That's the latest fantasy budget proposal. it is getting hard to keep track. This one from the Governors office. Facing a deficit of $45b he is proposing $15.4 billion in spending cuts. The rest? well there's this idea that the citizens will vote for a 1.5% increase in the sales tax and other increases. Oh and that sales tax on goods? Well apparently they found a lawyer who imagines that aplies to goods AND SERVICES. Good luck with that as well.
The scribes have confirmed this joyous occasion. The days are no longer getting shorter. The Earth will indeed be reborn and not slip into that dark night.
Wishing everyone a solemn Alban Arthan as we honor the souls of the trees we sacrifice then deify in our living rooms. Hang the revered kerm-oak, drink the blessed wassail. "Yule" feel so much better. The Norse had the right idea taking 12 days for Jole.
Oh and for all you recent religion adoptees a translation: Christmas, Christmas Trees, holly, sacramental wine and the 12 days of Christmas.
Changing the name makes little difference; Merry Christmas.
Just a quick post while I get the ever growing MAXfest organized.
California Municipal bonds are getting slammed. Here's a new one: Rio Elementary So what? A poorly performing school district needs money. Well look at the details. Maturity 9/1/2028 RIO CALIF ELEM SCH DIST CMNTY Coupon 5.120% Yield 11.000% Price $53.07 Call date 9/1/2012 Call Price $102.00
The reason they need the money? They built a shiny new poly-million dollar school and administrative complex to support Riverpark. Gee, ya think this is gonna end well? And as a side note; 11% double tax free is a more than 19% taxable equivalent.
States, for instance, usually must provide a 20 percent match to receive federal money for transportation projects. Now, though, state officials and others are trying to get the requirement waived for a stimulus bill. And with more than 40 states projecting budget deficits in the next two years, that request is finding sympathy on Capitol Hill.
Any guesses which types of "transportation" projects will get pushed with 100% funding. Yup, the least justified, otherwise known as transit boondoggles. Just ask Boulder about their light rail. Their Regional Transportation District announced the cost to build the system by its 2017 deadline would be $7.9 billion -- up from $4.7 billion. Skyrocketing prices for materials and declining revenue from RTD's 1 cent sales tax were blamed. Don't you love it? Declining revenues blamed for cost over runs.
Unfreakin' believable. This is how Prop 13 was first passed.
The Democrats circumvented Republicans through a number of novel maneuvers that take advantage of the legal difference difference between taxes and fees and skirt the need for a two-thirds vote of the Legislature, which is normally required for tax hikes. A two-thirds vote would require some Republican support, but GOP lawmakers have vowed not to raise taxes. On the floors of the Senate and Assembly, Republicans said the Democrats showed contempt for voters and an unprecedented subversion of California's Constitution.
Let me tell you what's going to happen. Within two weeks an initiative will be circulating that amends the Constitution to reclassify "fees" as taxes and it will pass with 85% approval. That's an ungovernable situation but that won't matter bu then.
31.90% year over year. Who in their right mind bought in Nov 2006? We know the people who couldn't afford $630,000 a year previous. DQNews has the details.
$166,250 over 12 months. Worse, the median home is smaller. $13,000 per month is more than $400 per day in lost equity in addition to payments of at least $200 per day. Just what does $600/day buy you? The world renowned Ojai Valley Spa is only $300/night.
NEW YORK, Dec 16 (Reuters) - Maurice "Hank" Greenberg, former American International Group (AIG.N: Quote, Profile, Research, Stock Buzz) boss, has questioned whether the troubled insurance company sold securities to the Federal Reserve Bank of New York fund at a higher price than they were marked on the insurer's books.
And it turns out it wasn't only people who have been caught naked as the tide goes out. The next 18 months are now looking at a $40b deficit. That's now officially in my likely default territory. I wasn't expecting these dire 2009-2010 numbers until May when the tax receipts are counted. Not that this bad news has had the slightest impact on our dear leaders in Sacramento.
"But the cuts would be so deep as to be politically lethal even for (lawmakers) who think they are in districts that are safe."
This from SFGate story: Budget crisis may lead to $40 billion deficit
Matthew Yi, Chronicle Sacramento Bureau Sunday, December 14, 2008 (12-14) 04:00 PST Sacramento --
California is bleeding so much money that without a sweeping fix, the state's budget deficit will reach an unprecedented $40 billion in the next 18 months, a huge gap that many officials agree can't be bridged without increasing tax revenue.
But Republican state lawmakers, ...
But what? Do I have to spell it out? The Republicans don't want to accept any new taxes until the cuts are made first. This because they know that any new money would go where the Democrats want not to balancing the budget.
And belated congratulations to Tony Strickland for earning the local State Senate seat. The repercussions will be national.
$40 billion is more than $1100 per person and we know that by the time we exempt the children and the poor and the illegals there won't be many left to bleed.
California November revenue $1.3 billion below estimate Wed Dec 10, 2008 9:22am EST By Jim Christie
SAN FRANCISCO (Reuters) - California's general fund revenues in November were $1.3 billion, or 18.5 percent, below expectations, suggesting the government of the most populous U.S. state could run out of money as early as February, State Controller John Chiang said on Tuesday.
The government of California, the world's eighth-largest economy, must contend with a $28 billion combined shortfall for the remainder of its current fiscal year and its next fiscal year, which runs from July.
Understand this is an unexpected revenue shortfall below the already downward revised projections that were leading to a $28 billion deficit. Wait until they see what a -30% stock market will do to their income tax coffers.
Blog note: there's nothing wrong with your screen. The snow is my global warming indicator in anticipation of a massive coldfront sweeping down on SoCal. We could get snow.
Long time readers know I have little tolerance for ivory tower liberals. Actually I have little tolerance for ivory tower conservatives as well but they at least have kept their numbers under control. However in the spirit of the blind squirrel credit is due Robert Reich for his comments on Populist Backlash. Normally Reich spends his days bemoaning inequality and suggesting ways for government to impose equality of the lowest common denominator. Handicapper General, Diana Moon Glampers would blanche at some of his ideas for imposing equality. He then spends the rest of his time attempting to rewrite the history of the Clinton Administration with emphasis on his influence on their tremendous economic successes. Despite the obvious intellectual burden of these pursuits he has managed to find the time to either plagarize from the archives of EN or stumble upon the now blindingly obvious:
These Americans aren't revolutionaries. To the contrary, they're deeply conservative. They've worked hard, but their hard work hasn't paid off. Some have tried to save, only to see their savings disappear. They're worried about the future and about their kids' futures. They never expected anything like this.
This is the angry soil in which populist backlashes can take root.
Indeed. Of course he has it all backwards with respect to solutions; more government and more debt but at least he admits that the more debt and more government to date has been ineffective. That brings up the thing that bugs me most about Keynesians. No matter the size of the failure they will always fall back on the excuse that no matter what was done if only a little more had been attempted then it would have succeeded. And that is my prediction for these bailouts.
Hopefully by now readers know bubble when they see one. This one however is going to be particularly damaging when it pops. It isn't so much that long bond holders are going to get screwed, no the real problem is that the US won't be able to borrow long for generations.
And who do we know that needs to borrow? California, New Jersey Mionnesota and oh yes,.. home buyers.
The sordid details of Tesla Motors hat in hand is at the NYTimes.
The company is requesting $400 million in low-interest federal loans as part of the $25 billion loan package for the auto industry passed by Congress last year. The program is intended to encourage automakers to improve fuel efficiency, but should it be used for a purpose like this, as the 2008 Bailout of Very, Very High-Net-Worth Individuals Who Invested in Tesla Motors Act? Can you conceive any way that federal dollars could be put at greater risk — and for no equity in return, keep in mind — to benefit fewer people?
I just imagine their namesake rolling in his grave at the idea of becoming a vassal of the government.
Governor: The powers given to the governor include the coordination of the state emergency plan and programs to mitigate the effects of an emergency, and authority to suspend statutes, commandeer private property and personnel, and cooperate with federal agencies (Cal. Gov’t Code §8565 et seq.). The governor has complete authority over agencies and the right to exercise police power (Cal. Gov’t Code §8627 et seq.). Also, the governor may make expenditures “from any fund legally available” to deal with emergencies and accept services, equipment, and supplies (Cal. Gov’t Code §8645 et seq.). Additional powers of the governor in a state of emergency are enumerated in the statute (Cal. Gov’t Code §8654). During state of war emergency the governor exercises complete authority over all agencies and the right to designate all police powers in designated areas. (Cal. Gov’t Code §8620)
Schwarzenegger declares emergency SACRAMENTO, Calif. (AP) -- Gov. Arnold Schwarzenegger declared a fiscal emergency Monday and called lawmakers into a special session to address California's $11.2 billion deficit.
The state's revenue gap is expected to hit $28 billion over the next 19 months without bold action. The emergency declaration authorizes the governor and lawmakers to change the existing budget within 45 days.
The state is likely to run out of cash in February.
Got that? Some weird new power called "fiscal emergency." That's covered by Prop 58:
...the Governor may issue a proclamation declaring a fiscal emergency and shall thereupon cause the Legislature to assemble in special session for this purpose. The proclamation shall identify the nature of the fiscal emergency and shall be submitted by the Governor to the Legislature, accompanied by proposed legislation to address the fiscal emergency. (2) If the Legislature fails to pass and send to the Governor a bill or bills to address the fiscal emergency by the 45th day following the issuance of the proclamation, the Legislature may not act on any other bill, nor may the Legislature adjourn for a joint recess, until that bill or those bills have been passed and sent to the Governor. (3) A bill addressing the fiscal emergency declared pursuant to this section shall contain a statement to that effect.
Okay, so they can't pass any extra stuff. BFD. Here's where it gets interesting:
...the Legislature may not send to the Governor for consideration, nor may the Governor sign into law, a budget bill that would appropriate from the General Fund, for that fiscal year, a total amount that, when combined with all appropriations from the General Fund for that fiscal year made as of the date of the budget bill's passage, and the amount of any General Fund moneys transferred to the Budget Stabilization Account for that fiscal year pursuant to Section 20 of Article XVI, exceeds General Fund revenues for that fiscal year estimated as of the date of the budget bill's passage. That estimate of General Fund revenues shall be set forth in the budget bill passed by the Legislature.
Any bets that part gets ignored? Really. Now that the Governor has declared a fiscal emergency; no more bills that cost money. Yeah, right. Silly Constitutional stuff is for other people not our fine Legislature.
Housing Bubble, credit bubble, public planning, land use, zoning and transportation in the exurban environment. Specific criticism of smart growth, neotradtional, forms based, new urbanism and other top down planner schemes to increase urban extent and density. Ventura County, California specific examples.