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[stocks]

The Golden State Is Crumbling

California and Bust -- Michael Lewis

The smart money says the U.S. economy will splinter, with some states thriving, some states not, and all eyes are on California as the nightmare scenario.

The point of Meredith Whitney’s investigation, in her mind, was not to predict defaults in the municipal-bond market. It was to compare the states with one another so that they might be ranked. She wanted to get a sense of who in America was likely to play the role of the Greeks, and who the Germans. Of who was strong, and who weak. In the process she had, in effect, unearthed America’s scariest financial places.

“So what’s the scariest state?” I asked her.

She had to think for only about two seconds.

“California.”

But when you look below the surface, he adds, the system is actually very good at giving Californians what they want. “What all the polls show,” says Paul, “is that people want services and not to pay for them. And that’s exactly what they have now got.” As much as they claimed to despise their government, the citizens of California shared its defining trait: a need for debt.

David Crane, the former economic adviser—at that moment rapidly receding into the distance—could itemize the result: a long list of depressing government financial statistics. The pensions of state employees ate up twice as much of the budget when Schwarzenegger left office as they had when he arrived, for instance. The officially recognized gap between what the state would owe its workers and what it had on hand to pay them was roughly $105 billion, but that, thanks to accounting gimmicks, was probably only about half the real number. “This year the state will directly spend $32 billion on employee pay and benefits, up 65 percent over the past 10 years,” says Crane later.

“Compare that to state spending on higher education [down 5 percent], health and human services [up just 5 percent], and parks and recreation [flat], all crowded out in large part by fast-rising employment costs.” Crane is a lifelong Democrat with no particular hostility to government. But the more he looked into the details, the more shocking he found them to be. In 2010, for instance, the state spent $6 billion on fewer than 30,000 guards and other prison-system employees. A prison guard who started his career at the age of 45 could retire after five years with a pension that very nearly equaled his former salary.

The head parole psychiatrist for the California prison system was the state’s highest-paid public employee; in 2010 he’d made $838,706. The same fiscal year that the state spent $6 billion on prisons, it had invested just $4.7 billion in its higher education—that is, 33 campuses with 670,000 students. Over the past 30 years the state’s share of the budget for the University of California has fallen from 30 percent to 11 percent, and it is about to fall a lot more. In 1980 a Cal student paid $776 a year in tuition; in 2011 he pays $13,218. Everywhere you turn, the long-term future of the state is being sacrificed.

Michael Lewis

[stocks]

The Golden State Is Crumbling

California and Bust -- Michael Lewis

Michael Lewis:

…as he talked about the bankrupting of Vallejo, I realized that I had heard this story before, or a private-sector version of it. The people who had power in the society, and were charged with saving it from itself, had instead bled the society to death. The problem with police officers and firefighters isn't a public-sector problem; it isn't a problem with government; it's a problem with the entire society. It's what happened on Wall Street in the run-up to the subprime crisis. It's a problem of people taking what they can, just because they can, without regard to the larger social consequences.

It's not just a coincidence that the debts of cities and states spun out of control at the same time as the debts of individual Americans. Alone in a dark room with a pile of money, Americans knew exactly what they wanted to do, from the top of the society to the bottom. They'd been conditioned to grab as much as they could, without thinking about the long-term consequences. Afterward, the people on Wall Street would privately bemoan the low morals of the American people who walked away from their subprime loans, and the American people would express outrage at the Wall Street people who paid themselves a fortune to design the bad loans.

[stocks]

Illinois: the Deadbeat state

Owes billions in unpaid bills


Drowning in deficits, Illinois has turned to a deliberate policy of not paying billions of dollars in bills for months at a time, creating a cycle of hardship and sacrifice for residents and businesses helping the state carry out some of the most important government tasks.

Once intended as a stop-gap, the months-long delay in paying bills has now become a regular part of the state's budget management, forcing businesses and charity groups to borrow money, cut jobs and services and take on personal debt. Getting paid can be such a confusing process that it requires begging the state for money and sometimes has more to do with knowing the right people than being next in line.

Illi

[stocks]

The U.S. industrial base has been on a powerful upswing

In 2011 American manufacturing continued to expand, while Germany, Japan and Brazil all weakened in this vital sector.

Our top ranked area, Houston, is one of only four regions that enjoyed net job growth in manufacturing in the past 10 years.

Cheap natural gas, for example, makes petrochemical production in America more competitive than anyone could have imagined a decade ago. Linkages with Mexico in terms of energy as well as autos has made Texas — which is also home to No. 4 ranked San Antonio and No. 15 ranked Dallas — the nation’s primary export super-power, with current shipment 15% to 20% above pre-crisis levels.

The resurgence of heavy metal should lead regions, and the federal government, to consider shifting their emphasis toward productive, skilled based training and away from a single-minded focus on the BA or graduate degree. Few regions suffer a shortage of art history or English graduates. This more practical emphasis is particularly critical for the Midwest, which is home to four of the ten highest-ranked industrial engineering schools in the nation.


metal

[Rogerdodger]

The Statists who have never ran a business or hired anyone say that neither excessive Taxes nor Red Tape will discourage business.
But what do they know except what they read in a book?

AccentCare is the latest in a string of California companies moving or expanding to other states.
March 28, 2011
Home healthcare provider AccentCare is moving its corporate headquarters from Irvine to Dallas, according to the owner of the property where AccentCare has signed a lease for 33,000 square feet of space. AccentCare is the latest in a string of California companies moving or expanding to other states. Irvine business relocation consultant Joe Vranich reported on 204 such moves in 2010 alone.

California tech company to move most of its business, 135 jobs to Texas
Dec. 13, 2011
"It continues the momentum we have seen out of California, with companies looking for a less-costly business environment."The company's proposed average wage will be $75,000, Porter said, and most of its jobs are expected to be filled with local employees.
“Then the other part of it was the cost of doing business in California. Highest tax rates in the nation. Until recently very expensive real estate. Tremendous regulation and really a broken legislature. Something that’s got a built-in structural deficit that’s not going to improve,” explained Mittelstaedt. “The reality is this is just a very difficult place to do business. It’s a very expensive place to do business.”


Folsom Company Moving To Texas, Citing California Costs, Red Tape
Dec. 13, 2011It's official. Folsom-based company Waste Connections is moving out of California and headed to the state of Texas.
“Then the other part of it was the cost of doing business in California. Highest tax rates in the nation. Until recently very expensive real estate. Tremendous regulation and really a broken legislature. Something that’s got a built-in structural deficit that’s not going to improve,” explained Mittelstaedt. “The reality is this is just a very difficult place to do business. It’s a very expensive place to do business.”

Edited by Rogerdodger, 17 December 2011 - 12:54 AM.

[stocks]

The Golden State Is Crumbling

The Vandals rule the Central Valley of California

While the elites make excuses, citizens cope with theft and destruction.

I am starting to feel as if I am living in a Vandal state, perhaps on the frontier near Carthage around a.d. 530, or in a beleaguered Rome in 455.

The city of Fresno is now under siege. Hundreds of street lights are out, their copper wire stripped away. In desperation, workers are now cementing the bases of all the poles — as if the original steel access doors were not necessary to service the wiring. How sad the synergy! Since darkness begets crime, the thieves achieve a twofer: The more copper they steal, the easier under cover of spreading night it is to steal more.

In short, all the stuff of civilization — municipal buildings, education, religion, transportation, recreation — seems under assault in the last year by the contemporary forces of barbarism.

There is indeed something of the Dark Ages about all this. In the vast rural expanse between the Sierras and the Coast Ranges, and from Sacramento to Bakersfield, our rural homes are like stray sheep outside the herd, without whatever protection is offered by the density of a town. When we leave for a trip or just go into town, the predators swarm.

vandals

[stocks]

The Golden State Is Crumbling

Lost Angeles -- The City of Angels goes to hell

In the new century, Los Angeles has begun to fade, and it can’t blame its sorry condition on the recent recession.

Streets are potholed. Businesses and residents are fleeing. In virtually every category of urban success, from migration of educated workers to growth of airport travel, Los Angeles lags behind not only such fast-growth regions as Dallas, Houston, and Raleigh-Durham, but also historical rivals like New York.

Between 2001 and 2011, the number of jobs in the county contracted by 7.1 percent. -- the decline was particularly marked in manufacturing, with the hemorrhaging of more than 150,000 jobs since 1990; only New York has lost more industrial jobs over the past 20 years.

Why has Los Angeles lost its mojo? A big reason is a decline in the power and mettle of the city’s once-vibrant business community.

The “emperors” of LA are the leaders of the public sector. As business retreated, power in Los Angeles shifted toward the government and its workers. Back in 1990, 13 percent of employed Angelenos worked for the government; by 2008, that figure had jumped to 16 percent. Even after a deep recession, the public sector—both county and city—continues to pull in big payouts. Today, almost 18,000 county workers earn more than $100,000 annually. The city has followed a similar path, with its city council the highest-paid in the nation. In L.A., as in much of California, public employees’ pensions have risen at unsustainable rates.

The Latino-labor machine has two major priorities: expanding the power of labor unions, particularly in the public sphere; and self-perpetuation. Unsurprisingly, it cares little, and seems to understand less, about L.A.’s economic environment. An example is Mayor Villaraigosa himself, another former labor organizer, whom the machine elevated first to the city council and then to the mayoralty.


Los Angeles

[stocks]

California’s $500K Earners Dwindle

"Eventually you run out of other people's money" - Margaret Thatcher

Tax returns with adjusted gross incomes topping $500,000 fell to 98,610 in 2009, the latest year available, from a recent peak of 146,221 two years earlier

“Why did Tiger Woods grow up here and not live here now?”

California’s population grew at its slowest rate in history in the past decade. About 154,000 people left for other states in the fiscal year that ended July 1

Three of the top five states to which Californians have moved over the past decade -- Nevada, Texas and Washington -- don’t tax wages


link

[stocks]

Illinois: the Deadbeat state

Owes billions in unpaid bills

Drowning in deficits, Illinois has turned to a deliberate policy of not paying billions of dollars in bills for months at a time

"Our revenue growth is not enough to keep up with pensions and Medicaid. It creates a squeeze for everything else."

The tax hikers of 2011 hope you won't notice the carnage of 2012

Think back to 1/11/11, the night the General Assembly raised personal and corporate income taxes by 67 and 46 percent. That legislation didn't cut spending by one dime. Never forget the assurances, though, that these tax increases would pay the state's debts and prevent future budget deficits

the tax increases are stifling the economic growth that would boost those revenues. With their votes, they made Illinois an even higher-cost state for job creators.

The tax hikers trust that, in the 2012 election cycle, you won't notice that their assurances of 2011 have fallen flat.

chicago tribune

[stocks]

The Golden State Is Crumbling

In its modern origins California was paean to progress in the best sense of the word. In 1872, the second president of the University of California, Daniel Coit Gilman, said science was "the mother of California." Today, California may worship at the altar of science, but increasingly in the most regressive, hysterical, and reactionary way.

California's dominant ruling class—consisting of public-employee unions, green jihadis, and Democratic machine politicians—has no real use for science as Gilman saw it: as a way to create prosperity for its citizens. Instead, the prevailing credo of the state has been how to do everything possible to return to its pre-settlement condition, with little regard for what that means to the average Californian.

CalPERS earns 1.1% on investments in 2011

It falls short of the 7.75% average that actuaries say CalPERS needs to meet obligations. Calendar-year results are just indicators — the public pension fund's fiscal year ends in June.

The nation's largest public pension fund, the California Public Employees' Retirement System, posted a 1.1% return on its investment portfolio in 2011, Chief Investment Officer Joseph Dear told his board.


latimes