Tuesday, February 19, 2008

Shock Surprise

Gov. Arnold Schwarzenegger on Tuesday signed an executive order freezing state hiring and halting nonessential service contracts -- a move he said could save the cash-strapped state $100 million by June 30.

Schwarzenegger issued the order on the heels of a $2 billion midyear budget reduction to deal with the state's projected $14.5 billion deficit. The governor also urged the Legislature to immediately begin working on more cuts for the 2008-09 fiscal year, which begins July 1. Story.

Understand $100 million is nothing. It will probably cost more to institute a hiring freeze than the $100m projected savings. The implosion stays on schedule.

29 comments:

Property Flopper said...

First things first - he's got to stay in office and that means LOOKING like he's doing something useful.

Funny Circus Bears said...

Gridlock is great, implosion a close second.

Peripheral Visionary said...

Coming soon to a Federal government near you. Just like the tech bubble collapse, contractors will be the first to go.

w said...

Don't forget the deal to push most of the ~14 Billion shortfall into next years budget with accounting tricks. Just pathetic.

Santa Flipper Clause said...

Ho Ho Ho - It's Santa Flipper Clause

Is Arnie nonessential?
Maybe he could lay himself off.

Santa F. Clause

Lou Minatti said...

My family could cut back 10% and be just fine. The vast majority of businesses could cut back 10% on spending and deliver the same level of services. There is enormous bloat in the California state government. Up until the past month or so I saw it on a weekly basis.

The crisis is really about keeping government employees employed.

Lex said...

The real surprise today is that I may soon be able to legally buy a genuine Cohiba at my local cigar store.

Lou Minatti said...

Vallejo on the brink:

http://www.nbc11.com/news/15345539/detail.html

"The city currently has a $135 million liability for the present value of retiree benefits already earned by active and retired employees and an additional $6 million a year as employees continue to vest and earn this future benefit, Tanner said.

"The problem is basically bloated union contracts," Shively said."

Sac RE Agent said...

Finally some good news out there in the real estate world. Apparently there are more first time homebuyers able to purchase a home now than a year ago. Gotta love the CAR for that little piece of info to get agents psyched up for the spring buying season ahead.

Bakersfield Bubble said...

2 Ca cities on the brink. Just as you predicted Rob!

Bakersfield Bubble said...

What a great idea to break up the bond insurers and peel of the "good" muni business - OOPS nevermind...

Centipede said...

Get your head out of your ass if you don't want your life to belong to Exxon.

Centipede said...

Arnold sucks.
As does just about everything else in these subprime daze.

Peripheral Visionary said...

In all seriousness, the news on affordability is very good news indeed. If I recall the article correctly, parts of CA are going for 20% affordability up to 40% or more. I'm not calling a bottom, but as affordability starts getting close to 50%, you should start seeing renewed buying interest.

Rob Dawg said...

PV,
Coupla problems with your predictions. First employment is a lagging indicator and median household income figures lag even further behind that. We can expect household income to crash real soon now. Second, the people who can qualify to buy house now already bought 2005-2007 when they also qualified. When we do get to 50% affordability that 50% will not be looking to buy. There will be very very few of us who both qualify and are looking to buy.

Property Flopper said...

I wouldn't mind picking up a rental unit, but I'm going to wait for it to get a little more painful out there before I move.

It's a luxury, not a necessity, so I can wait until the price is right. Personally, I want the person selling to break down in tears when thinking of the price - even years later. :)

There are a lot of bank owned available here in Oakland, but these tend to be in neighborhoods I wouldn't want to drive through, let alone own part of. Give it a few years and the rest will follow.

Surprisingly, one market that has held up quite well are the luxury rentals. A friend has a beautiful place overlooking the ocean in the Mendocino area. She rents it out when not using it herself... prices on that kind of property have not fluxuated at all.

Bill said...

And when consumers do feel a recession is coming/here (i.e., their job is threatend), they do slam on the brakes and start saving like mad.

In that mode, they aren't interested in upgrading their house (move the oldest into the basement instead)

Property Flopper said...

Also - Fun article from CNN:

http://www.cnn.com/2008/LIVING/personal/02/20/borrowing.retirement.ap/index.html

Not bad enough that you're in trouble on the house / credit cards, let's keep the party going by eating the retirement.

Nice quotes:

"...he had little choice because he and his wife could not keep up with monthly expenses after American Express reduced the limits on three credit cards."

"...he's looking for someone to take over his $550 monthly payment on a gray BMW 335i he leased last April."

Bozo won't buy a car he CAN afford, he needs to lease one he can't... then can't even afford that lease.

Rob Dawg said...

Prop flop,
I'm gonna pick up me up 3 maybe 4 rentals. I will "peek" at the market in Q3 but only to see how far away and how fast the bottom is coming at us. I'd be surprised at anything worthy coming available before Q2 '09. I'm thinking 2-3 SFRs and a fourplex all co-located with one of the apartments for a part time manager. Something like this http://www.realtor.com/realestate/wrightwood-ca-92397-1090384155/ will go for less than half eventually.

For now I'm thinking a "new" car. 2003-2006 BMW X3s are literally piling up in the dealer lots. These are all Realtard® leases much like the idjit in your example. Last Sunday took the whole family to the used lot. Looked at high end sedans, upscale small SUVs and such. Actually sat the whole brood in a 2004 X3 with every single option. Said $28,900 they opened their mouth first with $27 and said, "I'll keep it in mind, fine car not haggling, just so much car it was $5k more than I was thinking of spending so it wasn't worth my wasting their time." The manager said "We can $22." I swear I should play world poker tour.

Property Flopper said...

Rob -

Yeah, my ideal would be a nice vacation rental; done right, they pay for themselves and I'd use it part time. Since those aren't dropping, I'm thinking either a SRF or a duplex. Something in a nice section of town. Might go a bit out of town though, we do have some odd rent control laws here.

Definitely not expecting to find anything for a bit yet - the market is tanking in "da hood", but the nice parts are just starting to sprout for sale signs. I'll wait for desperation.

Also - if the mgr was willing to drop to 22k that quick, he's willing to go quite a bit below. Nice of him to verify that for you... Next time start with "he said 22k last time, but I was looking more at 18k"... always fun to play with the dealers.

Property Flopper said...

Me and my lysdexia...

Make that SFR.

Akubi said...

@Centipede,
I agree. Unless something changes, ExxonMobil will be the downfall of this country.

Akubi said...

BTW, although there are programs I regularly watch on PBS, I've stopped giving for the first time in my adult life for these among other reasons:
1. Far too many annoying Boomer-centric pledge-drives that last an eternity when I've already given.
2. Too much children's crap.
3. ExxonMobil

unbelievable said...

The annual salary for California Governor Arnold Schwarzenegger is the highest in the governor salary ranking, $206,500, but he does not accept his salary.

Does this mean "you get what you pay for ?

Akubi said...

@unbelievable,
Arnold and family's security coverage costs a hell of a lot more than that.

Akubi said...

Reason #4 for hating KQED these days:
4. Ballroom Dancing

I'd like a pleasant transition from The News Hour and the Nightly Business Report and it sure the hell isn't f-ing BALLROOM DANCING!

Funny Circus Bears said...

I stopped watching PBS for the exact same reasons. In 1978.

Plus I was turned off when Jim Lehrer was seen dressing up his poodle as Anna Nicole and rubbing himself against it, Mister Rogers was caught kiddy fiddling, and Julia Childs turned her kitchen into a crystal meth lab.

I still watch Wheelchairs on Ice despite the lingering suspicion that Dickie Buttons bludgeoned his gay lover to death with a prosthetic knee.

Buzz Saw said...

I am already bracing myself for the inevitable fed gub bailout. A trillion dollar mortgage fraud scheme followed by an endless series of bailouts.

serinitis said...

Beware of renting from people going into foreclosure

http://www.sptimes.com/2008/02/19/Business/In_home_foreclosure__.shtml?ref=patrick.net