration from an overwhelmingly high percentage of state residents.

I still am at wit's end--what happens now? If they are out of money, what's next? How do they operate? What is the true outcome of all this???


reply posted on 2-2-2009 @ 03:29 PM by wutone
reply to post by MOFreemason


Personally I don't care how they operate anymore.

There is absolutely no way to get out of this crisis (short of an Obama bailout) the way the government is operating at the present time.

The state government want to INCREASE taxes. Businesses and now residents are leaving California in droves because of the present system. I personally know several people that have been laid off because their employer is moving to Kentucky due to operation costs. By increasing taxes, more people are just going to leave, who will be taxed then? The legislators have really got to read about the goose that laid the golden egg.

The state government does not want to cap spending. They do not want to make cut backs. They do not want to freeze growth. The state unions literally has the state legislators by the nuts. The state is bleeding dry and yet the unions don't want to give up a single penny, they insist on MORE taxes to keep the budget flowing and money coming in.

I can go on about how the way our state government is handling things but the biggest thing about our government is that it is a reflection of California culture.

We, the people of California, think we are entitled to big houses, big cars, big services, whether or not we can afford them. We are an irresponsible culture and we deserve an irresponsible government.

If the whole thing collapses, maybe we can get a good dose of reality. Maybe we Californians can stop trying to live like they do on MTV. Maybe we can stop being a most wasteful people that exports our wasteful and irresponsible culture to the rest of the world.

And as for an Obama bailout, I really hope it doesn't happen and I hope you folks in the rest of the country fight tooth and nail to prevent it. In fact it would be far worse if we got bailed out, it would just prop the institutions that are running our state into the ground and give groundwork for like institutions to start infecting (if they haven't already) other states.


reply posted on 2-2-2009 @ 03:44 PM by projectvxn
Because this is the sort of thing that creates massive unrest.

Here's what's going to happen:

California will declare of state of emergency due to economic collapse within the next month or so. Beg for federal money. But when this happens the federal money will be used to pay their bond holders who will be leaving very soon. Once this happens they will officially declare default, and the 7th largest economy in the world will become the first collapsed economy of the US. This will send ripple effect throughout the US especially in places like Nevada that enjoy huge tourism numbers(Or did, that has died down recently). We(Nevada) have a 1 billion dollar budget shortfall and a California default would cause our economy to effectively collapse as well. Same will happen to some east coast states that depend on California for initiative funding like Massachusetts green agenda, which is soaking up state funds like a sponge. Like I said, only the first domino. This will force defaults in at least 15 states right off the bat. The Federal Government will step in to cover basics like unemployment and tax returns, police and fire services. They'll have to print the money. Foreign investors will look at this and start dumping state and treasury bonds because they know that inflation will destroy their returns. Once this happens the US Federal government will become insolvent and shortly after you will see default. Then huge inflation will take place.

Quote me on it later.

[edit on 2-2-2009 by projectvxn]


reply posted on 2-2-2009 @ 04:01 PM by projectvxn
I've been warning about exactly this for so long I'm starting to feel like a broken record(Skipping CD for your young-ens ). And people don't seem to realize that I'm not actually predicting anything. I'm using common sense based on what I know about investor behavior, economics, and politics. I'm a fact oriented person and I crunch the raw data, I don't wait for official reports and numbers. They are usually misleading and manipulated for political purposes.

We are in for it. It may not happen EXACTLY as I said. For instance, Arnold may not declare an emergency(Though it is very likely he will as this would immediately free up funds). But it will happen. There's no turning back the clock at this point, and they will have no choice but to bite the bullet.

If we hadn't spent 8.4 trillion on bailouts this would be manageable. But I'm afraid this is only going to get worse from here. This collapse is going to force Obama's hand and he will declare a bank holiday soon while he looks for capital to free up so that California(And other states) can take loans to meet the basics. This is when the true status of the economy will be seen.

That was supposed to be the Bush plan(Recapping banks to make loans). But the problem is that even if Obama found the funds to recap the California system and "fix" the nations banks this would only lend to more inflation and we're back to square one.

[edit on 2-2-2009 by projectvxn]


reply posted on 2-2-2009 @ 04:13 PM by xoxo stacie
reply to post by projectvxn


You are right on the money there are 46 states that are planning on going the same way in 2009. But as far as the state of emergency that was already declared when this first came out. It didn't get much coverage, but they had to do it to get help from the Fed over all this mess.
Seems to me it didn't work anyway things are still going down hill and there doesn't seem to be anyway to stop it now. But then again with all the banks hording the money we all turned over to them we could always let them take charge. Which seems to have been the plan in the first place. Governments all over the world have handed over trillions to those crooks and not one penny of it is being used to save "said" country. We printed trillions all over the world yet the world is still in dire straights??? Where exactly is the trillions of dollars, and what or who is controlling it? Think about it. Trillions of dollars but everyone is broke and no one has any money.....something reeks and it isn't the rotting food on the docks for lack of payment!
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