California Impending Fiscal Demise

[Aurielius]

Is the state of California bankrupt? Well, an increasing number of politicians and economic analysts are answering that question in the affirmative. The truth is that California is a complete and total economic disaster area. The state government of California is projected to have a budget deficit of at least 19 billion dollars this year, and next year the budget gap is projected to grow to 37 billion dollars. To put that in perspective, the entire budget for the government of California is only about $125 billion per year. Already, California's credit rating is the lowest of all 50 states, and there are persistent rumors that it is about to go lower. If California's credit rating is slashed, it will be very expensive for them to borrow the money that they desperately need. Once upon a time, the state of California was the poster child for the American Dream, but now it is on the leading edge of America's rapidly unfolding economic nightmare.

 

 

Say the state can't make its debt payments, and no one will lend it any more money. In that case, the federal government could step in and put the state into receivership. This would involve the assignment of an accountant to manage the state's debt, overseen by a judge. It would be a lot like bankruptcy, except instead of following a structured set of steps—informing creditors, appointing creditors' committees, a 120-day window to file a plan, etc.—a receiver has the authority to force creditors to renegotiate loans in a speedy fashion. However, the accountant in charge would not have the power to make decisions about the state's budget, such as which programs needed to be cut and which taxes had to be raised. (No state has ever gone into receivership.)

 

 

So the question is this, when and if the state of California appeals to the Federal government for help what should the other forty nine states do?

[Harbringe]

Is the state of California bankrupt? Well, an increasing number of politicians and economic analysts are answering that question in the affirmative. The truth is that California is a complete and total economic disaster area. The state government of California is projected to have a budget deficit of at least 19 billion dollars this year, and next year the budget gap is projected to grow to 37 billion dollars. To put that in perspective, the entire budget for the government of California is only about $125 billion per year. Already, California's credit rating is the lowest of all 50 states, and there are persistent rumors that it is about to go lower. If California's credit rating is slashed, it will be very expensive for them to borrow the money that they desperately need. Once upon a time, the state of California was the poster child for the American Dream, but now it is on the leading edge of America's rapidly unfolding economic nightmare.

 

 

Say the state can't make its debt payments, and no one will lend it any more money. In that case, the federal government could step in and put the state into receivership. This would involve the assignment of an accountant to manage the state's debt, overseen by a judge. It would be a lot like bankruptcy, except instead of following a structured set of steps—informing creditors, appointing creditors' committees, a 120-day window to file a plan, etc.—a receiver has the authority to force creditors to renegotiate loans in a speedy fashion. However, the accountant in charge would not have the power to make decisions about the state's budget, such as which programs needed to be cut and which taxes had to be raised. (No state has ever gone into receivership.)

 

 

So the question is this, when and if the state of California appeals to the Federal government for help what should the other forty nine states do?

 

Declare bankruptcy themselves ,the debt loads that states ,provinces ,mnicipalities and Nations are carrying are unsustainable ,the only ones doing good through all this are the banks and their profits are on the way to new highs.Its just a money circle scam they have created ,we borrow more to keep going ,pay them more interest upping their profits ,then yet again have to borrow more to keep going yet again ,its a vicious cycle that is turning the entire western world into debt slaves.Serves us right though this is a practice the west has been doing to the Third World for over 50 years through institutions like the IMF , World Bank ,what goes around comes.

Edited December 10, 2010 by Harbringe

[DarkWarrior45]

I'd say let California sink or swim on it's own.

 

Now if they are smart, they would declare bankruptcy and then makes plans and steps to get themselves out of their own mess, and not pay off loans with more loans.

 

Should the other 49 states do something about it? My opinion says no.

[Chaosblade02]

I'd say let California sink or swim on it's own.

 

Now if they are smart, they would declare bankruptcy and then makes plans and steps to get themselves out of their own mess, and not pay off loans with more loans.

 

Should the other 49 states do something about it? My opinion says no.

 

I agree, this is on California for the mistakes they made, why should the tax payers of the other 49 states have to bail them out? They chose to elect the dumb ***** who got them into this mess, they should be the ones who deal with it. And if they aren't smart enough to elect people that DO know how to get them out of this mess, then they bring their own ruin. I am tired of the spend, spend, spend policies, then people QQing for help when they fail.

 

They need to simply slash spending, there is no way around it, if they raise taxes too much they will drive people out of California that have any money, so then instead they get less tax income. It is still a free country last time I checked, and if someone doesn't like a states tax policies they can move, and they will if they get too carried away, then you got everyone mooching and nobody paying.

Edited December 10, 2010 by Chaosblade02

[marharth]

Only if we had made weed legal, but the fear propaganda ended up winning.

[Maxwell the Fool]

Lordie, Aurielius, way to make this hard :P

 

California messed up, they should deal with it.

 

On the legalization of pot:

Pot legalization would certainly yield tax revenue, but no where NEAR the amount that California is in debt. Stop pretending the the passage of a law with questionable morality would solve everyone's problems and move on to real issues ;)

[marharth]

Lets not turn this into a pot debate, it wouldn't solve all of the debt issues... It would certainly HELP the debt issues...

[Maxwell the Fool]

Lets not turn this into a pot debate, it wouldn't solve all of the debt issues... It would certainly HELP the debt issues...

 

This.

[Balagor]

Isn´t California the state where all the wealthy people live? And didn´t Mr. Obama just recently let the law that will keep rich people free of taxes, stay?

Listen to a good old commie´s advise. Raise the tax for the upper part that earns more than a given treshold. I can not say how much, since I am not familiar with your standards. But if you are rich enough to own a house sized as a greater hotel, both for you and your sons and daugters, you have also several hollyday houses, a few sailboats, a jet perhaps an island or a beach of your own. Cars we don´t count, they are like shoes and clothing, If you´re even richer than that you also have one or two little islands in Saudi Arabia.

Of cause you have earned it. It is yours. You made it. Nobody should take any of it. You made it all your self. Or did you? How about this great country of yours, that made it possible in the first place. This country that provides you with infrastructure, a defense to look after you, also abroad should some of your activities be in danger. Isn´t it fair that you pay your share to that country that provides you with a save and comfortable home?

If you as a very wealthy person contribute with more than average, you can be the more proud, and and you will still cope with just 2 houses, 1 island, 1 or 2 sailboats and perhaps only 1 jet.......etc, but most important, it is very beneficial for your country. :thumbsup:

[Paxan_1]

Isn´t California the state where all the wealthy people live? And didn´t Mr. Obama just recently let the law that will keep rich people free of taxes, stay?

Listen to a good old commie´s advise. Raise the tax for the upper part that earns more than a given treshold. I can not say how much, since I am not familiar with your standards. But if you are rich enough to own a house sized as a greater hotel, both for you and your sons and daugters, you have also several hollyday houses, a few sailboats, a jet perhaps an island or a beach of your own. Cars we don´t count, they are like shoes and clothing, If you´re even richer than that you also have one or two little islands in Saudi Arabia.

Of cause you have earned it. It is yours. You made it. Nobody should take any of it. You made it all your self. Or did you? How about this great country of yours, that made it possible in the first place. This country that provides you with infrastructure, a defense to look after you, also abroad should some of your activities be in danger. Isn´t it fair that you pay your share to that country that provides you with a save and comfortable home?

If you as a very wealthy person contribute with more than average, you can be the more proud, and and you will still cope with just 2 houses, 1 island, 1 or 2 sailboats and perhaps only 1 island.......etc, but most important, it is very beneficial for your country. :thumbsup:

 

This one i would sign. :thumbsup:

 

Thanks Balagor