Sticking with the beach metaphors, it is only when the (economic) tide goes out that you see the wormholes in the pier's pilings. Or something.
California benefited more than any other state from the housing bubble and truth be told, a realtor adds less to carbon footprint that a smelter employee. Real estate will not come bounding back.
California also benefited more from the China bubble than any other state and again, won't snap back, especially if the idea of carbon tariffs should become law.
The country's largest pension plan, CalPERS has warned that member municipalities have to be prepared to raise taxes to make up the fund's investment shortfall.
It seems serious when you see stories like this:
Cash drying up, California is about to delay tax refunds, slash aid to the needy
...Among those who won't get paid on time: taxpayers who file their returns early and are awaiting refunds; families who depend on welfare and aid for the aged, blind and disabled; and programs that serve developmentally disabled and mentally ill patients....And: Cal drops to 47th in public school spending
And so on and on.
Looking on the bright side is this article from Reuters:
With California facing a $42 billion deficit in the current economic downturn, a glum Gov. Arnold Schwarzenegger has warned that the Golden State is on the brink of insolvency.
More people have left California than any other U.S. state over the past year, some disenchanted with snarled traffic, scarce jobs and some of the highest taxes in the nation. Add the prospect of still higher taxes and fewer public services, and normally sunny Californians have little to celebrate.
Still, experts say the most populous U.S. state and the world's eighth-largest economy is well placed to rise again and that this crisis could spur major changes in the economy that will pay dividends in the long term.
Abundant natural resources, big ports, access to the Pacific Rim, a large, relatively young work force, entrepreneurial draw and tech-oriented industries augur well for the future, economists and historians say.
"The prophets of doom and gloom are just not looking at the reality of California," said Jerry Nickelsburg, senior economist at the UCLA Anderson Forecast.
"The government has created kind of a mess and that's a problem to be solved, but the negatives are actually fairly small. I think you can expect a lot of good out of California," he said.
The typically upbeat Schwarzenegger made international headlines this month when, instead of delivering his usual cheery "state of the state" speech, he issued a short, bleak message about California's roughly $1.5 trillion economy.
"A ROCK UPON OUR CHEST"
"California is in a state of emergency," said the former actor and bodybuilder, whose second term ends next year. "Addressing this emergency is the first and greatest thing we must do for the people. The $42 billion deficit is a rock upon our chest and we cannot breathe until we get it off.">>>MORE