Tuesday, March 09, 2010

California Default Watch II

March 8 (Bloomberg) -- California Treasurer Bill Lockyer’s bid to sell $2 billion of bonds this week, his first issue since November, may benefit from a falling risk premium after lawmakers at his urging passed a bill to prevent the most- populous U.S. state from running out of cash.
A special session of the Legislature approved measures to chip away at a $20 billion budget deficit and give state officials powers to put off as much as $5 billion in spending. The delays are intended to sidestep cash shortfalls like those last year that forced the state to issue IOUs to pay bills and triggered cuts to its credit rating.
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And an excellent blogger I haven't mentioned in a long time, Of Two Minds:

Why California Is Doomed (March 9, 2010)

California is doomed for two simple but profound reasons: the cost structure is too high for most businesses to survive, and a boom-dependent economy.

The dysfunctions crippling California would easily fill a volume: a dysfunctional Legislature that has been gerrymandered to protect virtually every seat; a dysfunctional proposition system which enables special interests to craft Protected Fiefdoms via the ballot box; recalcitrant public unions who don't see anything wrong with public servants getting 90% of top-pay in pensions while still earning big bucks as "contract employees," an enormous population of undocumented workers who pay only sales taxes, and whose employers pay no payroll taxes, either-- and that just scratches the surface.
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7 comments:

Property Flopper said...

FIRST new post in a while...

Lou Minatti said...

Just dial back state spending by 10 years, adjust for inflation, and the problem is solved. This shouldn't be rocket science.

Stagflationary Mark said...

Rob Dawg,

For your amusement...

Greek Apples Californian Oranges

http://www.aei.org/article/101715

While California certainly has budget problems that should not be minimized, they pale in comparison to those of Greece. Whereas California's budget deficit presently amounts to less than 2 percent of its US$ 2 trillion economy, Greece's budget deficit has now reached a staggering 12 ¾ percent of its US$300 billion economy. This difference must make one think that the eventual correction of the Californian budget deficit would have around one fifth of the negative impact on its economy as the necessary correction of the Greek budget deficit would have on the Greek economy.

It really is an apples to oranges comparison. California is a state. Greece is a country.

California doesn't just have California's deficits. California also has about 1/7th of America's deficits.

No problem!

Just add both together before comparing to Greece.

This assumes that Californians would want to tackle both deficits simultaneously in order to better compete with Greece on a level playing field of course.

Got apples? ;)

tj and the bear said...

Please tell me she's not "the redhead". :-(

Rob Dawg said...

No, she's not. Deliberate tease. There will be no question when the "Redheaded Stepchild" post goes up.

Lex said...

Have fun.

Northern Renter said...

That was some redhead in your next post... I was so put off, I couldn't even Murst it.

When I read about the fiscal problems facing your state, the line "We are all just prisoners here, of our own device." keeps running through my head.

NR