You Can’t Make This Stuff Up
February 24th, 2010 - 11:51 am
California Assemblywoman Diane Harkey says her state is “literally bankrupt,” and compared the “state’s situation to a family with a mortgaged house, maxed out credit cards and zero savings,” according to SFGate.com. Not so fast, says state treasury spokesman Tom Dresslar:
“You might score some political points by saying the state is bankrupt, but you’re hurting taxpayers when you do that. We are not basically bankrupt,” Dresslar said. “When you have that kind of talk out there and it makes it into the papers, it poisons the market when you go to sell bonds.”
You got that? State Treasurer Bill Lockyer is worried California might have trouble borrowing its way out of its spending crisis.
There’s a lot of that going around.
It’s almost like a family hiding its credit history in order to take out a mortgage on a house they can’t afford.
California is screwed. I came to this conclusion yesterday. And that sucks, because I live here.
Here’s the story:
I was at a luncheon the other day with the State Controller of California (the guy who cuts the checks) speaking. He actually seemed to be a pretty stand-up guy. He was careful not to say anything too politically damaging, but he was completely up-front about that issues facing the state.
Here’s the really scary thing: he asked the group how many people would be willing to cut spending in the following areas: Education, Health Care assistance, and Prisons? These areas comprise 92% of California’s budget, so any meaningful cuts would have to touch them. I was the ONLY person in the room that raised their hand for all three. And without naming names, this was one of the most conservative groups of people you could get into a room (at least in Cali).
If people don’t even have the guts to raise their hands in a room full of as like-minded a bunch as you’re going to find, how on earth do they expect their politicians to do anything?
I suspect California’s not the only place like this…
One thing to note is that the way that California has worked its way around not having enough money is to simply print its own. Yes I know you’re saying to yourself that “States cant do that”, but thats what the State of California does; they are called “IOU”s. The State prints these things in lieu of real cash and issues them to various parties, like state workers and suppliers who have no choice but to accept them. Each year, the number of IOU’s gets bigger and they become more the norm.
Its illegal, its wrong on so many levels but thats whats being done. What was once unspeakably impossible, is now the norm.
This kind of news always gives me an overwhelming sense of relief.
I made an offer to buy a house in San Francisco five years ago, at the height of the real estate market. (An offer that was only rejected because I made my offer contingent on the property passing its basic inspections… suggesting another reason to be relieved.)