Yes, folks, crises is not an error. It is the plural of crisis. Just since 1992 there have been 3. In 1992 the state funds ran so low that the state employees were issued warrants instead of paychecks. Banks honored the warrants and redeemed them later with a 5% premium. It took 2 months for the legislature to pass a budget.
In 2002, thanks to California's kinda sorta deregulation of the electricity market, there was another crisis. The legislature assumed the competition that(snicker snicker ha ha)deregulation brought would hold prices down until 2 weeks after Heck froze over. So they put a cap on how much electric companies could charge consumers. Yes, the politicos in Sacramento put a limit (AKA regulation) on how much electricity providers could charge their customers. They never thought that inflation would nudge prices up, that developing countries (India, China for example) would not want more oil for their expanding energy needs or anything else would drive prices for electricity production up. In other words, the legislature did not do much thinking at all when they set up this "deregulated" electricity market. When real life kicked in, California's electric suppliers were forced (by legislative fiat of course!!) to pay more for electricity then they were allowed to charge consumers. This brought on rolling brownouts and the recall of Governor Gray Davis.
Now, Arnold Schwarzenegger is Governor and dealing with the same problem. The state of California spends more money than it takes in. If California was a nation onto itself separate from the USA, it would be somewhere between the 5th and 10 largest economy worldwide based on gross domestic product. How does a state with a gross domestic product larger than lots of nations end up with such a deficit that a budget emergency needs to be declared and the state stops paying its bills ??!!! Truth is much,much stranger than fiction.
Wednesday, January 28, 2009
Monday, January 26, 2009
The First Lady is Smoking Hot!!!!
I saw a picture of President & First Lady Obama walking down Pennsylvania Ave on January 20. The Prez had his overcoat buttoned up, probably due to the ambient air temperature of 20 something fahrenheit. The First Lady had her coat open. Unless she had thermal underwear on, I don't know how she could not feel the chill in the air. Perhaps it has something to do with the fact that she was born and raised in Chicago, the windy city on the shore of Lake Michigan. President Obama was raised in much balmier climates( Hawaii, Indonesia & Kansas) so it would be natural for him to button up his overcoat. Oh well, just more proof that opposites attract! Maybe Barack's balmy nature and Michelle's Chicago heartiness will make for a winning team in the White House. Let's hope so.
Tuesday, January 20, 2009
Armageddon California Style!
Here's the latest news from the California State Budget Crisis:
John Chiang, Controller for the State of California, announced on Friday, January 17, 2009 suspension of some State debt payments effective Feb. 1, 2009. $3.7 billion will be suspended (AKA not paid) unless the governor and legislature can work together and put together a working budget in 2 weeks. At a news conference in his office Friday, Chiang said "It pains me to pull this trigger. But it is an action that is critically necessary."
The suspended payments include $2 billion in tax refunds, $13 million in student grants and $300 million for elderly, blind and disabled Californians. The tax refunds are actually excess collection of income tax payments to the state from the taxpayers wallets in the first place. This has got to hurt the taxpayers unless they are masochistic, suicidal or both. The $300 million for the blind and disabled may be a place to start trimming the budget. Here is a quote from www.news10.net, the website for News 10 KXTV in Los Angeles:
While we're on the subject of clarification, let's review the budget crisis over the last 12 months. Governor Schwarzenegger declared a fiscal emergency for the state of California under the rules of proposition 58, which he sponsored and the voters ratified in 2004. Proposition 58 requires action by the legislature to correct the anticipated monetary shortfalls. 1 year later, they are still trying to resolve the shortfall. Most emergencies and crises have such urgency that 12 months with no resolution is unthinkable.
More on this later.
John Chiang, Controller for the State of California, announced on Friday, January 17, 2009 suspension of some State debt payments effective Feb. 1, 2009. $3.7 billion will be suspended (AKA not paid) unless the governor and legislature can work together and put together a working budget in 2 weeks. At a news conference in his office Friday, Chiang said "It pains me to pull this trigger. But it is an action that is critically necessary."
The suspended payments include $2 billion in tax refunds, $13 million in student grants and $300 million for elderly, blind and disabled Californians. The tax refunds are actually excess collection of income tax payments to the state from the taxpayers wallets in the first place. This has got to hurt the taxpayers unless they are masochistic, suicidal or both. The $300 million for the blind and disabled may be a place to start trimming the budget. Here is a quote from www.news10.net, the website for News 10 KXTV in Los Angeles:
Also affected are an estimated 1.3 million blind and disabled Californians, like Kathy Hall, who's friend Lillian Duran explained the impact it could have. "She will not be able to pay her house payment, her VISA payment, her rent."Only in California can the blind and disabled afford house payments and rent, not to mention a visa card. I don't mind a whole lot assistance for someone to pay either a house payment or rent but not both. I also find the visa a little too much. Maybe that statement needs some clarification.
While we're on the subject of clarification, let's review the budget crisis over the last 12 months. Governor Schwarzenegger declared a fiscal emergency for the state of California under the rules of proposition 58, which he sponsored and the voters ratified in 2004. Proposition 58 requires action by the legislature to correct the anticipated monetary shortfalls. 1 year later, they are still trying to resolve the shortfall. Most emergencies and crises have such urgency that 12 months with no resolution is unthinkable.
Monday, December 29, 2008
This posting is dedicated to all the men and women serving America abroad. Army, Air Force, Coast Guard, Marines, Navy, State Dept. and anyone else out there who is working to protect our freedom and interests. Thank You Very Very Much!!!
The week before Christmas 2008
(for Detroit and D. C.)
T'was the week before Christmas and all through the plants,
not a creature was stirring, not even the ants.
The assembly lines were shut down with great care
In hopes that Uncle Sam would soon bring repair.
From politicos in D. C. there rose such a chatter,
"We cannot allow Detroit's factories to be battered!!!"
The Motor City Magi hopped in their private jets
and flew to D. C. to beg for as much money as they could get.
They went to Congress with visions of C-notes in their heads
but were admonished "you should have driven instead!!!"
Back to the Motor City the Magi's chariot's did fly,
all so heartbroken they could have cried.
"Who are these wise-arses to treat us in this manner?
Fannie and Freddie prove us managers much better.
If we could only get back our campaign contributions
that would give us true problem resolution!"
The magi gave a collective shrug and dejectedly sighed
"It's back to D. C. we all must fly.. make that drive!!!"
They ordered their lackeys to acquire them good wheels.
"Get a Ford!! Get a Chevy!!!
Get a Chrysler! Get a Buick!!
No Navigators! no Suburbans!
No Vipers! No Vettes!!!
especially no Camry or Civic!"
The Magi dashed landward to the East this time
Hoping their gestures would work just fine.
Democrats vowed taxpayers they would protect
and still save the industry from its own neglect.
Republicans responded with "wait just a minute,
we can't protect taxpayers without taxation limits!!
We're not Santa Claus, nor the Easter Bunny
The taxpayers just don't have that much money!!"
This put the hot potato in the President's lap
He told the magi" this is the time to act.
I will authorize $14 billion to you.
In return this is what you need to do."
"By march 31 2009 you will have a plan in place
to reverse 30 years losses in the market share race
You must get all your stakeholders to work together
to make your companies a whole lot better."
The magi did thank him for the multitude of bucks
"It's nothing" he said "as Pres I'm just a lame duck.
This time next month you'll deal with a new president
who wants to spread the wealth to all US residents."
This thought made Mr. Bush look forward to Texas
and getting away from the city of taxes.
He was overcome by a flood of so much good cheer
He proclaimed "Merry Christmas and a happy new year!!"
The End (finally)
The week before Christmas 2008
(for Detroit and D. C.)
T'was the week before Christmas and all through the plants,
not a creature was stirring, not even the ants.
The assembly lines were shut down with great care
In hopes that Uncle Sam would soon bring repair.
From politicos in D. C. there rose such a chatter,
"We cannot allow Detroit's factories to be battered!!!"
The Motor City Magi hopped in their private jets
and flew to D. C. to beg for as much money as they could get.
They went to Congress with visions of C-notes in their heads
but were admonished "you should have driven instead!!!"
Back to the Motor City the Magi's chariot's did fly,
all so heartbroken they could have cried.
"Who are these wise-arses to treat us in this manner?
Fannie and Freddie prove us managers much better.
If we could only get back our campaign contributions
that would give us true problem resolution!"
The magi gave a collective shrug and dejectedly sighed
"It's back to D. C. we all must fly.. make that drive!!!"
They ordered their lackeys to acquire them good wheels.
"Get a Ford!! Get a Chevy!!!
Get a Chrysler! Get a Buick!!
No Navigators! no Suburbans!
No Vipers! No Vettes!!!
especially no Camry or Civic!"
The Magi dashed landward to the East this time
Hoping their gestures would work just fine.
Democrats vowed taxpayers they would protect
and still save the industry from its own neglect.
Republicans responded with "wait just a minute,
we can't protect taxpayers without taxation limits!!
We're not Santa Claus, nor the Easter Bunny
The taxpayers just don't have that much money!!"
This put the hot potato in the President's lap
He told the magi" this is the time to act.
I will authorize $14 billion to you.
In return this is what you need to do."
"By march 31 2009 you will have a plan in place
to reverse 30 years losses in the market share race
You must get all your stakeholders to work together
to make your companies a whole lot better."
The magi did thank him for the multitude of bucks
"It's nothing" he said "as Pres I'm just a lame duck.
This time next month you'll deal with a new president
who wants to spread the wealth to all US residents."
This thought made Mr. Bush look forward to Texas
and getting away from the city of taxes.
He was overcome by a flood of so much good cheer
He proclaimed "Merry Christmas and a happy new year!!"
The End (finally)
Friday, December 26, 2008
Why a car czar creeps me out.
During the oil embargo of the early 1970s, President Nixon appointed James Love as Energy Czar to head the newly formed Federal Energy Administration. Now we are stuck with a cabinet level agency, the Department of Energy in its place. Did we really need another bureaucracy in the first place? I don't think so.
My concern is a Car Czar will transform itself into another large bureaucracy. Thank goodness President Bush did not appoint a Czar for 31 days, he just left the responsibility with Treasury Secretary Henry Paulson. The Treasury Dept. is funding the auto bailout so they should oversee the use of the funds.
My advice for President Elect Obama is this. Make a list of all the government agencies that GM Ford and Chrysler have to deal with now. I'll get you started with the obvious, departments of Labor, Commerce, Transportation, EPA. These are just a few cabinet level federal agencies. Don't forget the various and sundry state and municipal governmental entities they deal with. Is another large bureaucracy going to make the Big 3 manufacturers into instant turnarounds? No, it will only strain their ability to turn a profit, the basic ingredient of a viable recovery.
My concern is a Car Czar will transform itself into another large bureaucracy. Thank goodness President Bush did not appoint a Czar for 31 days, he just left the responsibility with Treasury Secretary Henry Paulson. The Treasury Dept. is funding the auto bailout so they should oversee the use of the funds.
My advice for President Elect Obama is this. Make a list of all the government agencies that GM Ford and Chrysler have to deal with now. I'll get you started with the obvious, departments of Labor, Commerce, Transportation, EPA. These are just a few cabinet level federal agencies. Don't forget the various and sundry state and municipal governmental entities they deal with. Is another large bureaucracy going to make the Big 3 manufacturers into instant turnarounds? No, it will only strain their ability to turn a profit, the basic ingredient of a viable recovery.
Sunday, September 28, 2008
abra cadabra.. poof!!!! WM becomes JPM!
Wow!! The FDIC did not even wait until the weekend to seize Washington Mutual(WM), the nation's largest savings bank and sell it to JP Morgan Chase (JPM). This will spare the taxpayers another bailout at the cost of shareholders and bond holders of WM. Hey!!! the people who took on more risk for more reward are left holding the bag, not the taxpayers and responsible mortgage holders!!! This is an event that should become a trend.
Just remember one thing. The root cause of this sub-prime lending crisis is the government's extension of credit (via Fannie Mae and Freddie Mac) to mortgage borrowers who could not handle the mortgage they were receiving. When Bill Clinton told Fannie Mae and Freddie Mac to lend money to people who could not handle the debt, that started the current sub-prime lending crisis. This occurred in 1995. In 1996 Bill Clinton became the first Democrat to be re-elected as President of the USA since FDR.
HHHMMMMMM!!!!
More to come.
Just remember one thing. The root cause of this sub-prime lending crisis is the government's extension of credit (via Fannie Mae and Freddie Mac) to mortgage borrowers who could not handle the mortgage they were receiving. When Bill Clinton told Fannie Mae and Freddie Mac to lend money to people who could not handle the debt, that started the current sub-prime lending crisis. This occurred in 1995. In 1996 Bill Clinton became the first Democrat to be re-elected as President of the USA since FDR.
HHHMMMMMM!!!!
More to come.
Monday, September 22, 2008
deja vu: another weekend another bailout act 3
Good Grief!!! The feds are getting more done on the weekend than they do during the week. This weekend they drafted a 3 page bill requesting congressional approval of a $700 billion bailout fund to buy the bad debts that banks & insurance companies are carrying on their books. The goal is to get financial institutions to stop hoarding cash and increase the liquidity of the short term credit markets. The fear is that without increased liquidity soon, there will be an economic meltdown and collapse similar to the Great Depression. My hope is this will be the last bailout needed. Altogether this bailout is pushing the $1 trillion mark, which is a high price to pay for a soft landing. I also hope that this turns the tide on large companies expecting the taxpayers to bail them out every time their business cycle enters the slump phase.
On another front of this bailout war, the Federal Reserve gave the last 2 major US investment banks permission to change their status to bank holding companies. On Sunday Goldman Sachs and Morgan Stanley received the Fed's blessing to buy a commercial bank. The goal here is to give these investment banks access to commercial banks' deposits for the short term loans that are the lifeblood of investment banks. Hours after this permission was granted, Morgan Stanley signed a nonbinding letter of intent for Mitsubishi UFJ Financial Group to buy 20% of Morgan Stanley. Alas, a wall street company trying to rise from the ashes without 100% assistance from the Feds!! Is that a light I see at the end of the tunnel?
On another front of this bailout war, the Federal Reserve gave the last 2 major US investment banks permission to change their status to bank holding companies. On Sunday Goldman Sachs and Morgan Stanley received the Fed's blessing to buy a commercial bank. The goal here is to give these investment banks access to commercial banks' deposits for the short term loans that are the lifeblood of investment banks. Hours after this permission was granted, Morgan Stanley signed a nonbinding letter of intent for Mitsubishi UFJ Financial Group to buy 20% of Morgan Stanley. Alas, a wall street company trying to rise from the ashes without 100% assistance from the Feds!! Is that a light I see at the end of the tunnel?
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