Monday, July 13, 2009

Why CA's budget mess is the worse ever.

As this state sinks further into red ink and the debacle of the budget hearings go on yet again, this crisis is by far the worse that state has ever had and since the federal government is following the same erroneous methods that got us here, things are only going to get worse. Unlike in the past where we had issues but can recover financially, this time there won't be any such recovery or panacea to get us out of this financial nightmare. The state of California is about to seal their entry into the 3rd world banana Republicanism.

This isn't the first time the state has been short in funding for the budget and the feud of who should get what. In my 44 years living here, the budget has only been passed on time 6 times. After four decades of deficit spending (with a few exceptions here and there), basic math has finally caught up with the state and now we're in a stranglehold that we can't get out of.

First, what is different about this one that the other 43 weren't? This isn't the first time the state has issued IOU's. It's been done twice before (though one was for only two days) and the banks in the past had no issues with cashing them. Basically treating them like post dated state checks with the post date unknown. They eventually will get their money and with interests. However, these aren't ordinary times now. Banks no longer have the capital to extend such credit to worthy individuals much less an unworthy state. The banks just don't have the money anymore and the current state of the economy being the worse since the great depression with the money supply tighter than it ever has been since the Fed been established, they're not about to risk what little they have left to this state.

What's worse, in the past, the state had money. It was a matter of who got how much and where. There was reason to have faith that the state will eventually pay their IOU's and the interests. Now the state's credit rating is the lowest among the 50 states. In fact, we're on the verge to being classified as junk bond status. The state no longer has the money. The crisis in this case is to do something the politicians here have shown incapable to doing: cut spending. We have over a $20 billion shortfall, no more credit so we can't borrow our way out of it, nearly a $100 billion in bonds we're responsible for mainly education bonds that have produced absolutely nothing. So no money or credit, why would the banks take the IOU's? They're not worth the paper they're written on.

This is having a major impact on the economy as well. Many businesses now have no income from their dealings with the states and their suppliers are demanding their payments. Putting these businesses in a bad situation of having providing goods and services yet no revenue from the fruits of their labors. Now they're not going to be able to afford the business and that will mean even more layoffs. State employees, which I was one as a teacher over a year ago, are now being paid with IOU's or just plain not at all. Here, this will be a disaster beyond belief. 30,000 lay offs already (I being one of those and still looking over a year later for another job) this isn't going to improve the education of our children or the business climate of our state.

What's worse, our politicians either don't get it or don't care. Their districts are rigged so they will get re-elected no matter what since the districts are gerrymandered to insure their election. In fact, the governor was just criticized for derelict of duty to the people because he wanted to call a special session to force the legislature to work on the budget. What was it our stupid politicians were working on that got them so upset with our governor? They were working on a bill, and I kid you not, defining honey as nectar made as food from bees. I was like "huh". They needed to define this as a state law? While we're losing jobs at a frightening pace (already over 12% and will hit 13% this month, might hit 14% by the end of August), our politicians need to take time to define something we all learned in Kindergarten (well, maybe not here). We can't pay the bills or seem to even care. Businesses, as well as productive working people, are leaving the state in droves. People are not being paid or businesses are being shafted by our state. We on the verge to being classified as junk bond status, and these politicians are arguing over the definition of honey. I couldn't believe the stupidity.

So, as this state sinks further and further into a hole we can't get out of, the time has come to face some facts are else we're going to completely collapse. First, tell the special interest to go to hell. I mean it in those words. We simply don't have the money to cater to these people, especially the illegal aliens that suck up $30 billion in services. Cut them off and we're out of our quagmire, but that's not going to happen here. That would be considered too racist. Also, it would be political suicide since illegals vote here and they would vote out anyone that dare oppose them. However, we need to tell others, the teacher's union being the biggest one, we just don't have the money so deal with it. I know from personal experience because when the city of Vallejo filed for bankruptcy, the union accused them of lying and demanded yet more money and threaten a strike. I still couldn't believe it. The solution the city came up with was unfortunate and bitter, but was the only viable option: lay offs. The union put up a pathetic fight, but when there's no money, there is none. I would had preferred they laid off the unnecessary administrators that make over 100K and don't do much of anything. Why not lay off the excess bureaucrats, the excessive aides, or cut the politician's salaries (about $144K for 1/2 time) because they sure aren't earning their pay. Who knows what will get cut but since the politicians and their minions aren't going to take a cut, somebody is.

What's worse is, every time this budget is delayed, these politicians are breaking the law. However, there are no penalties for this. Perhaps if they're in jail, lose their pay and per Diem's for every day it's late until the budget is passed, then this would cease.

I don't put too much hope in this crisis and our government to resolved the issues. There's too much corruption, too much favoritism, and just too much entrenchment of bad policies and habits for them to change for the better. I just know one thing. As this stalemate continues, this state is in more and more serious trouble and will become an all too juicy target of a Marxist president to resist to give a bailout and take over the management of the state. Giving 12% of the electorate to him and setting up a most dangerous and destructive precedent for the other states that are in the same situation.

1 comment:

Andrew33 said...

I too recently discovered that things are far worse than we realize for more reasons than I could fit in 10 comments here. It is truly frightening how deeply our enemies are entrenched in our political and financial systems. That is why all these so called "bailouts are going to all these financial institutions. The elites are preparing for the crash of the dollar, and it's unstoppable now. Our money is just monopoly money. The only reason it still has value is because is because people think it does. Soon, something will happen that will expose what the true value of the dollar is, likely worldwide. Then those running the private bank known as the Federal Reserve will achieve their goal of killing our financial system. I am disseminating this info in a very "watered down way" in my Bankrupt America posts. for you, it is probably dull reading, but the pamphlet it is coming from is much more complex and accurate. I realize that in some areas, watering this down makes the financial data less "accurate" but I am doing this for people who do not understand complex economics and the history behind it. I want them to be able to connect the dots too. While i'd like to hear your comments on this, what's more important is that when we give out the original, that you get a copy for yourself. dig through it. Fact check it too. I always enjoy your posts. They are well said and always on the money. That's why I believe that you will appreciate this booklet which gives a rare peek from the view from inside the beltway that most of us couldn't even imagine. You are right, California is in deep trouble, what the rest of don't realize is that we as a country are in far deeper trouble and do not realize it yet.