CALIFORNIA IS IN DEPRESSION. Look!

Discussion in 'Economy' started by Neubarth, Apr 7, 2010.

  1. Neubarth
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    Neubarth At the Ballpark July 30th

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    California Pension Shortfall: June 2008 55 Billion to March 2010 500 Billion!
    A study released Monday by Stanford University estimates that California's three largest state-operated, public-employee pension funds—the California Public Employees' Retirement System, California State Teachers' Retirement System and University of California Retirement System—currently face a total shortfall of more than $500 billion.

    The figure dwarfs the funds' own combined shortfall estimate of $55 billion as of July 2008, according to the report, which doesn't account for the more than $100 billion loss sustained by the funds during the recession. That adds a further wrinkle to California's already precarious fiscal situation.

    The study, prepared by Stanford graduate students for Gov. Arnold Schwarzenegger, used a more conservative formula to estimate the pension systems' unfunded obligations, an approach advocated by a growing chorus of experts. The report also recommended increasing contributions to the funds, investing in less risky assets and trimming pension benefits for future employees.

    Gov. Schwarzenegger warned Monday that pension-fund shortfalls could lead California, which faces a $20 billion budget gap in the coming fiscal year, to divert more funds from other state programs to cover pension costs.
    Shortfall Awaits California's Big Pension Funds - WSJ.com


    L.A. to Run Out of Cash in a Month, Controller Says

    April 5 (Bloomberg) -- Los Angeles will run out of cash on May 5, city Controller Wendy Greuel said today in a release in which she requested a $90 million transfer of reserve funds to pay bills.

    The controller said she received a letter from the Los Angeles Department of Water and Power today indicating the utility wouldn’t send an anticipated $73 million payment to the city’s general fund. That money is part of an annual contribution of 8 percent of power revenue that the utility makes in lieu of paying taxes to the city, according to Ben Golombek, a spokesman for the controller.

    “The question I have been asked most often during the budget crisis is, ‘When will the city run out of money?” Greuel said in the e-mailed release. “Unfortunately, we finally have the answer.”

    Greuel, 48, said in the release that the city might not be able to make payroll. She asked Mayor Antonio Villaraigosa and the City Council to release $90 million from reserve funds to meet what she described as “an urgent cash need.” The controller’s financial reporting division estimated that the city would need $90 million to ensure solvency through the fiscal year that ends June 30, according to Golombek.

    The mayor supports the controller’s request for $90 million from the reserve fund, said his spokeswoman, Sarah Hamilton, in an e-mailed comment. He also called on city managers to adhere to spending controls he asked for in March, according to Hamilton.

    ‘Fiscal Crisis’

    “This is the most urgent fiscal crisis that the city has faced in recent history, and it is imperative that you act now,” Greuel said in her release.

    “There is no surplus money to transfer at this time,” S. David Freeman, interim general manager of the department, said in a letter today to Greuel that was released by Golombek.

    The City Council’s vote to block a proposed electricity rate increase last week may push the Department of Water and Power into deficit, the Los Angeles Times cited Freeman as saying. L.A. to Run Out of Cash in a Month, Controller Says (Update1) - Bloomberg.com


    Protect Your Wealth From Exploding Debt as States Implode

    Let’s put things in perspective. Greece’s gross domestic product (GDP) is approximately $357 billion. Meanwhile, the state of Illinois has a GDP of around $633 billion — and, on Monday, Fitch Ratings downgraded Illinois’ credit rating and warned of possible further action, leaving the state’s credit on negative watch.

    Why? Because Illinois has a $13 billion budget deficit and is careening into a liquidity crisis.

    Is Illinois not big enough for you? California is the largest U.S. state with roughly $1.8 trillion in GDP — the eighth largest in the world. That puts it roughly on par with Russia, Spain, or Brazil. How bad are things in California?

    California is wrestling with a $22 billion budget deficit.
    The deficit is expected to get worse, and hit $25 billion in 2012. And that’s a CONSERVATIVE estimate. Other estimates put it over $40 billion.
    Including state pension obligations, California’s debt burden is 37% of its economic output.
    The crisis is so bad, the credit default swaps — or insurance against default — on California general obligation debt now show California’s bonds are at greater risk than the bonds of Kazakhstan, Croatia, Bulgaria and Thailand. That’s right, Kazakhstan! Where Borat comes from!
    The financial situation is so severe that California is paroling prisoners early, slashing what once were deemed essential services, and doing the equivalent of rifling the couch cushions (shifting funds temporarily) to try and bridge the fiscal gap.
    http://www.marketoracle.co.uk/Article18433.html
     
  2. georgephillip
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    georgephillip Gold Member Supporting Member

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    California's debt is "owed" to Wall Street. Why not cut out the Fat-Cats and start generating our own credit?

    In 2009 California's capital and revenue what have fanned out $4 trillion in loans, more than enough to cover all projected budget deficits.

    Green candidate for governor, Laura Wells, a former financial adviser who polled 420,000 votes in her 2002 bid for State Controller has this to say:

    "Rather than drowning in debt and begging Wall Street for loans, California can institute a State Bank that invests in California's infrastructure, and future generations."
     
  3. Wry Catcher
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    Wry Catcher Platinum Member

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    Given that Meg Whitman is intent on buying the Governors office it's not likely Ms. Wells will be anymore successful this time around. What Californian's ought to do is to pull all of their money form the large national banks and put it in small local banks and credit unions. I'd also suggest a few dollars be sent to Jerry Brown; Whitman is a Rx for disaster.
     
  4. editec
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    editec Mr. Forgot-it-All

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    That essentially the same question I keep asking about the FED, isn't it?

    The above is my way of telling you that you're brilliant, BTW.

    You are, as I am, a kind of SOCIAL capitalist, chum.

    Don't bother looking up that term, I just invented it.

    The source of all wealth is the people.

    The people get to create a people's bank which is granted EXCLUSIVE RIGHT to invent money to loan to citizens who are willing to pay it back at interest.

    Hence, when you or I want to open a business or buy a home, we borrow the money from that CENTRAL PEOPLE'S BANK, and we pay it back to the same bank...a bank whose sole interest is to see to it that this NATION does well by granting citizens the money they need to advance its productivity.

    That's what we SHOULD have created in 1913.

    Instead we granted the exclusive right to INVENT NEW MONEY to private bankers.

    How fucking stupid was that?

    We're now once again seeing how fucking stupid that was, aren't we?

    The FEDERAL RESERVE'S primary fuduciary responsibility is NOT to the people of this nation.

    They are beholden to the stockholders of the PRIVATELY OWNED banks which collectively own the 12 Privately owned FEderal Reseve banks.

    HNone of them are Federal, and none of the have the slightest reservation about fucking over the people (see bailout of banks) to make their owners richer, either.
     
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    Last edited: Apr 11, 2010
  5. georgephillip
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    georgephillip Gold Member Supporting Member

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    Whitman is a Disaster with a big "D" for at least 90% of Californians. Recently her own staff revealed her assets were hedged in ways that make it virtually impossible to move them into a blind trust.

    I supported Jerry "Moonbeam" Brown during his last stint as governor. Lately I've come to suspect he's just as corrupt as any other career politician.

    When Prop 13 passed in '78 local communities in California lost $7 billion virtually overnight. The legislature passed an emergency $30 million appropriation to keep some local libraries open, Brown vetoed it.

    Days later Jerry quietly allowed a $30 million tax break for the horse racing industry to become law.

    There are even more troubling questions about the Brown family's connection to Indonesian oil interests that some claim has made the Brown family rich from conspiring with a dictator and his death squads.
     
  6. Baruch Menachem
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    Baruch Menachem '

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    You borrowed the money, you have to pay it back. It is a loan.

    Don't forget the banks that loaned you the money got it from their depositors.

    It looks like they realized that if they hadn't borrowed all that money, the interest on the debt they owe would be nil and they could do quite well on the income they have thrown away in interest
     
  7. Wry Catcher
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    Wry Catcher Platinum Member

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    I'm not aware of these allegations, but, that said, I'd vote for anyone but Meg Whitman. I read with interest the links re State Banks in your earlier posts, I wish I had a greater familiarity with macroeconomics.
    I guess I'll wait and see who opposes the idea - that will tell me if it's a good idea for the country or a good idea for special interests.
     
  8. Toro
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    Toro Diamond Member

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    Neubarth

    What you have posted is all extremely relevant and worrisome, but those fundamental problems are not a result of the current economy, other than it has sped up their reckoning. Even if we never had a recession and the economy continued to grow as it were, government pensions and spending would have been a problem some time down the road. California has been spending too much money. The recession means those problems are relevant now instead of 5-10 years from now.
     
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  9. georgephillip
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    georgephillip Gold Member Supporting Member

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    Maybe it takes Social Capitalists to make state banking possible. It sounds to me like the same concept North Dakota's Non-Partisan Party started from in 1919.

    Wall Street greed and arrogance drove some very conservative citizens almost a hundred years ago to set up a public banking institution that technically made the financial capital of the state the capital of the bank.

    "The State of North Dakota doing business as the Bank of North Dakota."

    Currently North Dakota is one of two states able to meet its budget and the other (Montana) is expected to go into debt by the middle of 2011. The BND's return on equity is about 25%.

    "In the last decade, the BND has turned back a third of a billion dollars to the state's general fund, offsetting taxes."

    Farid A. Khavari, a Phd Economist and one of several candidates running for Florida's Democratic gubernatorial nomination goes even farther:

    "State and local government budgets will balance without higher taxes when the BSF (Bank of the State of Florida) cuts interest costs. 6% BSF credit cards will save people billions per month, money that stays in Florida instead of going to the big banks--and the state will make huge profits on that too.

    "Saving billions in interest costs will create millions of jobs without subsidies just by keeping those billions circulating in Florida.

    "Eventually, the state will earn enough to reduce and eliminate state and local taxes while every Floridian has economic security in a recession-proof Florida."
     
  10. georgephillip
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    georgephillip Gold Member Supporting Member

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    Wry:

    Why not vote Green?

    I KNOW it's always been a wasted vote that only serves to help elect the greater of two evils.

    That could all begin to change next November 2nd in California.
    State Banking may well be an idea whose time has come.
    It could easily become a litmus test for any politician seeking our votes.

    Meg 326 and Moonbeam will NEVER take on Wall Street.
    Both want the White House too badly for that.
    Laura Wells garnered more votes in 2002 than any other Green has ever earned in a partisan state wide race:

    "A state bank for California is part of my platform...I ran for State Controller to 'Follow the Money.'"

    "Now we need to Fix the Money.

    "A state bank would keep California's wealth in the state. Rather than invest in Wall Street (we've hit the wall on that one) we can invest in our infrastructure and our future generations."
     

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