Oh, California!

[Overbuilders]

Yo, Dick! With all of the recent mergers and acquisitions in the banking industry, the latest being Wells Fargo purchasing Wachovia, who's going to step up and buy California?

http://www.npr.org/templates/story/s...31&ft=1&f=1003

[Dick Seibert]

Señor Englisheous:

A similar question was asked by a guy from Virginia, here is the question and the response:

California is the 5th largest economy in the world and all of the big money and beautiful people live there, so why the hell should we be lending them money? They just can raise taxes.

Lets see, why should anyone care?

First, the option of raising taxes is off the table as it requires a 2/3 majority in both houses and the governor's signature; or a referendum ballot to the voters to approve it directly, such as new state issued bond, for example, or increasing the sales tax, whatever. Since the politicians have tried to raise taxes in the legislature but failed and since they stalled so late on the budget missing any chance of a referendum ballot to raise taxes, short term borrowing is the only option.

Second, when California runs out of money to pay its bills, no investor will buy new municipal paper knowing the state is broke and no will to cut spending or to raise taxes.

Third, the option that is left is to layoff people. That makes the problem very visible and it hurts those people, namely the unions. The unions are very good at mobilizing their people to vote. It is why the state's budget can never be balanced since all referendums to limit spending have been defeated.

Forth, the state constitution mandates that debt service be paid first, ahead of education and all other spending priorities. Good news for holders of state issued paper, bad news for schools and teachers, prison guards, etc.

Fifth, since California is so large in population, even the politicians in Washington have to bail out the state or whoever is in office and whichever party controls Washington will be voted out.

Sixth, unemployed people after their benefits run out have an incentive to move to where the jobs are or lower cost of living states. You get infected with the California mentality. It is really that damning to sink your state's economy.

Seventh, There are certainly some questions to be answered regarding $200,000 annual salaries for firemen and police.

Eighth: The federal policies mandating medical care and entitlements, particularly in respect to illegal immigrants has heavily affected California's balance sheet for at least a decade. The costs of providing free medical and other benefits for illegals while business profited by paying them little has almost bankrupted the state.

Ninth, Schwarzenegger is implementing a global warming program that will probably sink the state into bankruptcy, he is a Republican, but he is married to a Kennedy, I think Maria has a lot to say about this global warming BS.

Need I go on?

I don't know if an entire state can declare Chapter 9, one locality has and others are watching to see if they get out of their union and pension liabilities, California leads the way, in many ways it is the most Socialistic state in the union, wonder if Obama will follow the model on a national basis when he gets to the oval office? Reading the local papers you would think that the biggest issue isn't Obama or Palin, it's the gay marriage initiative, that's about all people care about in this politically correct state. Fortunately we have our Prop 13 so old guys like me can live in our homes paying 1976 taxes for the rest of our lives. Warren Buffet came into the state to support Schwarzenegger, he proposed abolishing Prop 13, we ran the SOB out of the state.

Get ready to welcome our homeless and unemployed, when there is no more money for them they'll be knocking on your door.

[Dick Seibert]

Don't worry, California leads the way, New York, New York City, and Virginia are now demanding money.

It looks like the only states to be spared are the oil-rich states; however, as the economies of the states slow the demand for oil will subside, allowing the oil-rich states to join us.

But we have a solution you guys don't' have, Hollywood!

Why can't Paulson just give Arnold a grant for $10,000,000,000? That should tide the state over for at least 6 months. $10 Billion is only $33 per person in the U.S., so why can't you all just help us out?

This isn't a threat, but Arnold says if the Feds can't send some cash to Sacramento, then he will embargo some of the good movies and TV shows that are filmed in California. I'll bet if we blacked out "American Idol", "Dancing With the Stars" and "The Hills" for the other 49 states, the rest of you would come to your senses real quick, right?

[davenorthup]

California leads the way, in many ways it is the most Socialistic state in the union,

Oh no you do not. Alaska leads the way in the socialism state rankings. All brought to us by friendly Republicans. Windfall profits taxes, rebate checks, redistribution of corporate wealth to the citizens and almost no tax burden... Thanks guys...

[Dick Seibert]

Dave:

But when the economy tanks, the demand for oil will subside and Alaska, Texas, and North Dakota will join the party.

At least socializing the lending business makes for kinder gentler lenders:

"Then she kind of moved toward me a little and I saw that blood, and I said, 'Oh, no. Miss Polk musta done shot herself,' " Dillon said.

[davenorthup]

Dave:

But when the economy tanks, the demand for oil will subside and Alaska, Texas, and North Dakota will join the party.

Nah - we'll always sell our oil, maybe for a little less; but we have the FEDS to bail us out and we'll keep taking our $6-$8 of federal money for every $1 we put in. We also have a several Billion dollar rainy day fund and a ton of NG waiting to be tapped into..

[Dick Seibert]

There's got to be somebody left with money in the world to buy it, the Texans don't need it, the Saudi's don't need it, even the Mexicans don't need it, it's only $2.37 a gallon down there now becasue the socialized the oil industry decades ago, Pemex.

[frenchie]

Don't worry, California leads the way, New York, New York City, and Virginia are now demanding money.

Excuse me? I don't see anything in those articles about us borrowing anything - the State is going to cut spending, the City's going to raise taxes.

It's called "fiscal responsibility", Dick.

[Dick Seibert]

Don't worry Frenchie, back in the early 70s several cities were on the verge of bankruptcy as their employee salaries and benefits were bankrupting them, among them New York City and Oakland California were two that were pleading for Federal bailouts at the time, threatening bankruptcy, amazingly the problem healed itself, the housing inflation drove prices in the late 70s sky high increasing taxes and solving the dilemma, but the Feds did bailout New York City, so if they bailed out from your Socialistic excesses, shouldn't they bail out us for the same stupidity?

US economic stagnation in the 1970s hit New York City particularly hard, as trading on the New York Stock Exchange fell while the city's welfare spending continued. The city neared bankruptcy during the administration of Mayor Abraham Beame but avoided that fate with the aid of a large federal loan. A statement by Mayor Beame was drafted and ready to be released on October 17, 1975, if the teachers' union did not invest $150 million from its pension funds in city securities. "I have been advised by the comptroller that the City of New York has insufficient cash on hand to meet debt obligations due today," the statement said. "This constitutes the default that we have struggled to avoid." The Beame statement was never distributed because Albert Shanker, the teachers' union president, finally furnished $150 million from the union's pension fund to buy Municipal Assistance Corporation bonds. (President Gerald R. Ford angered many New Yorkers two weeks later by refusing an outright grant to the city, a decision famously, if inaccurately, summarized by the New York Daily News headline "Ford to City: Drop Dead.")

[Dick Seibert]

Frenchie:

We are in this mess becasue of pensions and green laws, both stemming from creeping Socialism, if the tax payers gave you $2.5 billion in 1975 why can't they give us $7 billion in 2008? $2.5 billion in 1975 is the equivalent of $25 billion today.

Massachusetts, he said, recently fell $170 million short of the $400 million it had sought in the credit market to make a routine quarterly aid payment to cities and towns. Louisiana and New Mexico both postponed multimillion-dollar bond sales in the face of the quivering market.

The problem, he said, may grow worse as 15 states besides California, including New York and Connecticut, work to fill several billion dollars in funding gaps that have emerged this fall.

In his letter, first reported by The Los Angeles Times, Mr. Schwarzenegger said, “California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the federal treasury for short-term financing.”

Treasury officials said they were reviewing the letter.

If California follows through on a $7 billion request, the loan, the equivalent of $192 for each resident, could surpass the federal government’s bailout of New York City in 1975 as it teetered on bankruptcy. After initially refusing, the federal government eventually provided $2.5 billion in federal loan guarantees that helped the city recover.

Still, Mr. Schwarzenegger and state officials said they viewed such a loan as a last resort in the event the government recovery plan did not sufficiently unlock the credit market.*

The Center for Government Analysis has released the results of a study of the 130 public pension systems in California, their financial health and the extent of taxpayer liability for current and future obligations. The report was commissioned by the Howard Jarvis Taxpayers Foundation.
Among the facts revealed by the study:


1. State and local governments (taxpayers) funding of pension systems nearly doubled over the five-year period beginning with FY1997–98.

2. By FY 2003–04 the combined public employee retirement systems had an actuarial deficit of approximately $50.9 billion.

3. Retirement benefit levels for state and local government employees in California are much more lavish than for private sector employees.

With California's global warming laws and restrictions on carbon dioxide emissions, no new businesses that deals with manufacturing will come to the state. Many retirees have left the state already for Reno and Las Vegas.

California is either going to repeal those green laws or they have to get the federal government to impose them on the nation so that business can't run to another state to avoid them. They can run to Mexico or Asia where very little regulation or green laws exist.

Even worse, we have been surviving on Silicon Valley's taxes:

Though companies like Yume claim that their business is not slowing, Internet advertising — the revenue model for an entire generation of Web start-ups — is perhaps one of the industry’s greatest vulnerabilities. In August, eMarketer, a digital marketing research firm, cited economic turbulence when it cut its projection for Internet ad dollars this year for a second time, to $24.9 billion, a 9 percent drop from its original projection.

In the hardest-hit sectors of the overall economy, companies appear to be putting the brakes on their Internet spending. General Motors said last month that it was cutting its digital ad spending, after saying earlier this year that it would dedicate $1.5 billion, half its annual budget, to online advertising.

Jeff Lanctot, chief strategy officer at Avenue A Razorfish, an interactive advertising agency, said financial services and auto firms in particular were pulling back. He worries that if the economic woes continue, online advertising will be severely hurt in 2009. “The digital ad industry is clearly not immune from macroeconomic conditions,” he said.**

California's crazy global warming induced green laws are threatening to drive business out of the state, Schwarzenegger wants the Feds to make them mandatory nationwide, and that ain't gonna happen, can you imagine the outrage in Texas if they had to put up with what we do? This is on top of the enormous salaries, health benefits, and pensions we pay our local socialistic enterprise called state government, where people retire at 50 at several hundred thousand a year, looking forward to million dollar a year pensions in their golden years.



* http://www.nytimes.com/2008/10/04/us...in&oref=slogin
** http://www.nytimes.com/2008/10/03/bu...C7V43ceBd6SeAg

[frenchie]

You were comparing Cali now, to NY now - I disagreed with that.

If you want to compare Cali now, to NYC when I was 8 years old & living in Canada... okay, I guess.

[Manny Davis]

Oh no you do not. Alaska leads the way in the socialism state rankings. All brought to us by friendly Republicans. Windfall profits taxes, rebate checks, redistribution of corporate wealth to the citizens and almost no tax burden... Thanks guys...

That a particular state is on the receiving end of a federal government forced redistribution of wealth scheme with other states doesn't tell us how socialist the state is.

Socialism relates to government control of the means of production. Questions like, "How easy is it to start a business?" or "How high are the taxes?" or "How much regulation is there over private enterprise?" will provide the answer. States with low taxes and light regulation would be the most capitalist and states with high taxes and heavy regulation would be the most socialist. Mass transit is socialist, private cars are capitalist. Strict building codes are socialist, people building as they wish is capitalist. Occupational licensing laws are socialist, people practicing whatever craft or vocation they wish is capitalist. A state with lots of government jobs is socialist, low amount of government jobs is more capitalist.

My guess is CA or perhaps a state in the northeast would end up being the most socialist.

[Allan Edwards]

There's got to be somebody left with money in the world to buy it.

Actually Dick, we have a 10.7 billion$ surplus.


http://www.dallasnews.com/sharedcont...1.4717464.html

"A $10.7 billion budget surplus predicted this week by Comptroller Susan Combs."

We could make you a loan, what do you have for collateral?

[Robert Z]

Dick,

What did you read about VA demanding money from the Feds?

[Dick Seibert]

Allan:

Maybe we ought to sue you for all that money you stole from us, what ever happened to the Enron money anyway, nobody seemed to have any when they went belly up, did it just disappear into the Houston economy?

Rob:

I follow an appraisal forum, there's an appraiser from Blairs Virginia that started a thread on the economy a couple of years ago, it's approaching 7,000 posts. He states Virginia problems at times, here is a recent statement from him:

Remember what I have been telling you guys for years: "If you want to know where the nation is headed watch what happens in California."
This is the tip of the iceberg. Just this morning as a matter of fact, there was a puff article in the morning paper about the little budget crisis here in Virginia. Virginia is about 1/5th the size of California and our budget crisis is 1/5th the size of theirs. The article says basically the same thing that article says: The Virginia constitution does not allow borrowing to fill in gabs in the current budget and any short falls will have to be dealt in the next budget yada yada yada.
So what does that mean: It means the state is screwed to the wall but the tax payers won't feel the pain for about a year or so.

PS: California is the 5th largest economy in the world and all of the big money and beautiful people live there, so why the hell should we be lending them money? They just can raise taxes. I am sure the Hollywood elite are bending over backwards to ante up. Maybe they can make some more movies about what bunch of jerks the Bush Administration is and use the proceeds to pay the state's bills. How about a Barbara Streisand concert. Nothing personal you people from the fruit cake state, but don't hold your breath until I send you any aid money. I have always found it odd that the people with all of the answers are the very same ones that cause all the problems. Don't you just love the "Progressive mentality?" Build your house on a sand pile over an earth quake zone, spend like their is no tomorrow while paying your firemen $200,000 per year and when the house and economy slid into the ocean cry for help to bail you out.