A lot of virtual ink has been spilled over the on-going economic crisis in California. Lost in the uproar is the fact that 6 other states are also having budget crisis of their own.

Most ideas for solving California's fiscal situation involve draconian cuts and higher taxes. Both are unavoidable at this late date.
However, in every crisis there is opportunity for more radical, progressive, long-term ideas. I would now like to present an idea for comment.

China is at it once again, to remove the dollar as the world reserve currency and they are bringing their pals, India and Russia to join in.

China will push reform of the international currency system to make it more diversified and reasonable, and to reduce excessive reliance on the current reserve currencies, the People's Bank of China said Friday.

"To avoid the shortcomings of sovereign credit currencies acting as reserve currencies, we need to create an ... international reserve currency that can maintain the long-term stability of its value," the PBOC said.

The wishes of the BRIC nations have finally been fulfilled.

(Bloomberg) -- The International Monetary Fund’s board of directors approved the issuance of bonds to the lender’s 186 members for the first time as it seeks additional sources of money to lend during the global recession.

The Bureau of Labor Statistics released the June 2009 unemployment statistics. The rate is unchanged at 9.5%. The long term unemployment has increased.

The number of long-term unemployed (those jobless for 27 weeks or more) increased by 433,000 over the month to 4.4 million. In June, 3in 10 unemployed persons were jobless for 27 weeks or more.

What's interesting is the number of people not in the workforce has increased 358,000.

The employment-population ratio, at 59.5 per-
cent, continued to trend down over the month. The employment-population ratio has declined by 3.2 percentage points since the start of the recession in December 2007.

According to Bloomberg of those left with a job, their hours are dropping as well as their wages:

It was the morning of January 22, 1932, in a quiet, middle-class neighborhood of the Bronx. A crowd was gathering in front of 2302 Olinville Avenue, near the Bronx Park.
City Marshals and Police had moved in to evict 17 tenants who were on a "rent strike". A crowd of 4,000 had gathered nearby.

When the marshals moved into the building and the first stick of furniture appeared on the street, the crowd charged the police and began pummeling them with fists, stones, and sticks, while the "non-combatants urged the belligerents to greater fury with anathemas for capitalism, the police and landlords." The outnumbered police barely held their lines until reinforcements arrived.

Every single reserve police officer in the Bronx had to be called in to prevent being routed by the rioters.

The headlines buried how AIG has more massive potential losses on their CDS portfolios.

learningmarkets:

According to AIG, the risk factor includes a super senior CDS portfolio with a net notional amount of $192.6 billion of AIG Financial Products Corp. and AIG Trading Group Inc. and their respective subsidiaries, collectively known as AIGFP, as of March 31, 2009. The portfolio represented derivatives written for financial institutions, principally in Europe, for the purpose of providing regulatory capital relief rather than for arbitrage purposes. The fair value of the derivative liability for these CDS transactions was $393 million at March 31, 2009.

It's almost embarrassing what they will try to spin as "good" economic news these days.

(Bloomberg) -- Home prices saw a “striking improvement in the rate of decline” in April and trading in funds launched today indicates investors believe the U.S. housing slump is nearing a bottom, said Yale University economist Robert Shiller.

“At this point, people are thinking the fall is over,” Shiller, co-founder of the home price index that bears his name, said in a Bloomberg Radio interview today. “The market is predicting the declines are over.”

“My guess would be that home prices are going to level off -- they’re not going to keep falling,” Shiller said in a separate interview with Bloomberg Television.

Wow! That sounds wonderful!

The economy of the UK is shrinking at its fastest rate since 1958.

Gross domestic product fell 2.4 percent from the final three months of 2008, compared with the prior measurement of a 1.9 percent drop, the Office for National Statistics said today in London. The median prediction in a Bloomberg survey of 28 economists was for a 2.1 percent decline. Construction activity plunged almost three times as much as originally estimated.

See what happens when an issue is cast as environmental instead of financial. That appears to be the case with cap and trade.

I can't add any further commentary. Just read it.

Edited: For those of you who want the full article and cannot make heads or tails out of Scribd (below), the article is here and attached below (pdf).

Before us we have the proposal to expand the powers of the Federal Reserve as the systemic risk regulator.

Consider this:

Thus within 18 months of taking office, Obama will likely have appointed five of the seven Fed governors . The central bank is designed to be independent from politics, so a president's best chance of influencing how the Fed will regulate banks or respond to economic changes is through these appointments.

The Federal Reserve acts independently of government, with pretty much only these appointments, each a 14 year term, and confirmation of each governor by the Senate.

The World Bank released a report Prospects for the Global Economy.

Here are some highlights for the year of the dog (sic) 2009:

^{GDP, 2008}

Last September, during the debate over the federal bailout of Wall Street, politicians that supported the bailout used a certain phrase.

"Our time has run out," said Rep. Spencer Bachus, R-Ala., the ranking Republican on the House Financial Services Committee. "We're going make a decision. There are no other choices, no other alternatives."

Recently I saw the same argument made on DKos concerning the deficit spending and bailouts. It seems like common knowledge at this point. If we hadn't bailed out Wall Street then we would headed into a Depression.

The fact of the matter is that this idea, that we had no choice, is wrong on three different levels.

A few months ago, I noticed something that seemed strangely discordant about our "Great Depression 2": consumers were refusing to stay dead, but instead showed signs of - at least partially - rising from the grave.

But a look at truck traffic (which is only posted monthly) and rail traffic (which is updated weekly) showed a continued year-over-year slide.

I took a further look because one very prominent blogger has recently alluded to rail traffic several times, most recently saying it was "horrible" and "13-week moving averages are still moving lower, with no apparent end in sight" So, what's going on? Does rail traffic in particular mean the recession is continuing to plunge deeper into the abyss, or are there signs of some stabilization?

There are those that honestly think you can make a sustainable economy based on people buying things they don't need with money they don't have. Then there are those who just want to sucker in the sheeple so they can fleece them one more time.
Finally, there are the sheeple themselves - so scared that they will buy into any feel-good message about Green Shoots that the politicians and media sells them, and even defend it.

What none of these three groups want is for the general public to know what the actual numbers really are.
They don't want me to show you what I am about to show you.