Monday, January 19, 2009

California In Crisis-3

"California, first in many things, is facing America's worst budget crisis. The gap between projected revenues and spending during this fiscal year and next amounts to $41.6 billion, which is almost half the total sum that the state expects to raise next year. Unlike the federal government, California is not allowed to get out of the jam by running a deficit. It is finding it hard to borrow to meet even short-term needs. ... Recession triggered the crisis but did not cause it. California relies heavily on income taxes, especially those paid by the top 1% of earners. These veer up and down with the markets. But instead of saving money in boom years, the state locks in higher spending on public services and embarks on projects that need long-term investment", my emphasis, Economist, 8 January 2009, link: http://www.economist.com/world/unitedstates/PrinterFriendly.cfm?story_id=12903483.

California's budget crisis deepens. No mattter what conditions, real per capita spending increases. California has a budget crisis because: it can't print its own money. Yet. California needs its own monetary policy and a flexible exchange rate with the other 49 states! Why not? Robert Steel, "formerly" of Goldman Sachs, the Treasury and Wachovia is available. Let's see if he will help California set this up, pro bono of course.

4 comments:

Junior said...

Thank God we're going to fall into the ocean in a few years anyway...

Anonymous said...

I think Mr. Steel is so status quo... he would just replicate the same, same stuff out there...

I'm thinking more a Google or eBay and California hookup...new wave.

Steel would just drag in "Government Sachs" for more underwriting while promoting credit default swaps against the state...

Big adjustment coming in CA... watch out.

Edgar Alpo said...

I hope they get a bailout, I don't want them migrating east.

Printfaster said...

It is the pensions, stupid. Primarily for police, fire, and prison. It is completely hopeless to control pension benefits.

To me the archetypal government worker are firemen, who were observed by one of their own, dispatched to a fire discussing whose turn it was to claim a disability pension for fighting a fire. Don't ever dream of investigating firemen for disability abuse. I observed my own case of it with a "disabled" fireman first running, then limping after mentioning that he was removing himself from the state after his disability settlement. Got to keep your story straight. Convenient to leave the state, you can just tell your neighbors that you won the lottery, and forget the limp. The injury was on-the-job volleyball. I went from honoring firemen to detesting them in 15 minutes thanks to this fraud artist.

The system is hopeless until nuclear war clears the state of its government. A prop 13 redux will not help. This stuff is in the fabric.