California Economy

[Toro]

I've always thought of California as something of a basket-case, at least politically. I was surprised when I ran the numbers and discovered that during this decade, California has actually outperformed Texas, albeit slightly.

From 2000 through 2009, per capita economic growth in California at 31.6% was slightly higher than Texas at 31.5%. California was disproportionately affected by both the collapse of the Tech Bubble and the Housing Bubble compared to Texas. Also, Texas is a net exporter of energy whereas California is a net importer of energy. You can calculate all the data from these sites.

BEA : Gross Domestic Product by State
California QuickFacts from the US Census Bureau

Texas benefited greatly from a quintupling of oil prices during the decade, was not as affected by the collapse of the Tech Bubble in the earlier part of the decade as much as California, and did not experience the same catastrophic boom/bust real estate cycle as California did. Yet California actually outperformed Texas.

I have an article I will post later.

 

[Tank]

Remember when people used to say "without illegal aliens California's economy would collapse.

 

[iamwhatiseem]

Why did this surprise you?
California has a HUGE economy. And yet despite an also HUGE tax basin - they are broke.
That is what should surprise you.

 

[loosecannon]

California is a whale of an economy with lots of industries and innovation others envy, plus everybody wants to live here.

But we have a morass of legal and political problems that conspire to cause intractible fiscal deficits, and the costs of doing business here are too high.

The California economy was ideal for a robust, vibrant economic era, but is proving to be totally disastrous in a shrinking economic era.

If we can make the adjustments we will be fine, we are an engine of growth. If we don't we are in for a world of hurt.

 

[Revere]

Back out the growth in government and re-run those numbers.

 

[Toro]

Why did this surprise you?
California has a HUGE economy. And yet despite an also HUGE tax basin - they are broke.
That is what should surprise you.

They're not broke. Debt is, what, 7% of GDP? If California were an independent country, it would be the least indebted developed country in the world by far. They may be a basket-case, but they aren't broke. They have lots of money, but the will to pay isn't there. Orange County is one of the richest counties in the country, yet they went bankrupt in the 90s not because they couldn't pay but because they didn't want to. Same thing for the state now.

Size has nothing to do with the rate of growth.

 

[Revere]

Private wealth has nothing to do with bankrupt governments.

 

[william the wie]

California is a whale of an economy with lots of industries and innovation others envy, plus everybody wants to live here.

But we have a morass of legal and political problems that conspire to cause intractible fiscal deficits, and the costs of doing business here are too high.

The California economy was ideal for a robust, vibrant economic era, but is proving to be totally disastrous in a shrinking economic era.

If we can make the adjustments we will be fine, we are an engine of growth. If we don't we are in for a world of hurt.

The really big problem for California is the lack of water. Energy exports can resume as soon as drilling resumes and that would solve most of the fiscal problems the lack of rain and snowpack is not easily solved. Secondarily tectonic risk reduces the value of obvious solutions such as solar distilleries of seawater. As with northern China urbanization is causing the desert to grow at remarkable speed due to soil erosion. Soil erosion is increasing all through the state as fires are followed by land slides reduce available water. (According to my niece in the Oakland Hills she has seen some of these problems first hand over the past two decades and that whole area used to be part of the temperate west coast rain forest.)

My guess is that until reforestation, desalinization and low water lawns become the norm California will continue to decline. This still will not address the problem of Far East pollution crossing the Pacific and making a bad situation unmanageable but that problem has existed to some extent since prior to the Sino-Japanese war in the late 1800s. Until those environmental stressors can be and are addressed at a cost the average taxpayer in CA can afford the situation will get worse.

 

[Revere]

California is a whale of an economy with lots of industries and innovation others envy, plus everybody wants to live here.

But we have a morass of legal and political problems that conspire to cause intractible fiscal deficits, and the costs of doing business here are too high.

The California economy was ideal for a robust, vibrant economic era, but is proving to be totally disastrous in a shrinking economic era.

If we can make the adjustments we will be fine, we are an engine of growth. If we don't we are in for a world of hurt.

The really big problem for California is the lack of water. Energy exports can resume as soon as drilling resumes and that would solve most of the fiscal problems the lack of rain and snowpack is not easily solved. Secondarily tectonic risk reduces the value of obvious solutions such as solar distilleries of seawater. As with northern China urbanization is causing the desert to grow at remarkable speed due to soil erosion. Soil erosion is increasing all through the state as fires are followed by land slides reduce available water. (According to my niece in the Oakland Hills she has seen some of these problems first hand over the past two decades and that whole area used to be part of the temperate west coast rain forest.)

My guess is that until reforestation, desalinization and low water lawns become the norm California will continue to decline. This still will not address the problem of Far East pollution crossing the Pacific and making a bad situation unmanageable but that problem has existed to some extent since prior to the Sino-Japanese war in the late 1800s. Until those environmental stressors can be and are addressed at a cost the average taxpayer in CA can afford the situation will get worse.

Um, no, none of those things have anything to do with California teetering on insolvency.

Try 1/8th the country's population carrying 40% of the country's welfare cases on its back.

 

[loosecannon]

California is a whale of an economy with lots of industries and innovation others envy, plus everybody wants to live here.

But we have a morass of legal and political problems that conspire to cause intractible fiscal deficits, and the costs of doing business here are too high.

The California economy was ideal for a robust, vibrant economic era, but is proving to be totally disastrous in a shrinking economic era.

If we can make the adjustments we will be fine, we are an engine of growth. If we don't we are in for a world of hurt.

The really big problem for California is the lack of water. Energy exports can resume as soon as drilling resumes and that would solve most of the fiscal problems the lack of rain and snowpack is not easily solved. Secondarily tectonic risk reduces the value of obvious solutions such as solar distilleries of seawater. As with northern China urbanization is causing the desert to grow at remarkable speed due to soil erosion. Soil erosion is increasing all through the state as fires are followed by land slides reduce available water. (According to my niece in the Oakland Hills she has seen some of these problems first hand over the past two decades and that whole area used to be part of the temperate west coast rain forest.)

My guess is that until reforestation, desalinization and low water lawns become the norm California will continue to decline. This still will not address the problem of Far East pollution crossing the Pacific and making a bad situation unmanageable but that problem has existed to some extent since prior to the Sino-Japanese war in the late 1800s. Until those environmental stressors can be and are addressed at a cost the average taxpayer in CA can afford the situation will get worse.

We have lots of water, Willie. 10% of the state is a rainforest that sheds 80 inches of rain/sq inch, or enough water for a billion households. Most of the other 90% of the state also has significant rainfall.

We simply lack a comprehensive water strategy.

Pollution from across the Pacific is a non issue. Some of the cleanest air on earth flows in on our shores each day.

 

[william the wie]

That could be but as Revere pointed out the money needed to implement such a strategy is being wasted a way.

 

[Revere]

That could be but as Revere pointed out the money needed to implement such a strategy is being wasted a way.

No, government standing in the way of population friendly solutions.

 

[loosecannon]

That could be but as Revere pointed out the money needed to implement such a strategy is being wasted a way.

wasted on public employees who have serious entitlement issues.

 

[glew]

Pollution from across the Pacific is a non issue. Some of the cleanest air on earth flows in on our shores each day.

Wait...Asia, the most polluted continent on the planet, manages to ship clean air into the US? How could this be? The answer to Cali's economic problem is simple...It has been run by liberals and progressives for decades...Same for New York and New Jersey...It is not a coincidence that the fiscal problems in those states, and most liberal states, are the same. Texas, Idaho, and Utah, along with most conservative states, are handling this national economic mess much better.

 

[loosecannon]

Wait...Asia, the most polluted continent on the planet, manages to ship clean air into the US? How could this be?

The pacific ocean is the world's largest filtration system. All the toxins wind up in the ocean leaving the air itself crystal clean.

 

[glew]

Wait...Asia, the most polluted continent on the planet, manages to ship clean air into the US? How could this be?

The pacific ocean is the world's largest filtration system. All the toxins wind up in the ocean leaving the air itself crystal clean.

Really!? Ohhh..from the enviro-whackos on here, I assumed that the earth isn't able to take care of itself and it is up to us to do it for her...Because any "human" pollution is permanent and if we don't stop right "NOW", then the planet will end as we know it...lololol...thanks for clearing that up for me LC

 

[Trajan]

Why did this surprise you?
California has a HUGE economy. And yet despite an also HUGE tax basin - they are broke.
That is what should surprise you.

They're not broke. Debt is, what, 7% of GDP? If California were an independent country, it would be the least indebted developed country in the world by far. They may be a basket-case, but they aren't broke. They have lots of money, but the will to pay isn't there. Orange County is one of the richest counties in the country, yet they went bankrupt in the 90s not because they couldn't pay but because they didn't want to. Same thing for the state now.

Size has nothing to do with the rate of growth.

I am trying to get what you mean exactly. They have a 20 billion year to year budget deficit, which all agree is much higher as creative bookkeeping has hid another 3-4 billion.The shortfalls are already forecast out to 2016.

They have set in stone payments that eat up 18-20% (roughly depending on their yearly revenue), so that % can easily go up as revenue continues to sink, bond payments, interest on loans from the feds etc.

Then there's the pension fund obligations, they have underfunded them for the last several years AND they were creatively finagled calculating higher income from the funds accruals than they realized or ever will. They are not sure how much that is exactly but can be between 450 and 500 billion ( Stanford study 6 months ago), thats 6 times the yearly state budget btw, this is defined locked in liability. They have a cash payment due to calpers for 55 billion this coming year.

where is this money you seem to think they have?

 

[sangha]

Why did this surprise you?
California has a HUGE economy. And yet despite an also HUGE tax basin - they are broke.
That is what should surprise you.

They're not broke. Debt is, what, 7% of GDP? If California were an independent country, it would be the least indebted developed country in the world by far. They may be a basket-case, but they aren't broke. They have lots of money, but the will to pay isn't there. Orange County is one of the richest counties in the country, yet they went bankrupt in the 90s not because they couldn't pay but because they didn't want to. Same thing for the state now.

Size has nothing to do with the rate of growth.

I am trying to get what you mean exactly. They have a 20 billion year to year budget deficit, which all agree is much higher as creative bookkeeping has hid another 3-4 billion.The shortfalls are already forecast out to 2016.

They have set in stone payments that eat up 18-20% (roughly depending on their yearly revenue), so that % can easily go up as revenue continues to sink, bond payments, interest on loans from the feds etc.

Then there's the pension fund obligations, they have underfunded them for the last several years AND they were creatively finagled calculating higher income from the funds accruals than they realized or ever will. They are not sure how much that is exactly but can be between 450 and 500 billion ( Stanford study 6 months ago), thats 6 times the yearly state budget btw, this is defined locked in liability. They have a cash payment due to calpers for 55 billion this coming year.

where is this money you seem to think they have?

You're full of shit, which is why you have to inflate potential liabilities. For example, describing liabilities that depend on the future performance of the market and life expectancies as "locked in liability" is a bald faced lie.

 

[loosecannon]

I hope Trajan and sangha hash this out in full cuz I live here and I can hardly stand to hear the grizzly details.

California is an expanded version of our capital city, Bell.

 

[loosecannon]

Wait...Asia, the most polluted continent on the planet, manages to ship clean air into the US? How could this be?

The pacific ocean is the world's largest filtration system. All the toxins wind up in the ocean leaving the air itself crystal clean.

Really!? Ohhh..from the enviro-whackos on here, I assumed that the earth isn't able to take care of itself and it is up to us to do it for her...Because any "human" pollution is permanent and if we don't stop right "NOW", then the planet will end as we know it...lololol...thanks for clearing that up for me LC

The air pollution is deferred into the ocean as I already stated. Leaving the air clean and the ocean dirty.