California in Peril - Continued
As Thraxxus mentioned just previously, yes my wonderful Golden State is having issues. Big-time cash flow issues, mostly caused by the current real-estate crisis, and its effect on tax revenue. The perilous drop in housing prices means less property taxes. Also, the drought didn’t help either. Vallejo was kicking around the bankruptcy escape clause, probably as some kind of cry for help. No, not Vallejo! Puhleaze.
As a result, California and our glorious leader, Heir Schwarzenegger, seem to be a bit bond-crazy. Admittedly, the word “bond” makes my eyes gloss over like Tori Spelling evaluating her credit card statement. Here is a good Q&A about state-issued bonds that you may find interesting - or not. Guess which side of the fence I’m on? So Cali is borrowing a buttload of money. Man, I’ve been there before.
However, I do know this - there is no way the 35th largest economy in the world is going bankrupt. Are we paying our government employees way too much? Oh yeah. Here is a great article in The SF Chronicle a while back (link) about cops pulling down obscene salaries because of overtime; some low-level policemen were making more than the mayor! The article is a good summary of the fiscally irresponsible carnage happening on CA city and state payrolls. This type of corruption goes on everywhere - need I even mention Chicago? Boston?
Furthermore, California is not the only state with a budget crisis. Nevada, Pennsylvania…hell, Michigan is practically a demilitarized zone as we speak. So does that make me feel better? Heck yeah. They don’t have awesome beaches! In Reno, are you an hour from the mountains, ocean, or desert? Why go to a more financially stable state when you can hang out in California, the fun-loving, freewheeling, suntan state? Also, the people are a lot prettier. If I’m going to drive on potholed roads on the way to my disappearing job, I might as well have a nice view.
In all seriousness, the economy is cyclical. This is how it worked, works, and will work. Could I buy a house somewhere else? Make a little less money with a lot lower cost of living? Maybe. Did I mention I live in California?
A Bit on Corruption
I have never hidden the fact that I am originally from California, in fact I will even share with you that I am from a small town of 300 thousand people called Escondido. My father still lives in the house in which I was raised and constantly feeds me information regarding my home state. I refer to California as my home state as that is where I am from, not where I live; I now reside in Kansas.
Back to my father. Let me begin by saying that my father is a leary fellow, constantly looking out for what could possibly crush his world next. If you knew him, you’d know that is basically justified given how many times he has almost been killed, lost everything, and ended up in jail/prison. Needless to say the man has lead a colorful life. Today my father called me to talk shop - the following is a snippet of that conversation.
Dad: Hey are you busy?
Thraxxus: Sick as hell at home, but hey I am good. Whats up?
Dad: Oh that sucks. You sound terrible.
Thraxxus: yeah not feelin..
Dad: I called to give you an update on California.
Thraxxus: Oh yeah? whats the dealio?
Dad: Schwartzenegger is apparently trying to get a loan from the California State Lottery as well as the Federal Government. I don’t think you should come visit me this year. Supposedly the state is finished in September!
Let me stop here. My father then goes on to paint a rather bleak picture of the state of things in California. For instance in San Diego County there are supposedly over 100k MEN out of work! Furthermore, given that Cali brought down the law hard on illegal immigrants working, a huge percentage of the Mexican workers have left the state, thus my father says that it feels sort of empty. Apparently the rate of Bank Robberies has skyrocketed there as well. The thing that gets me here is that if what my father says is correct, which I don’t doubt, then there is a larger problem there:
- California is in debt to such a degree that they are talking about bankruptcy.
- If they declare bankruptcy then who pays the government employees there?
- If nobody plays the government employees then who works the base infrastructure like Police, Fire etc?
- If the state is broke, how can it afford to take a loan from anyone? The logical aspect being it spends more than it makes right? If I did that I know I couldn’t get a loan, how can a state?
- When the previous governor was in power the state “misplaced” 9 billion dollars. True story. Look it up. Public record and what not. Where did it go? And furthermore, how is it that nobody was investigated nor was anyone brought up on charges?
Remember my pieces on Fannie Mae and Freddie Mac? Now consider this California bit. Someone tell me how is it that people are finding their ways into public oriented positions, seemlingly stealing billions of dollars, and then disappearing without so much as an investigation? Someone once said “Things will get worse before they get better.” Remember that in the coming years.
