California must go bankrupt

[coyotes_geek]

By John C. Dvorak

BERKELEY, Calif. (MarketWatch) -- Various economic reports have come and gone over the past few months, but the worst so far, at least for California, is the latest UCLA Anderson Forecast. It painted a grim picture for the Golden State, with unemployment going above 12% and lingering in the double digits until 2012.

The Anderson report, which comes out quarterly, pretty much says the state is in a tailspin -- something we've actually known all along. Read the full report.

Only the technology sector is likely to grow and serve as the foundation of California's overall recovery, according to the report's authors. Most of the great high-tech companies in the United States are scattered around Palo Alto, such as Apple, in Cupertino; Oracle, in Redwood Shores; and Intel, in Santa. Hewlett-Packard is in Palo Alto itself.

When you include parts of Silicon Valley stretching from San Francisco down to Los Gatos and back up through Milpitas, there are literally thousands of companies, big and small, involved in high-tech development and manufacturing.

There even are pockets of similar tech-related companies throughout California in somewhat remote spots, such as Carlsbad.

The state is awash in technology.

But will the all-important tech firms abandon the state if the situation continues to deteriorate? This should be a major concern.

I was alarmed visiting the once-bustling 4th Street corridor in Berkeley, where the largest restaurant in the area was shuttered, as were numerous boutiques and small shops. This has driven all the stores to adopt shorter hours, so by 6 p.m. on weekdays it's a ghost town.

Except for the University of California itself, the city of Berkeley seems as if it's decaying. I'd advise a drive along University Avenue from the freeway up to the campus. I've been on dirt roads in Mexico that are in better condition than much of University Avenue. In fact, the entire street looks and feels more like the outskirts of Henderson, Nev., than anything in the San Francisco Bay Area. It's scary.

This is due in part to the antibusiness policies long employed and revered by Berkeley. The resulting mix of businesses includes tattoo parlors, fortune tellers, check-cashing joints and struggling small storefronts. A couple of strip clubs would fit right in.

UC Berkeley has one of the greatest engineering departments in the world. Now name one high-tech company in Berkeley. You can't; tech companies scramble out of there as fast as they can. (There is a burrito place called High Tech Burrito. That's about it.)

But the city is a microcosm of the state's larger problems and of the great Catch-22. California cannot get out of debt without drastic cuts in spending, meaning layoffs and higher unemployment, meaning less cash flow back into businesses. The state cannot get out of debt without higher taxes, which means borderline businesses folding, creating more unemployment and depressing revenues.

California already has issued IOUs to employees, which were eventually refused by the banks and ironically refused by the state itself.

The only real solution to save California from the inevitable actually is the inevitable: Declare bankruptcy, and reset the system.

What will then emerge will be as important as the process and recovery. We will finally get to see, as the saga unfolds, what we saw in the city of Vallejo, Calif., during its bankruptcy proceedings -- a pattern of corruption, cronyism, abuse and the defrauding of the taxpaying public. City officials making more than $300,000 a year, firemen making more than $200,000, friends hiring friends.

Government work should be a refuge, not a gold mine.

California is being broken by its own government, state and local. You can see it when you live in other states.

I have a place in Washington state. There is no personal income tax; property taxes are lower, and the sales tax is lower. The government services are better and more efficient, and the roads are nothing like University Avenue or the Nimitz Freeway. The public schools are not in shambles.

There is a recurring thought when comparing the Golden State to Washington: "What's wrong with this picture?"

UCLA's Anderson report finally concludes that California will not recover as quickly as the rest of the nation. Gee, I wonder why?

Bankruptcy should help. Just do it.

http://www.marketwatch.com/story/california-must-go-bankrupt-2009-09-18?siteid=yhoof

[iggypop123]

they make it sound so easy

[NoOptionB]

How embarrassing.

Those knuckledraggers should learn to balance their credits and debits.

[Wild Cobra]

How long was the left running (ruining) California now? There congress was mostly democrat for how many years?

[LnGrrrR]

How long was the left running (ruining) California now? There congress was mostly democrat for how many years?

For about as long the governer was Republican, I think. :lol

[Wild Cobra]

For about as long the governer was Republican, I think. :lol
You think incorrectly.

[exstatic]

Unless they have a shit pot of cash stashed, bankruptcy is a horrible option. Entities declaring BR are no different from people declaring: there won't be any credit for a LONG time.

Cut whatever you have to. Tell the whiners "It's this/these program(s), or ALL programs if we go BR."

[CosmicCowboy]

The other 49 states will bail out California. The feds won't let California go bankrupt.

[SouthernFried]

The other 49 states will bail out California. The feds won't let California go bankrupt.

Feds are in much worse shape than California.

[c@t]

Terminator won't let his state sink.

[boutons_deux]

If the Repugs were in power like they were in 2001, they'd let/encourage CA to go bankrupt, like they kept FERC from interfering as Kenny Boy and other criminals screwed up the CA energy market.

[LnGrrrR]

You think incorrectly.

Feel free to provide the numbers, if you care to. :)

[CosmicCowboy]

Feds are in much worse shape than California.

That won't stop them. They will just keep printing more money.

[c@t]

That won't stop them. They will just keep printing more money.
I'd convert all my green cashes into golden bricks if I had got any... :wakeup

[coyotes_geek]

Unless they have a shit pot of cash stashed, bankruptcy is a horrible option. Entities declaring BR are no different from people declaring: there won't be any credit for a LONG time.

Cut whatever you have to. Tell the whiners "It's this/these program(s), or ALL programs if we go BR."

If they had a shit pot of cash stashed, they wouldn't be on the verge of bankruptcy. They're already paying people in IOU's.

[coyotes_geek]

The other 49 states will bail out California. The feds won't let California go bankrupt.

Wrong. The other 49 states have their own problems and aren't interested in the least in bailing California out of the mess they created for themselves. California is on it's own.

[BacktoBasics]

Won't be long before the anti-marijuana groups start spinning their webs.

[hope4dopes]

Feel free to provide the numbers, if you care to. :)
Yeah everyone in America knows what an enclave of far right extremists Californians are....right.

[boutons_deux]

"enclave of far right extremists Californians are"

ever been to Orange or San Diego counties? Ever heard of John Birch?

[CosmicCowboy]

Wrong. The other 49 states have their own problems and aren't interested in the least in bailing California out of the mess they created for themselves. California is on it's own.

It doesn't matter what we think. The feds WILL bail them out if it comes to that. They fit the definition of "too big to fail". It would devastate the bond market if California goes bankrupt.

[coyotes_geek]

It doesn't matter what we think. The feds WILL bail them out if it comes to that. They fit the definition of "too big to fail". It would devastate the bond market if California goes bankrupt.

When you say "the feds" you need to keep in mind that means Congress, and 98 senators and 380-somthing representatives are not from california. They're not going to let the federal government bailout california without bailing out their own states. And since it's impossible to bailout all 50 states, California isn't getting bailed out.

[LnGrrrR]

Yeah everyone in America knows what an enclave of far right extremists Californians are....right.

WC asked how long Dems have held the California Congress. I made a tongue-in-cheek reference that it was long as the Guvernator. It's his implication; he can feel free to do the research for it.

[CosmicCowboy]

When you say "the feds" you need to keep in mind that means Congress, and 98 senators and 380-somthing representatives are not from california. They're not going to let the federal government bailout california without bailing out their own states. And since it's impossible to bailout all 50 states, California isn't getting bailed out.

You really haven't been paying attention to whats going on. Congress didn't vote to bail out AIG either, but we sure as hell did it.

[hope4dopes]

WC asked how long Dems have held the California Congress. I made a tongue-in-cheek reference that it was long as the Guvernator. It's his implication; he can feel free to do the research for it. or you can have the integrity to concede his point I doubt you do.

[hope4dopes]

"enclave of far right extremists Californians are"

ever been to Orange or San Diego counties? Ever heard of John Birch?
Ever hear of the other 90% of the state.

[coyotes_geek]

You really haven't been paying attention to whats going on. Congress didn't vote to bail out AIG either, but we sure as hell did it.

And trillions and trillions of bailout dollars later congress isn't going to stand buy and let the government bail out california when their own states aren't getting similar treatment. Since Obama needs congressional support for his agenda he's not going to go over their heads. Plus he's already gone on record as saying there will not be a special bailout for california.

[JudynTX]

Legalize weed in California, problem solved. :lol

[CosmicCowboy]

And trillions and trillions of bailout dollars later congress isn't going to stand buy and let the government bail out california when their own states aren't getting similar treatment. Since Obama needs congressional support for his agenda he's not going to go over their heads. Plus he's already gone on record as saying there will not be a special bailout for california.

There are a lot of ways to bail them out. Obama specifically did not rule out fed guarantees of state debt (including California) if necessary, and that is just the same as a bailout.

[coyotes_geek]

There are a lot of ways to bail them out. Obama specifically did not rule out fed guarantees of state debt (including California) if necessary, and that is just the same as a bailout.

Agree to disagree. We'll see what happens.

[LnGrrrR]

or you can have the integrity to concede his point I doubt you do.

If his point is that the majority of the Congress are democrats, and that's the reason why they're in trouble, then it's a bit of a hazy line. I'm sure spending practices were stupid, and yes, Dems probably handled some of that.

I don't have enough of a bone to bother picking a fight.

[hope4dopes]

[QUOTE=PandaSpur;3699937]Legalize weed in California, problem solved. :lol[/QUOTE

You could legalize weed,crack,heroin and ACORN in California, and it wouldn't do shit.They'd spend every dime you could raise and more.

[Wild Cobra]

WC asked how long Dems have held the California Congress. I made a tongue-in-cheek reference that it was long as the Guvernator. It's his implication; he can feel free to do the research for it.
California Legislature (http://en.wikipedia.org/wiki/California_legislature), third paragraph:

The California State Legislature currently has a Democratic majority, with the Senate consisting of 25 Democrats and 15 Republicans; and the Assembly having 49 Democrats, 29 Republicans, 1 Independent, and 1 vacancy. Except for the period from 1995 to 1996, the Assembly has been in Democratic hands since the 1970 election (even while the governor's office has gone back and forth between Republicans and Democrats). The Senate has been in Democratic hands continuously since 1970.

[George Gervin's Afro]

California Legislature (http://en.wikipedia.org/wiki/California_legislature), third paragraph:

So clarify for us who is to blame for a state's woes. The Gov.? The legislature? The current President?

Please clear this up for all of us.

[coyotes_geek]

It's Fox News' fault.......

[George Gervin's Afro]

It's Fox News' fault.......

I'm trying to figure out who is to blame for a state's budgetary woes? Can you answer that? Pretty simple question. I don't blame you for not wanting to answer.

[Wild Cobra]

So clarify for us who is to blame for a state's woes. The Gov.? The legislature? The current President?

Please clear this up for all of us.
The California legislature.

[coyotes_geek]

You're right, it is a simple question. It's the fault of the legislature and the governor. Happy now?

[George Gervin's Afro]

You're right, it is a simple question. It's the fault of the legislature and the governor. Happy now?

So whoever is in charge of a state's legislature and governorship is to blame. I happen to agree. Now let's go find the GOP states and blame the GOP for being failures..

Houston is experiencing it's highest unemployment rate in many years..Oops Perry and the GOP are to blame..:lmao

[Wild Cobra]

You're right, it is a simple question. It's the fault of the legislature and the governor. Happy now?
I would agree to include the current governor if the legislature didn't override his vetoes.

Example:

Stopping the Governor's Vetoes (http://www.californiaprogressreport.com/2009/07/stopping_the_go.html)

[coyotes_geek]

So whoever is in charge of a state's legislature and governorship is to blame.

For the state budget, absolutely.


I happen to agree. Now let's go find the GOP states and blame the GOP for being failures..

Fair enough. Got a particular state in mind?


Houston is experiencing it's highest unemployment rate in many years..Oops Perry and the GOP are to blame..:lmao

Unemployment is not a function of the state budget. If it were, would that mean that Perry & the GOP deserve credit since the unemployment rate for Houston and the rest of Texas is much lower than the national average?

[LnGrrrR]

Props to you for looking it up WC. :toast

[Wild Cobra]

Props to you for looking it up WC. :toast
I already knew the answer before posting. Some things are easy to find. Others are hard due to information overload.

[LnGrrrR]

I already knew the answer before posting. Some things are easy to find. Others are hard due to information overload.

I had no clue, personally, how long the Dems had the California Congress, and couldn't find it with a quick search.

I'm more than willing to concede that it's highly likely that the Democratic Congress spent way more than it should have.

[coyotes_geek]

I would agree to include the current governor if the legislature didn't override his vetoes.

Example:

Stopping the Governor's Vetoes (http://www.californiaprogressreport.com/2009/07/stopping_the_go.html)

It's a two way street. The governor and the legislature share responsibility for getting a deal done. The gov shouldn't get a pass just because he played the "my way or the highway" card and the legislature had the right to override his veto. They need to work together to solve the problem.

[Wild Cobra]

It's a two way street. The governor and the legislature share responsibility for getting a deal done. The gov shouldn't get a pass just because he played the "my way or the highway" card and the legislature had the right to override his veto. They need to work together to solve the problem.
When the legislature can override the veto, what can the governor do? You want to blame him for doing what is in his power to stop the excess spending?

[Wild Cobra]

I had no clue, personally, how long the Dems had the California Congress, and couldn't find it with a quick search.

I'm more than willing to concede that it's highly likely that the Democratic Congress spent way more than it should have.
Key point was it was always democrats in the senate since 1970, and all but one term since then was democrat controlled of the assembly.

Look at the fucked up states. Most of them have mostly been controlled by democrats.

[coyotes_geek]

When the legislature can override the veto, what can the governor do? You want to blame him for doing what is in his power to stop the excess spending?

Why shouldn't he share some of the blame? He has a say in the budget too. Yeah, it so happens that the checks and balances end up giving the legislature the final say if they can override a veto. Still, that shouldn't get him off the hook because the problems California is facing now were years in the making. Has he been vetoing every budget since he got into office?

But you are correct in that the legislature has primary control over the purse strings. Basically this is all I'm trying to say. 0% < % of blame Arnold deservers < 50%.

[CosmicCowboy]

California has been building this problem for 20 years+. After prop 13 passed they didn't reign in spending appropriately and have been relying on income taxes for the majority of their state revenue...that was OK in the good times but then a recession hits, income tax receipts go down, and they have more money going out than they have coming in.

[nuclearfm]

California needs to secede from the union and return to Mexico. Anglo Hippie rule will end! The Lakers can move back to MN

[nuclearfm]

California has been building this problem for 20 years+. After prop 13 passed they didn't reign in spending appropriately and have been relying on income taxes for the majority of their state revenue...that was OK in the good times but then a recession hits, income tax receipts go down, and they have more money going out than they have coming in.

Yup, It's also a high certainty that if they had a higher property tax, their property values wouldn't have risen so INSANELY high. There would be not such a high inflation.

Hippies always want everything without paying for it. :greedy