Folks, the Golden state ain't. The boom was a fantasy and the problems will not go away anytime soon. Building an economy on paper rather than activities that add value is not sustainable. I imagine the next step is going to be an attempt to pick the pockets of the rest of the country, those 53 members of the U.S. House, led by the Speaker, will try to nationalize the costs of Cali's profligacy and policies. It should be interesting....On December 14, '07 it was: The California Miracle, Ain't:
This is just a peek behind the curtain. As the truth that California's economy was based on ever-escalating real estate prices becomes clear, the myths of supremacy will be shown to be just that.Today Reuters says:
Just one example: it's easy to be energy efficient if you make your living swapping paper.
But that activity should not be confused with wealth creation, it's more of a greater fool or musical chairs type of game....
California may need emergency $7 billion loan: report
California may need an emergency loan of up to $7 billion from the federal government within weeks, the Los Angeles Times on Friday quoted Gov. Arnold Schwarzenegger as saying in a letter to U.S. Treasury Secretary Henry Paulson.In the letter dated October 2, Schwarzenegger called for the passage of the $700 billion financial industry bailout plan which the U.S. House of Representatives is expected to vote on Friday, the Times said.
"Absent a clear resolution to this financial crisis, California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the federal treasury for short-term financing," Schwarzenegger wrote in the letter, according to the paper....MORE
HT: DealBreaker, who comment:
I always knew California was a street beggar waiting to happen. It was that smug "I'm too good for fiscal responsibility" coupled with that "I make so much money might now, I don't have to worry, and people can always use a smart guy with a degree from Stanford," and topped off with a little bit of "anyhow, what could possibly happen with the economy that people don't need investment bankers anymore" naivete. So California has spent itself into a corner. Again.
True, it's been brewing for quite awhile. It's not just consumers that have been outliving their means. Municipalities have been spending like drunken sailors in a 1980s Hong Kong port for quite some time, but the timing of this credit crunch thing worked out perfectly. Now they can all blame it on financial acts of god and get in on some hot bailout action with Hank.
All we really need is a major financial shock every 5 years or so and we can get away with anything at all.
Some of our other Cali. posts:
Hedge Funds; Venture Capitalists; Public Employee Pensions Push for Lieberman-Warner
Californians leading the way to consumer bust
California: Here Comes the Next Mortgage Crisis
Subprime was just the beginning. Wait until California's prime borrowers start handing their keys to the bank.Californians to pay $600 mln for green think tank. And Farm visits can ease mental illness
California's cap-and-trade won't work
Lahde Capital letter to investors: short California, and CMBS
Court rejects California limits on ship emissions
There goes another investment idea. When California first proposed limiting ship's emissions, I thought some smart Mexican billionaire, along with the Chinese, would be building a world class port to take all the business that wouldn't be going to Long Beach.
