ilene's picture


Visit with a few posts by Russ Winter and Mish Shedlock. 

California and “Solving Problems”

Courtesy of Russ Winter of Winter Watch at Wall Street Examiner

American masters of the universe and their toadies give self serving lip service to covering some events in Europe. They are forced to really. But when it comes to the last Ponzi standing, the US, we see little of the kind.

For example recent estimates of California’s budget deficit soared to $16 billion, compared to $9.2 billion estimated in January. Tax revenues are falling far short. Now the state proposes more tax increases and spending cuts. Even though California is a non-recourse state, bankruptcies are running hot.  The other state to pay close attention to is Illinois, a political quagmire of the highest order.  My prediction: both California and Illinois are political hot potatoes and Democratic states. Therefore any attempts at Federal bailouts of states will be gamed unmercifully.  Look for this to develop pre-election.


For additional analysis on this topic and related trades subscribe to Russ Winter's Actionable - risk free for 30 days.The subscription fee is $69 per quarter and helps support Russ.s work on your behalf. Click here for more information. (Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to The Wall Street Examiner.)


See also Mish's 200,000 Lose Unemployment Benefits This Week, Nearly Half From California


"The grim situation in California is about to get grimmer as Unemployment Benefits Go Bye-Bye

More than 200,000 long-term jobless Americans will lose their unemployment checks this week, when eight states roll off the federal extended benefits program.
Nearly half of them live in California, and the rest reside in Florida, Illinois, North Carolina, Colorado, Connecticut, Pennsylvania and Texas.
The federal extended benefits program has provided the jobless with up to 20 weeks of unemployment checks after they've run through their state and their federal emergency benefits, which together last up to 79 weeks...

"As noted above, California bears the brunt of this wave of benefit expulsions, and that will exacerbate the state's fiscal problems. For details, please see California Deficit Soars to $16 billion; Governor Brown Threatens Public Education Unless He Gets "Temporary" Tax hikes; How Brown Ruined California in His First Term; Four Point Solution.

California, like Greece is perpetually in fiscal trouble. Overoptimistic revenue forecasts coupled with spending $2 billion more than expected has California in a deep hole. Governor Jerry Brown has the same non-solution as ever, hike taxes.
Brown wants a "temporary" (as in seven years) tax hike. Given we all know there are no such things as temporary tax hikes in California (seven years is permanent enough in the first place), and also given the California school budget needs an axe, I say let him."


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boeing747's picture

American are eating California-made pies.

If a Californian pays 35% tax rate, then 30% is federal yet only 5% is state tax, so every 7 tax dollars generated by a Californian 6 goes to federal gov and 1 to CA state. We have 11% of total population yet only 2% of voice in Senate, talking about modern day 'tax without representation'. Besides, illegal workers are picking California's cherry.

OSCSPJ's picture

Thanks for proving point about CA. Idiot. Everyone pays the same federal taxe rate. State rates vary. Idiot

BernankeHasHemorrhoids's picture

Can the other 49 states vote to NUKE California? Those worthless bastards deserve it. Give it to the North Koreans for their failed missile shots! With luck maybe they'd get a live one off and finish off LA or San Francisco.

e-man's picture

Just remember that without California, all those worthless bastards would be living in your town.  Careful what you wish for.

AC_Doctor's picture

Hopefully the spend-thrift Libs will all be on the farthest west sides of Kalifornia when the big one dumps 1/4 of the asshole state into the Pacific...

ParaZite's picture

Heh... if you want to see Californication, wait til the Facebook IPO pops like a 14 year olds zit under a little pressure on the first day. Then you will see pensions, etc really Californicated... or just fucked, depending on the state you are in and how many of your pension funds have been biting at the bit to get in on the "ground floor" of Facebook. 

It should be an epic day... or an epic fail. I think for me and mine, the best bet is to sit back and watch the chaos and buy the silver dip. 

The Alarmist's picture

Facebook and its collection of billions of personal pictures and a virtual treasure trove of personal identifying information makes it a huge national security resource that will not be allowed to fail.

hairball48's picture

I sincerely hope you are wrong. I hope Facebook flops and is allowed to die. It deserves to die. It's hard to believe that allegedly intelligent people actually believe that Facebook is worth a $100 BILLION. Fucking insane imo. But then I ain't a "sheeple".

W10321303's picture

California is where the INTERNATIONAL MEGA viruses all began....IT's called REAGANISM, 'the politics of GREED!" Let the wealth TRICKLE DOWN as we find new a vicious ways to re-create SLAVERY! Then we might give you SLAVES a job, like fighting wild animals bare-handed in the Coliseum SPQR.....All of the THE most vicious and worthless ideas of Neo-Liberalism came from SOCAL or The University of Chicago or Stanford..."But, wait there a lot more of THEM now so we better try to find a way to scapegoat THEM for all of our supreme STUPIDITY, like VOOODOOOO Economics and fighting three WARS by selling debt bonds to the Chinese and any other fools who graduated from Stanford or Harvard or Yale or the University of Chicago, and we will create a secret society of Law School Graduates and then appoint them all to Federal Courts and slowly, WE WILL repeal the first 16 Amedments".....The SERIAL Killer CRYPTO-Facists all vacation together in Palm Springs....

JohnKozac's picture

Don't forget about the Fuki Radiation bathing the West Coast 24/7.

The bright side is that Cali fruit is now 3x it's normal size.

Who would 'a thought?!

John_Coltrane's picture

Radiation kills bacteria and virus so its a good thing for food and crops and is actually used in that function.  Radiation is not radioactivity!  You only need worry about radioactivity and since radiation falls off as the inverse mean square of the distance from its source and is well screened by body tissue any radiation from Japan is lost in the natural background levels-I'd spend more time worrying about getting hit by an asteriod-or a run on the banks.   Just don't ingest radioactive materials-pretty easy to avoid.

Now you know more science than 99% of Californians.

rosiescenario's picture

Funnier...Brown sent a bunch of delegates to Texas to try and find out how they are good at attracting new businesses.    Of course most of these new businesses are fleeing California's byzantine system of rules and regulations where one must not only track and conform to Federal rules but then another set that the state's bureaucrats dream up.


Brown should have sent these delegates to talk to business people within CA and he might have gotten a clue.


The first thing CA should do to balance its budget (which will never happen) is to fire at least half of the bureaucrats in Sacramento who both cost money and at the same time kill revenue by driving businesses out of business.

Bicycle Repairman's picture

They'll raise some taxes and open up a pipeline to the FED.

Stuck on Zero's picture

California spends in excess of $12,000 per student per year for education.  Imagine what a classroom of 30 kids could get with that money?  Two PhD instructors, all new computers, 3 teachers aids, and have lots left over for projects.  What do they get now.  Hundreds of thousands of highly paid bureaucrats.

Freddie's picture

How many millions of those kids are illegals or recent immigrants. They wreck it for American kids, their illegal parents pay no taxes and get endless benefits.

Normalcy Bias's picture

As long as those PhD's are in something other than Education...

rosiescenario's picture

Ditto for all the services....10 cents on every dollar might make it through this system to the intended beneficiary.

e-man's picture

Jerry Brown's tax hikes will work.  Suzanne researched it.

NEOSERF's picture

200K roll off the roles...woohoo unemployement rate 7.9%, things are getting better...look for a 200pt gain next month on this alone...

hairball48's picture

I don't have TV anymore, but watching Kalipornia go broke has to be the best show on the air. I'm loving it....long as they keep their miserable asses in Kalipornia and don't move here to MT.

Normalcy Bias's picture

That's the problem. Like rats fleeing a sinking ship, many will infest the rest of the country with their irrational politics, never acknowledging what sank California in the first place...

The Alarmist's picture

In fact, ex-Californians are what has been infecting and killing places like Oregon, Washington, Nevada, Arizona and even Utah and Montanna.  The rest of the US would be a better place if California had fallen into the sea in the 1970's.

Freddie's picture

As I have said before - California died when Manson and his robots killed those poor souls.  this was the end of The Golden (shower) State.

El Viejo's picture

When the rich kids have spent their inheritance, what then???

kevinearick's picture

they couldn't increase the tax base with all that stimulus, and these tax increases are targeted guessed it, PENSIONS. And what does that mean to the ponzi markets...

Government you can believe in, of, by, and for government.

Watch out, they can also make the price of Gold any number they want...Do you have a local market?

pashley1411's picture

The political class know they are spending in a manner that can never be met with revenue and never be repayed.   Its baked into the cake, as it were, so why frighten sheeple with speeches, especially from Brown, though since he isn't running for reelection he's expendable. 

Except for the (latest) attempt to fleece the flock with the intitiative to increase "temporary" taxes on the November ballot.   California is so desperate, and delusional, about tax funds that it has already assumed passage of the initiative in the state's 2012-2013 budget.   

After the vote, mum will be word, and the political class will want the sheeple to go back to munching grass and let the looting continue.

Titan Uranus's picture

Nice job on the swamp cleanup, eh Nancy?  I'm sure Brown is one of your favorites...

Titan Uranus's picture

BOHICA California. 

Augustus's picture

The Windy City Wetter has prognosticated about everything but the number of fly spots on his spoiled eggs.  He was an early Obama supporter because of the wonderful speaches.  Next week he will be convinced of sun spot theories determining the market direction.  Entirely worthless cut and paste flogger, IMHO.

apberusdisvet's picture


50 short years in California:


Feel good surfer bands; fun and the good life in the sun

The Reagan Mystique begins

The Reagan prosperity ends

The liberals become progressives

The Progressives become Marxists

Unions become the new power elite

Mexico and Latin America invade

The entitled swamp the productive

Reality bites everyone in the ass.


Bicycle Repairman's picture

You left out unlimited, unplanned freeway growth and sprawl.  Endless auto pollution.  Natural resource depletion of all kinds, especially water.  Lots of private sector fuck-ups of the "slash and burn" variety.

Freddie's picture

He glossed over the evile vermin that flooded in from the East Coast aka Baltimore, NJ, NY - people like Pelosi's klan, Boxer, Feinstein, Waxman, Spielberg, Katzenberg, et al.  They infected the state like a disease.

divide_by_zero's picture

Brown sowed the seeds of his own failure the first time he was governor, when he got the public employee unions collective bargaining rights. He continued the paybacks this time as soon as he got in office again , well the chickens are coming home to roost.

Like all statists, rather than meaningfully shrinking government as a first response he'll first attempt to cause the most pain for taxpayers using education, services, state parks  etc. Eventually though as Peter Griffin said about sex with Kobe; "You can kick and scream all you want but it's gonna happen."

MrPalladium's picture

Sadly, only about two thirds of the population can benefit from education beyond the eighth grade level. Only about one quarter can possibly benefit from college. Expenditures on education should be cut drastically across the board with the remaining resources applied rigorously to educating those who can move our society forward.

No amount of money can overcome low IQ.

Freddie's picture

College now is a day care program and a status thing to help young people's self esteem.  Yes - they are illiterate but of they have a degree then they feel good. 

Started with the crap where awards and trophies were handed out to all the kids for soccer and other things.  It did not matter if they excelled at anything or even tried.  Their self esteem was what was important.  Now if you deny many of these illiterate young people a college edukayshun then you are a racist.  Liberalism.

ClassicalLib17's picture

I live in northern Illinois and our community has a band director who thinks it appropriate to play Louie, Louie at the Memorial Day Parade 2 years ago.  I raised the issue with the high school principal and the district superintendent.  Last year, this progressive decided that a motown medley would suffice.  I complained again.  This year they are not scheduled to participate.  I hate this man's political ideology to my core, but support his individual right to freedom of speech. A Memorial day observance is sacred and when I played in the band in my school days in the late 60's early 70's we always played the appropriate music.  I wanted the district to fire this miserable shithead, but he's union and unless he groped one of the children his job is secure.  I caused a school district employee( fine arts director)( fine arts director? What the fuck does a fine arts director do?) to cry when I questioned the intentions of the band director before her the other day.  I am a local elected official for the first time with a full year under my belt and I can say without reservation, things are much worse than even what is reported here.  God save us   

The Alarmist's picture

When I was growing up there were still more than a few senior executives who never formally went beyond high school.  To your comment, I actually knew one CEO of a mid-size midwestern firm who never went beyond the 8th grade, but every bit as sharp and more rounded and learned that some of the power elite I have met lately.  

Needless to say, comparing an 8th grade education of the early 20th century to today's 8th grade education is kind of like comparing the Dollar of 2012 to a 1967 Dollar.

MrPalladium's picture

That is so true! All four of my grandparents had only eighth grade educations (Circa 1900) but they were far more literate and numerate than most of today's high school grads. My siblings and I all have advanced degrees - PhD, MD, JD, and MBA.

duo's picture

Not only that, but paying $30K a year to learn what most high school students knew in, say 1975.

Umh's picture

That's not fair. That would be tracking students. The current system of babysitting and medicating is fairer and nicer.

Bicycle Repairman's picture

The current system of unlimited non-recourse loans is also quite kewl!!

MrPalladium's picture

"The current system of unlimited non-dischargeable loans is also quite kewl!!"

There!! Fixed it!!

worbsid's picture

Californicated => fornicated like california.  Same as "amerfornicated". same as eurofornicated. It is all the same, caused by the same for the benefit of the same. Clue:  That is not you or me.

battle axe's picture

Calif + Earthquake = Problem solved. 

Bringin It's picture

From the bowels of insanity, Jerry and the California Public Employees' Retirement System board argue over how to book the realization that they're going to see only 7.5% roi this year versus prior bogus guesstimate of 7.75%

WhyDoesItHurtWhen iPee's picture

I think the Latin is "Fiatusfornicatus".

Alea Iactaest's picture
California, the ninth largest economy in the world, resorts to austerity

engineertheeconomy's picture













The Alarmist's picture

Reminds me of a line from "I Believe in Swordfish" by the Dead Milkmen ...

Why should we buy postage stamps

We can make our own.


BTW, RHCP??? Right Hand Circular Polarization?