Thread: California nightmare for the global economy?

California nightmare for the global economy?
Peter Navarro

Friday, August 15, 2008

Will the California budget crisis tip the United States into recession? The California economy is certainly large enough to inflict such damage. It's the seventh-largest economy in the world and home to close to 38 million Americans.

California's budget deficit is by any reasonable measure enormous. This budget deficit is estimated at $17.2 billion and represents more than 17 percent of the state's general fund expenditures (about $101 billion). In contrast, New York, which faces the second-worst budget gap in the nation for fiscal year 2009, has a gap of about $5 billion, which represents less than 10 percent of its budget.

In closing its past budgetary gaps, California has acted more like the federal government rather than merely one of 50 states. Indeed, unlike the federal government (or sovereign nations), each state is required to balance its budget each year; and no state, at least in principle, has the authority to engage in the kind of discretionary deficit spending both the federal government and nations around the world routinely use to stimulate their economies.

In the past, a profligate California has gotten around this balanced-budget requirement by using a technique that effectively allows the Golden State to administer its own fiscal stimulus. In particular, California - under both Democratic and Republican governors - has simply issued new bonds every time that it has spent far beyond its means.

California's problem this time, however, is that its deficit is so big, its balance sheet is so bad, and world credit markets are so tight that issuing new bonds alone is no longer a viable option. Instead, California's politicians are inexorably being forced toward a solution that will prominently feature both a large tax increase and significant spending cuts.

Indeed, this is not a partisan matter of choosing one's poison. The budget deficit is so large that it cannot be eliminated without raising taxes, anathema to the state's Republicans, and spending cuts, equally unpalatable to California Democrats. Of course, the faster the state Legislature accepts this harsh reality, the faster the deadlock can be broken.

Viewed from a macroeconomic perspective, there is an even harsher reality. Increased taxes and reduced spending will send a very nasty contractionary shock through a California economy that is already reeling from a housing market meltdown and punishing gas prices. Should Gov. Arnold Schwarzenegger's budgetary medicine - including firing many state employees - trigger a recession, this may well serve as a tipping point for a national recession and, in the worst case scenario, even a global recession.

In considering these dangers, it is worth noting that California provides close to 13 percent of America's real GDP growth. In contrast, the second-largest contributor to U.S. gross domestic product is Texas, and it provides only half that stimulus. It also worth noting that California is an important destination for both U.S. manufactured goods and world imports, particularly from Asia. Already, California's unemployment rate is more than 6.8 percent and well above the national average of 5.7 percent. At least some economists believe California may already be experiencing negative growth. The economy is likely to get a lot worse before its gets better.

If there is any one civics lesson to be learned from this fine mess, it is that the state's politicians must learn to resist overspending in good times so that the state won't face bankruptcy when bad times hit. It should be equally clear that any damn fool can issue bonds to balance a budget. However, it takes real political courage and economic foresight to put a state budget on an even keel through fiscally conservative tax-and-spend policies. At this juncture, California is nowhere close to that - and the rest of the country, and perhaps the world, may soon pay the Golden State's piper.

http://www.sfgate.com/cgi-bin/article.c ... =printable

Will the California budget crisis tip the United States into recession? The California economy is certainly large enough to inflict such damage. It's the seventh-largest economy in the world and home to close to 38 million Americans.

1/10 OF THE POPULATION; DEAR ME, ICE GET IN THERE.

Originally Posted by AirborneSapper7

California nightmare for the global economy?

California's problem this time, however, is that its deficit is so big, its balance sheet is so bad, and world credit markets are so tight that issuing new bonds alone is no longer a viable option. Instead, California's politicians are inexorably being forced toward a solution that will prominently feature both a large tax increase and significant spending cuts.

Am I the only one who thinks giving millions of dollars to illegal alien gang bangers who kill Americans just might be a factor here?

http://www.laweekly.com/2007-06-07/news ... un-runner/

Did City Hall Fund a Gun-Runner?

Published on June 07, 2007

FEDERAL ALCOHOL, TOBACCO AND FIREARMS AGENTS knocked first, then entered the Downey home of purported anti-gang activist Hector Marroquin on Wednesday, arresting him for selling silencers and weapons — including three assault rifles and a machine gun — to an undercover ATF agent.

The gun sales, some of which Marroquin, the founder of the gang-intervention group No Guns, transacted at his bar in the city of Cudahy, were captured on videotape and audiotape, said police officers present at his arrest.

Inside the house, the 51-year-old veteran of the 18th Street Gang surrendered as his daughter's boyfriend, David Jimenez, a parolee at large, jumped out a window, tossed a gun into the backyard pool and climbed on the roof, authorities said. Officials said ATF agents then confronted him, he climbed back inside and was arrested and charged as a felon in possession of a gun.

Marroquin, an alleged associate of the prison-based Mexican Mafia, has grown accustomed to such intrusions, having been arrested many times over the years while at the same time being the founder and CEO of No Guns, which has received $1.5 million from Los Angeles City Hall via the much-criticized L.A. Bridges program designed by the Los Angeles City Council to keep youth out of gangs.

On Wednesday, the L.A. District Attorney's Office filed five charges related to Marroquin's sale of automatic weapons and silencers to the undercover ATF agent, according to a criminal complaint filed in L.A. Superior Court. Also charged was Marroquin's girlfriend, Sylvia Arellano, who police arrested the same day in Cudahy. Police searched Marroquin's bar on Atlantic Avenue in Cudahy, as well as an auto yard in South Gate, where they recovered gang photos and journals.

No Guns finally lost its funding last year, after city officials found the organization had engaged in nepotism and misappropriation of public funds. Along with his wife, son and daughter, who police say is a member of the Hawthorne L'il Watts Gang, the Marroquins made more than $200,000 a year in salaries — public funds paid by L.A. taxpayers — to steer children away from gangs and help active gangsters escape the life.
However, a report by civil rights lawyer Connie Rice and independent audits have stated that L.A. Bridges, which has funneled more than $100 million to programs like No Guns, cannot show that it has reduced gang activity, and the city council lacks any meaningful measures for determining success. Just last week, another purported gang-member-turned-good, 30-year-old Mario Corona, with a group called Communities in Schools, also a recipient of L.A. Bridges money, was sentenced to 32 months in prison for transporting a large amount of methamphetamine and being a felon with a gun.

The undercover sting that culminated Wednesday came as the result of a nine-month investigation, federal ATF officials said. The complaint alleges Marroquin and his girlfriend sold guns to an ATF agent in September, October and November of last year. According to the District Attorney's Office, Marroquin posted $260,000 bail and is expected in court on June 21.

Please address all L.A. Bridges program inquiries to lagryd@lacity.org.

http://www.lacity.org/mayor/villaraigos ... nStrategy/

Meet the new boss, same as the old boss:

http://www.reuters.com/article/domestic ... 7420070620

Minister to lead Los Angeles anti-gang efforts
Wed Jun 20, 2007 3:27pm EDT

LOS ANGELES (Reuters) - An evangelical minister was appointed on Wednesday to head a new initiative against violent gangs in Los Angeles, which has been dubbed the gang capital of America.

The Rev. Jeff Carr, a minister in the Church of the Nazarene, will oversee a $168 million effort to create youth programs and other initiatives to counter a dramatic rise in murders and drive-by shootings among an estimated 720 street gangs.

Boy, doesn't the money just flow like a river when LA "battles" its youth problems with millions of our tax money? Maybe we can solve the "Ganga-fornia" problem by training the 18th Street Gang to run a small 'printing press' in the basement of one of their, ahem, "youth development centers".

GETTING THE ANCHOR BABY LAW PASSED WILL HELP CURE THE TOTAL PROBLEM IN CALIFORNIA.

CALIFORNIA IS GOING TO HAVE TO USE 'TOUGH LOVE';

ICE WORKING UNDERCOVER YET IN CALIFORNIA?