Dr. Housing Bubble 04/13/09

[Crewleader]

California Budget and Economy Examined: 8th Largest Global Economy Still on the Brink. $8 Billion Budget Shortfall for Next Fiscal Year and May 19 Election. Why the Six Major Propositions are only Short-Term Fixes.

The ostrich does not hide its head in the sand yet people still believe this and have vivid images of this happening. Many think that the California budget disaster is now a thing of the past because the legislature decided that they were going to do the hard thing and handoff the final decision to California residents. The ostrich does not stick its head in the sand but California politicians do this everyday. The problem concisely put is a shortage of money or over spending depending on how you look at it. The state is spending more than it brings in. An elementary math equation would explain this. However, the state legislature being polarized and unable to get anything done, decided that it would be prudent to pass along the hard decisions to voters on Tuesday May 19. If many of you recall, the state had the longest budget delay in history and never addressed the crux of the problem. The problem can only be solved by either raising revenues or deep cuts in spending. We will examine the upcoming propositions in this article but also tie them into the bigger picture of the state.

California itself is a gigantic economic engine. With a GDP of $1.8 trillion, it is by far the biggest economic state in the country. In fact, if you were to take California as a country in itself it would be the 8th largest economy in the world between Italy and Spain:



However, California itself is at the heart of the current economic mess. A state littered with the landmines of Pay Option ARMs and Alt-A loans still lingering in the background. The market is reeling like a dazed boxer from being too dependent on the real estate and finance driven economy. The state now has the highest combined tax rate but also one of the highest unemployment rates in the country coming in at 10.5 percent. Digging deeper, the real unemployment rate is hovering around 16 to 19 percent. So going back to our simple equation, those that are unemployed typically do not buy as much and instead of being taxpayers, start relying on government resources.

http://www.doctorhousingbubble.com/california-budget-and-economy-examined-8th-largest-global-economy-still-on-the-brink-8-billion-budget-shortfall-for-next-fiscal-year-and-may-19-election-why-the-six-major-propositions-are-only/

[Double T]

1. All the bailouts and stimulus are short term fixes; previous stimulus........

was not able to prevent our current crisis. With ever increasing unemployment that will go beyond 20% and an inability to even service the interest on our escalating debt, the future will be unsustainable and extremely unfortunate.

[corruptmewithpower]

2. I live in San Diego. We have dysfunctional government here.

That's state level and city level - catastrophy being the norm for both. I don't know how to fix it, but i know what we have doesn't work worth a damn. We pay income taxes, sales taxes, property taxes, fees, fines, . . . everything, up the wazoo, and still the governments are always in crisis mode. It's enough to drive us all up a tree, except for the fact most of us live in the deserty areas and there aren't a lot of trees one could climb.

[spag68]

3. Climb a tree

When you said that I immediately pictured the wacky roadrunner adversary climbing a cactus.