California to be bankrupt in 10 days

How did it come to this?

Ten days remain before California will begin defaulting on its obligations.
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The state is spending so much money that Governor Schwarzenegger could fire every single California civil servant and still not come close to balancing the budget! Even if he also fired the other 149,000 legislative aides and people who work for the state’s courts or university systems (people not directly under the state’s control), he still couldn’t eliminate the deficit.

Lawmakers are spending so much money that California could become a state without employees and still not balance its books.

Alternatively, Schwarzenegger could close every single state prison, fire the guards, release all the prisoners—plus cut off all funding for health care across the entire state—and still be billions in the hole.

Governor Schwarzenegger has described this deficit as a rock upon California’s chest that is suffocating the state.

Already Schwarzenegger has ordered most state offices to close two Fridays a month beginning in February. The unpaid days off will effectively reduce employee salaries by around 10 percent.

But the situation is now so critical that state Director of Finance Michael Genest says that in just over a week, California will be forced to defer making payments on certain state commitments. Instead, he says, “the state will have to defer or pay with ious for most of its obligations.”

That is right; California will be reduced to sending out bits of paper indicating that at some point in the future, if finances ever allow, the state will make good on its bills.
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State Controller John Chiang says that tax refunds will be delayed, as will payments to state vendors and local social aid programs. Some rent and food assistance programs will be held back. Californians should also eventually expect permanently higher taxes, reduced services, and mounting job losses. Not a pretty picture, but one that looks likely.

Each day that passes without a new budget will necessitate even more cuts and tax increases, says Genest.

America be warned: As California goes, so goes the nation.

You can't expect the 8th largest economy in the world to go under and it not effect everything else.
For starters, the muni bond market would be rocket from one coast to the other. And then things would get ugly.

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California Bankrupt

Wow, just wow. and they are delaying payments to the most vulnerable, the blind, disabled SSI payments.

I'm sorry but they need to enforce immigration law in part simply to reduce the budget drainage. It's estimated to be about $10.5 billion in the hole and the underground economy in that state has to be massive.

Obviously the housing bubble pop is #1 reason they are in such trouble but still....

I'm sorry it's beyond practicality.

#2 is they are an inane bureaucracy of entrenched politicians that never lose their seats.

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When they close the schools....

....a cherished goal of CA Republicans the &^%$ will hit the fan blades. Millions of 'parents' rely on the school system to warehouse their kids.

Here as in DC the Democrat Party seems unable to realize that they must play smash mouth football not engage in the 'bi-partisanship' Kumbaya that they seem drugged by.

At least the social drone Caroline Kennedy dropped out of contention for Senator of NY. But the true arrogance of our 'inane bureaucracy' and we need to include both House and Senate in the bureaucratic category is that a man with a brain tumor is still Senator.

What effective human organization would leave a man with a brain tumor in a place of critical decision making. Only one with a supreme indifference to it's ability to perform. Only one where the rewards and perks for the 'Leader$hip' insulate them from reality.

Okay enough hammering on the political aspects by me.

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'When you see a rattlesnake poised to strike, you do not wait until he has struck to crush him.'

LOL

well, one thing that is hypocrisy is how our Congress, with bodies falling on the floor due to "stress" is how they will not confront the brazen, institutionalized age discrimination going on in the U.S. labor market. If the were engineers, every single one of them would be discriminated again.

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Reverse Oakies?

A friend of mine in Portland, Oregon says he's seen Californians apply for work at the place he works at. I won't go into overpopulation in regards to California, but one has to figure that the excess labor supply will spill out into neighboring states. Now I'm not saying you're going to see a Grapes of Wrath kinda thing, for starters most of the stuff people own is on credit and just foreign-made junk; anything of value has already been pawned off to meet next month's grocery bill. While I doublt you will see organized cravans of Californias heading to Oregon or Arizona or even Nevada, but you will see many just leave the state. As for the illegal immigrant situation, many are leaving because there are no jobs. There was a thing on the BBC a month ago about three families, with members that have been here for a generation or so, leaving to Mexico because of no work. Most of the males said they didn't expect to find any in the near future, and have gone on to other things.

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organized caravans out of California yes it happened - 2000/2001

I have no idea how they were calculating the unemployment numbers from about 2000-2003 in San Francisco, Bay area in California but I was there.

I am not exaggerating, the streets in San Francisco were lined with U-hauls, people were getting evicted, there were people with Masters degrees, PhDs, incredible skills and ability ....sleeping in their cars, homeless, and even worse, places like Macy's and Starbucks wouldn't hire them.

I drove down highway 880, which is in Silicon valley, at 6pm going 75 mph. That highway is normally a parking lot and during that time, you cannot move at all.

The offices were abandoned, the grass was long, there were simply no people.

The number of people who lost their jobs has been estimated at 50%. That's 50% of Americans who were permanently squeezed out of careers in tech, STEM.

Even worse, they offshore outsourced even more jobs and if they could not do that, they brought in guest workers.

But, Oregon isn't the place to go. Intel just announced 1000 people layoff.

In terms of illegal immigration, Oregon is like California....damn the costs, damn the reality of trying to provide social services, public services and so on....

I'm sorry when I see and this happened also in 2000-2003 people who truly need social services, food stamps being denied while it's all welcome, come on in to get the same things with fake IDs and an underground economy I just say something has got to give.

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These scenes are what sparked my adventures into Econ

It was like the grapes of wrath and still, to this day, STEM, tech workers are not seen as being devastated.

For such events it was astounding how it didn't really make the press or was really acknowledged.

At least in the 1930's they acknowledged the devastation to the oakies and workers generally.

I'll never forget those scenes and even worse, the absolute callousness towards people who were losing everything, including even shelter.

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