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Washington Post: California's scary sneak preview

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posted on Jan, 5 2010 @ 12:32 AM
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www.washingtonpost.com...



California's scary sneak preview

By Ezra Klein
Washington Post Staff Writer
Sunday, January 3, 2010

We Californians pride ourselves on the crystal-ball quality of our state. Auto emissions regulations, the tech boom and bust, Ronald Reagan, Hispanic immigration, the anti-tax revolt, the mortgage bubble, the struggle for gay rights, most movies, the popularity of Richard Nixon, the unpopularity of Richard Nixon, plastic surgery, and Tiger Woods's marital problems were all tested in the Golden State before being released to audiences nationwide.

The next likely item on that list is not a happy one, however. California is in a total fiscal crisis. It's had to slash state services to the bone and will have to cut further. It's gutted the University of California and lost its credit rating. David Paterson, the governor of New York, casually mentioned that he thinks California might default on its debt. That's bad enough, as it could drag down the national recovery. But what's worse is that this picture is probably coming to a theater near, well, all of us.

California's fiscal crisis will look sadly familiar to close watchers of the national checkbook. That's because California is not having a fiscal crisis so much as a political crisis. The trigger may have been the recession, but the root cause was written into the state constitution, and it was visible long before the housing boom went bust.

In California, passing a budget or raising taxes requires a two-thirds majority in both the state's Assembly and its Senate. That need not pose a problem, at least in theory. The state has labored under that restriction for a long time, and handled it with fair grace. But as the historian Louis Warren argues, the vicious political polarization that's emerged in modern times has made compromise more difficult.
...

...more at link

[edit on 5-1-2010 by Dbriefed]




posted on Jan, 5 2010 @ 12:56 AM
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So looks like it's not over yet.

Budget is far from being resolved. Other states will follow.

Unemployment and the resulting loss in income tax and sales tax will continue to hurt government overspending.

Political vengeance and repercussions of the last two years are coming. Expect massive political shake ups.

The health care wars are not over. The current bill calls for dramatic tax increases over the next four years and no benefits. This is going to tick the public off big time.



posted on Jan, 5 2010 @ 01:53 AM
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I agree with you about California and all the states. The Federal govt. doesn't want to bailout California because as soon as they do the rest of the 49 states will want bailouts also. And even if they do get bailouts it still won't solve the problem, just put it off a year or two. And given human nature if you think the states aren't fiscally responsible now, imagine what they will be when they think all they have to do is run to the federal govt. and get bailed out. Heads I win Tails I win. Also California is losing money from the drought problem in the state and other states in the area. Farm land is being turned into dust bowls because there isn't water for them, which in turn means that revenue that you would have gotten from this productive field won't be taxed. Another reason that California is the ALBATROSS in the coal mine, is that its called the inland empire. It makes up 13% of the national GDP, and if a state or any entity that has that profound of an impact on our Gross Domestic Product suddenly goes bankrupt or defaults on bonds and loans will send a shudder through the whole bond market. Not to mention that it will make the credit crisis that happened 2 years ago look like a friday afternoon correction in the market.



posted on Jan, 5 2010 @ 02:02 AM
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This is going to be so much fun. I am so glad I live here in stormy California.
Whats even better is that I live in one of the highest unemployment areas just out side of sacramento. People want to leave but they can't make enough money to get out. Moving costs money unless you go it on foot with just the clothes on your back. Unfortunate truth is we did this to our selves.
My personal theory is when they shut down our psychiatric hospital and turned every one out on the streets they all went to the capitol building where they are now employed.



Also California is losing money from the drought problem in the state and other states in the area. Farm land is being turned into dust bowls because there isn't water for them, which in turn means that revenue that you would have gotten from this productive field won't be taxed


That's the biggest load of bull. There is plenty of water from the northern half of the state. Between the Chinook salmon that are supposedly decreasing in numbers (although if you know where to go you can fish them out with your bare hands right out of the sacramento river) and other supposedly threatened species...
Sure we might have had a drought year last you but its an el nino year now. Ask any farmer around and they'll tell you it has nothing to do with the drought, only politics.

[edit on 5-1-2010 by calstorm]



posted on Jan, 5 2010 @ 04:58 AM
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Odd but I don't recall hearing "as goes California, so goes the country" before. The socio-economic climate in CA is not really a good indicator for the rest of the country. As a matter of fact, CA is probably a great example of what too much libralism can do to ruin an economy. In the 20 years that I lived there, I watched EPA standards run amok on small business; I saw PC BS destroy public education; I experienced out of control affirmative action ruin a work force. So I guess California is a great example of what NOT to do.



posted on Jan, 5 2010 @ 09:24 AM
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You cannot give every liberty to everone from everywhere and expect a "few" to pay for it all!

A species survives by coexisting and looking out for the group at large.



posted on Jan, 5 2010 @ 02:45 PM
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Originally posted by Mr No One
Odd but I don't recall hearing "as goes California, so goes the country" before. The socio-economic climate in CA is not really a good indicator for the rest of the country. As a matter of fact, CA is probably a great example of what too much libralism can do to ruin an economy. In the 20 years that I lived there, I watched EPA standards run amok on small business; I saw PC BS destroy public education; I experienced out of control affirmative action ruin a work force. So I guess California is a great example of what NOT to do.


Indeed.

After I fled to Oregon from California and lived fairly peacefully for 10 years, then came the Liberal Californians fleeing en mass from their self made disaster into Oregon back around 1997.

They promptly set themselves up in county, city or local governments by slick talking and pulling one over on the 'dumb' back woods hick Oregonians.

When in fact they just weren't accustomed to being LIED to straight to their face. They'd never experienced a Native California Flake close up and personal. Morally bankrupt. Totally, Nothing personal against our good friends in CA; they can deal with it.

Native born and mostly conservative Oregonians fled to Alaska.

Now look at the despair of Oregon.

Know without doubt... again, Know without doubt... that's the reason Oregon is in the current condition.

There is good reason it's called the left coast.

Mr No One and I both fled east eventually.



posted on Jan, 5 2010 @ 03:47 PM
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Arnold Schwarzenegger will lay out plans for his last year as California's governor this week under pressure to close a $21 billion budget shortfall and fundamentally change how the state is run.


www.reuters.com...



posted on Jan, 5 2010 @ 08:02 PM
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reply to post by Dbriefed
 


I know in Oregon their solution (democrats in control that is) is to increase state spending (because it .. "stimulates" the economy) and increase taxes on small businesses and corporations, AND, on anyone making $125,000 or more a year.

Now, the businesses, particularly the smaller businesses, have already stated that with those tax increases, within the year they could lay off another 75,000 people. Unlike California though, the issue is left to the voters.. we will vote whether or not to increase said taxes. With the amount of unemployed in the state, it's likely to pass. The state faces a massive budget shortfall of nearly 5 billion dollars, and they expect to tax the fastest shrinking income bracket and the businesses that employ us to increase their spending.

Maybe they need to take a Microeconomics 101 class.



posted on Jan, 5 2010 @ 08:20 PM
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I am just waiting for California's problem to be handed over to the Federal Government. Thereby placing their relief on the other 49 states.
Then people might just ask;Why are we having to pay for their mistakes?
This state of affairs is exactly what rampant liberal policies render!!

BANKRUPTCY!!!



posted on Jan, 5 2010 @ 11:01 PM
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Even if the legislature was able to pass more taxes, the ugly truth is that it will chase out more employers and will decrease the tax paying base. The state will be stuck with illegals, people on welfare, and state workers. This will not help the budget situation.

There is no solution to this problem. Even if the federal government bails out California, it will still be considered a default. If California, a huge chunk of the American economy, defaults, faith in the economic system will crash faster than what any bailout can solve.

Why would anybody (nationally) want to pay their taxes to bail out a state that props up illegal immigration and state worker unions? Especially if that money can just be printed?

Why would anybody want to continue to support a large government wherever it exists when it will soon be proven that large governments are destined to fail like what will happen in California.

Part of me can't wait for this to happen. I have lived in California all my life and it would be nice to see the big government that was rammed down my throat for so many years start crashing and burning.



posted on Jan, 6 2010 @ 06:26 PM
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Yup, California wants a Federal bailout.

www.reuters.com...

Schwarzenegger wants more federal money for California

Peter Henderson and Jim Christie
SACRAMENTO, California
Wed Jan 6, 2010 5:25pm EST

SACRAMENTO, California (Reuters) - California Governor Arnold Schwarzenegger on Wednesday vowed to pry more dollars from the federal government, which he said took more than it gave, but left details on how to close a $19.9 billion state budget gap until later this week.

In a state of the state speech, the governor said creating jobs was the top priority for his last year in office and proposed spending $500 million in worker training funded by part of the budget which is in surplus.

He also laid out ambitious reforms for the final year of his term -- almost certain to include months of budget battle.

Schwarzenegger on Friday will present his plan to close a budget hole that reflects the problems of the boom and bust California economy. The U.S. economic engine faces deteriorating finances as it tries to balance its budget and preserve social safety nets in tough times.

The outgoing Republican governor, stopped by term limits from seeking reelection in November, called for tax reform, protection for higher education spending -- and more money from the federal government.

"We no longer can ignore what is owed to us, or what we are forced to spend on federal mandates," Schwarzenegger told the combined state Assembly and Senate, which must support any budget plan by a two-thirds majority -- a bar that has forced months of acrimonious debate in previous years.

Democratic State Controller John Chiang said lawmakers have little time to lose if California's government is to avoid the same kind of cash shortages that last year forced it to hand out IOUs to pay its bills.
...


On TV Schwarzenegger also mentioned it was unfair for some states to benefit more than others from the Health Care bill.

[edit on 6-1-2010 by Dbriefed]



posted on Jan, 6 2010 @ 06:49 PM
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reply to post by Dbriefed
 


WHAT? Unfair that some states will benefit more than others from the health care bill? Does this douche bag know it's going to take the equivalent of taxing the entire Midwest, JUST TO PAY FOR CALIFORNIA? California is a net tax loss.. they consume far more than they produce economically and fiscally through taxation contribution to the entire Union.. California want's the Union to pay for it's addiction to social programs that enable the poor to leach of the State Government teet, while doing NOTHING to further their population to DO MORE.. California is a WANT WANT WANT and give NOTHING in return state.. they want the World on a golden platter and want everyone else to pay for it.

@#% you California. Rot in your self induced disease of government corruption, over spending and economic fallacies. The only down side to your troubles is that now the rest of the Union has to take in all the California refugees who believe if they move to another state, their socialist ideas will work better with a new tax base.



posted on Jan, 6 2010 @ 07:01 PM
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Doomed to repeat it.


If you ain't got the do re mi, boys, you ain't got the do re mi,

Why, you better go back to beautiful Texas, Oklahoma, Kansas, Georgia, Tennessee.

California is a garden of Eden, a paradise to live in or see;

But believe it or not, you won't find it so hot If you ain't got the do re mi.



posted on Jan, 6 2010 @ 11:06 PM
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This is going to be interesting, the Fed gov't is screwed. "Damned if we do, damed if we don't" type situation. My guess is that the fed will choose a policy that will drag this out as long as possible, letting the public absorb little bites of CA going bankrupt. Could you imagine what would happen to the market if Pres. Obama flat out states during the State of the Union address " The Treasurey has advised me not to bail out the state of California" The collapse would be instantaneous. So, we will get small snippets and more stories of IOU's out of CA. Its starting to look like the 'guns 'n butter' crowd is right



posted on Jan, 8 2010 @ 02:01 AM
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Now this is a bit fringe, and way out there. But here's an article where Putin theorizes that California will declare bankruptcy this month after not getting bailed out by the Federal government, and US/Canadian troops are being prepositioned for the expected rebellion.

www.eutimes.net...


Prepare For Rebellion, Obama Orders US-Canadian Troops
Posted by Europe on Dec 16, 2009


Kremlin position papers presented to Prime Minister Putin today on his upcoming meeting with NATO Secretary General Anders Fogh Rasmussen state that the European-US military alliance has authorized an ‘emergency request’ from President Obama to utilize American and Canadian NATO troops to put down what is expected to be a “rebellion” after the expected January, 2010 ‘declaration of bankruptcy’ by the State of California.

According to these reports, Obama’s fears of rebellion are due to the economic health of California (the United States largest State) after the 3rd largest US State, New York, declared a ‘fiscal emergency’ and refused to release to its cities and towns over $750 Million due them this past week with the Governor of New York, David Paterson, declaring “I can’t say this enough: The state has run out of money.”

New York’s fiscal crisis, however, pales in comparison to California’s, where new economic data points to its expected 5-year budget deficit reaching the staggering amount of over $100 Billion which Russian economists warn will result in budget cuts so steep as to create ‘social chaos’ among this States 36 million citizens.

New York’s fiscal crisis, however, pales in comparison to California’s, where new economic data points to its expected 5-year budget deficit reaching the staggering amount of over $100 Billion which Russian economists warn will result in budget cuts so steep as to create ‘social chaos’ among this States 36 million citizens.

Reports from the United States are, indeed, confirming the mass movement of military supplies and thousands of Canadian Special Forces Troops to California from the Canadian Forces Base of Petawawa to join their American military counterparts, with ‘secondary’ reports stating that at least 1,000 tanks are massing their too.
...
More at link

Here's a google search for related posts of the article: www.google.com...



posted on Jan, 8 2010 @ 04:21 AM
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Does anybody know what is happening in Dallas on February 3rd? Will the weather be nice enough to put the top down?

California is an indicator of what stupidity accomplishes. Others up above said it best. It really is a fool's state.

No matter what you've been brainwashed into believing... not everybody is equal, and not everybody passes muster. There are no guaranteed ''rights'' for fundamental wrongs.



posted on Jan, 8 2010 @ 04:08 PM
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Update: California Governor declares Fiscal Emergency

Nothing was fixed last year, was it?

www.reuters.com...

WRAPUP 1-Schwarzenegger drafts 'draconian' California budget
Fri Jan 8, 2010 3:34pm EST

* Budget aims to close $19.9 billion deficit

* Spending cuts, federal funds needed

By Peter Henderson and Jim Christie

SACRAMENTO, Calif., Jan 8 (Reuters) - California Governor Arnold Schwarzenegger declared a fiscal emergency as he unveiled his new budget on Friday and said the state will face another cash crisis as early as March.

Schwarzenegger's budget for 2010-2011 aims to close a $19.9 billion deficit, relying mostly on spending cuts of $8.5 billion, which he called "draconian," and $6.9 billion in federal funds. The state will spend $82.9 billion.


"There is simply no conceivable way to avoid more cuts and more pain," said Schwarzenegger in his final year in office as he is barred from seeking re-election due to term limits.

He made a call for "real reform" to the budget and tax systems, which he blames for the running fiscal crisis that led to the state issuing IOUs last year as cash and tax revenues fell short in the sharp economic downturn.

"If you compare it to an intersection it's like seeing people crashing into each other and never building a stop sign, never building a stoplight," he said.

He said the state will face cash challenges in March, but can repay debt as scheduled in May and June. But by July, he sees "substantial cash challenges" if no corrective action is taken.

By declaring the fiscal emergency, Schwarzenegger calls the California legislature in session to consider his proposals. The budget must be approved by a two-thirds majority vote, a difficult requirement that makes passing the budget an arduous process.

Schwarzenegger also called again on the federal government to come to the rescue of the state with the largest economy by raising the amount Washington transfers back to the state.

"Right now the federal government is forcing us to spend money we don't have," he said. (Writing by Mary Milliken, editing by Dan Whitcomb Kenneth Barry)


[edit on 8-1-2010 by Dbriefed]



posted on Jan, 8 2010 @ 08:43 PM
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Every economist worth his salt knows that money don't just 'disappear' into the thin air.

For California to overspend would only mean more money had been circulated - from tax revenues given to the contractors, contractors to their staff and suppliers- staff to the shops to purchase essentials - shop owners paying to importers, importers paying to the overseas factories.

Social welfare also means the same circulation of money to purchase goods. But why is California in such poverty today? Where did the money 'disappeared' into?

1. Illegal immigrants - they take the money and remit back home, so those money are not circulated within the State. Who allowed these cheap labour into the country? None other than Corporations.

2. Imports - Californians imported more than they had exported, but who were the ones who makes the biggest bucks by selling supposedly cheap goods from China to US expensively? - None other than your Corporations.

3. Hoarding money:- If the money gets hoarded in banks or private homes, it wont get circulated. So who are the greatest hoarders of money - Corporations.

The only way to deal with the hoarders are to print more money in order to devalue the dollar and the son of bitches from the Corporations will weep buckets, and quickly release their over saved money hoarded up.

For the devaluation of the dollar, you have the Corporations with their greed to thank for. They did all of us in. It's nothing about capitalism, just pure human avarice.

Send back the illegal immigrants who robbed citizens of their jobs, then take back those jobs, save but spend wisely, bite the austerity bullet for a couple of years and California will back on its feet again. Hope and morale builiding is more necessary, along with wiser govt spending to stimulate growth and responsible welfare schemes.

It's only money and can be earned back, not the end of the world. Japan in 1945 lost the war and was nuked, but within 7 years after paying off its debts and crimes, its people bounced back and became who they are today, an admired people.

So too can fellow american Californians, descendants of the same forefathers whom built the american empire, do the same.




[edit on 8-1-2010 by SeekerofTruth101]



posted on Jan, 9 2010 @ 03:00 AM
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Originally posted by SeekerofTruth101
It's only money and can be earned back, not the end of the world. Japan in 1945 lost the war and was nuked, but within 7 years after paying off its debts and crimes, its people bounced back and became who they are today, an admired people.

[edit on 8-1-2010 by SeekerofTruth101]


Good post but I bet things would be different if Japan was not an island and shared a border with Mexico.

Japan was also rebuilt by the U.S. (for fear of communism taking over) so in essence was bailed out . California is already taken over by communists and pretty much needs a collapse.



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