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.
I want to highlight two systemic, structural causes for California's impending bankruptcy as a state and as an "economy": a crushingly high costs structure and an economy entirely dependent on the next boom.
I know this sounds too simplistic to be meaningful, but I think there is much truth in this statement: Costs are too high because the guy before you paid too much.
In other words, you can't afford the $500,000 mortgage on the $625,000 house you bought in 2008 because the guy before you paid $550,000 for a house which sold for $140,000 in 1997.
These numbers are drawn from reality: our friends bought a small home in a desirable suburb in the San Francisco Bay Area for $140,000 in 1997. Yes, it was a fixer-upper and yes, our friends completely remodeled it. The fair value of the house after renovation was probably in the $175,000 to $190,000 range, tops.
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ReplyDeleteYou are a Moron, it is a slow collapse, but I would bet you that by the end of 2011 at the latest california will collapse economically or by earthquake, take your pick, but it Will Happen!
ReplyDeleteNot sure who EA is, but I'm friends with Charles Smith and he's an expert on the decline of California. Plus, everything he says is backed up by all my relatives in CA, sooner or later. It is doomed. Esp if Jerry Brown wins. They will try to solve the problem with the same things that causes the problem. California is America's Greece and Iceland. Talking to a relative out there recently and the hot talk for the cities is Chapt 9 bankruptcy. That means defaulting on all their muni bonds.
ReplyDeleteAt 9:51 Why do you give a fuck what the EA does or doesn't do? Get your own blog and get a purpose in your shallow life. I don't know who you think you are, or what you think your place in this world is, but you have seriously miscalculated your contribution to the grand scheme of things. BTW, you also have borderline personality disorder, you will require medication, isolation, and all of your family and friends should be warned, and your children removed from your home. Everyone needs to be protected from carcinogenic dysfunctional personality.
ReplyDelete951 you are an idiot, I used to live in cali, moved away in 05, best move I ever made. Talk to friends there all the time, they tell me they wish they could leave but cant sell their homes and kids in school, they cant leave but want to very bad, they tell me it is a police state and getting worse everyday
ReplyDeleteStop feeding the troll, ignore it; focus on the article.
ReplyDeleteI have a wealthy friend in California that owns over ten car dealerships, big ones. He never has a bad word to say. He told me yesterday that he wants to sell off all his businesses because he thinks the economic end is near. That was really odd coming from him.
Oh rubbish. Jobs are returning, and things are improving. Look at the stock market rally! You think it would if things are bad?
ReplyDeleteCali is doomed because there are too many bimbos strutting around maxing out credit cards, all of that over-priced real estate is eventually going to be worth quite a bit less, and of course the Terminator can't save John Connor from the burning building. Reality is slowly starting to set on the shores of the Golden State.
ReplyDeleteAmerica is a very talented nation. Were it not so, it would have imploded decades ago.
ReplyDeleteProblem right now, though, is production cost base. It's just too high. The country needs a reset, which essentially what's unfolding.
Americans may earn less in the future. However, this will be offset with lower housing cost and other factors.
The country can survive this economic mess if it doesn't come apart at the social seams. Civil war, or widespread chaos, would lead to its undoing.
P.S. Nissan is planning to sell a wholly electric powered automobile, starting near the end of 2010. This is a BIG development, because it is only a matter of time before enterprising people begin outfitting homes with sufficient solar panels to recharge those cars! In other words, the world doesn't have to end with the big crash happens. There's a tonne of money to be made in replacing all those gasoline/diesel-powered vehicles.
Well, not to be a downer, but it takes a LOT of solar power to charge up for most car usage today. And some of that energy could be used for powering your home. Also, what about cloudy days? There have been a lot of electric car ideas, and even some companies that do conversions. A large part of the problem is the cost of the batteries and the lifetime of the batteries.
ReplyDeleteThe bottom line is this: it isn't only the financial industry/economy that needs to be reset. It is our daily consumptive habits. And when the US starts to really hurt for oil, it's going to be a wake up call and then we will really see just how far we have extended ourselves on the hope of technology's unending returns.
Hurt for oil? Do you know how much oil and shale we have in this country and off of both coasts? The only reason we aren't pumping more, is due to those wonderful politicians who want to steer money to their 'interests'. Electric or fuel cell energy is coming, and it is for the best, but for now, there is no physical reason why this country has to hurt for energy.
ReplyDeleteI moved out of California in Oct 05' as well. I lived there my entrie live and owned 2 business' there. I sold my business' and have never looked back. That state is doomed. It's 'progressive' politics run amuck.
Cut off all financial aid to illegal Mexicans, that will drop the deficit by 1/5 or 20 billion. Next, all State employees will be paid the State minimum wage.
ReplyDeleteProblem solved.
8:54 is 100% correct! Too bad the PTB love forcing the illegals on us and undermining our communities/states/nation.
ReplyDeleteMaybe when CA legalizes pot, the local CA economy will pick up?
8:54 I agree. It almost always amazes me when I need to deal with some one who works for the government in any capacity. They for the most part they seem as though they are equal to Walmart or McDonalds adult employees. The truly confusing part is that they make more than most of Americans doing similar private jobs. I would say a 20% layoff of all fed, state, county and city workers would do it. It would also set off massive riots. Have you noticed that it is the liberal Democrat types that gather in groups strut around and throw rocks, topple cars, set things on fire, and pillage stores?
ReplyDeleteIt is the conservative sheep mentality that gather in groups, tea bagger groups, church groups, brainwashed conservative sheep that vote against their interests time after time after time and vote for repug theives that are owned by the big corps, and they are too stupid, blinded by religion to see the truth, religious loons like mcveigh and repug military types that blow up buildings and non serving military types like roves, cheneys and bushs who use others to fight their wars that they were too much of pussies to fight in, but have no problems starting for their buddies at halliburton and the military industrial complex, fcking hypocrites
ReplyDelete5:34 I have heard that tune a million times, but each time it doesn't get any more accurate or true. Go ahead and be a faithful believer but the proof is in the pudding, or shortage thereof.
ReplyDelete9:09 When they start to unsanction morons is when the economy might turn around. Good luck guys!
ReplyDelete1015
ReplyDeleteAnd our Liberal Communists in this country are any better? They are part of the blame too. From my point of view the Bush Administration was liberal/socialist in its policies. Stimulus programs, amnesty and zero border security, expansion of the federal government, clamp down on civil liberties, etc. Those are all Liberal/Keynesian/Marxist policies.
It's going to take a hardline right wing party to put america back on the right track. I'm not talking about Neo-Con big government Zionist republicans. I'm talking extremist small government advocates that are ready and willing to round up the illegals and send them back. Someone willing to stop "free trade" and impose tariff on all the shit we import. Someone poised to smash the Jewish oligarchy at the Federal Reserve. Someone ready to ban Freemasonic Lodges, the ADL, and the Southern Poverty Law Center. Groups like La Raza will be declared treasonous and the leaders/financiers should be imprisoned.
No left wing, feel-good, one-world, egalitarians have the balls to put this country back on the right track. Their only passion is expanding ZOG (Zionist Occupied Government) and screwing the white working class with more taxes and tidal waves of 3rd world immigration. True masculine conservatives who don't bow down to political correctness or the Israelis are what we need to preserve what's left of AMERICA.
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ReplyDeleteAMEN BROTHER