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Let me start this discussion by explaining that I'm not some wild-eyed paranoiac or Bible-thumper: I simply recognize that the economy, guided by the "relatively" free flow of capital via supply and demand, abhors both a vacuum and the efforts of politicians to interfere with it. And it's become increasingly clear that a large percentage of California's public officials, and their clientele, don't want to acknowledge this.
We know where a lot of the "time bombs" are ticking away -- a vastly underfunded public pension system, an over-hyped real estate market, and a growing portion of the general population with little, or no "skin in the game". And without sinking to personal rancor, I want to point out, as I have in other posts, that our neighbor nation to the South has functioned for almost ninety years under a faux "democracy" that in reality is not.
The Golden State is not alone in this; the City of Chicago, in particular, with much more of a "hard case" reputation, is similarly losing its ability to function, and the disease is spreading to the entire state of Illinois; and with the election of Donald Trump, the polarization continues to intensify.
And please, let's try to hold the discussion to socio-economic consequences rather than partisan bickering.
Are you thinking that California is not too big to fail ?
We've gone through many boom and bust cycles and Governor Moonbeam has always used his Jesuit Priest Jedi training to deliver us from the brink of the abyss.
All it takes is to increase the taxes so spending can continue.
The take on the California property tax alone has got be close to a trillion as more and more middle class housing are getting closer to the million dollar price.
The Chinese are scarfing up properties at what they consider bargain basement prices as they have more dollars than sense.
Until the Federal Reserve raises interest rates and Fannie Mae and Freddy Mac say " No Mas" to their holding of mortgages that may be subject to being close to underwater, the party will carry on like 2008 never existed.
If you can't handle the greed and fear cycles, move to another state as this state just doesn't learn.
Like all bankrupt Corporations do, just sell off the assets for pennies on the dollar and then change the name so the debt can't be moved forward
Successful economies need people above all else. The West coast has an abundance of that and demand isn't likely to stop in the future.
Any drop, issue or change is simply a buying opportunity there and will remain so until the demand side of the equation changes. That isn't bloody likely because jobs, weather and **** to do. There is a reason people are flocking over there and to big cities in general.
In fact, the bigger problems will be in the fly over states. You're already seeing a move and preference change to cities, relatively few cities, because that is where the jobs and good incomes are. The next recession will only exasperate that
As for real estate, look no further than generational mortgages. Japan can do it, so can we. In fact you can expect loans in general to have increased time to pay. It's been happening in just about everything for a couple of decades now and will continue. 72 months for a car will be short and 30 years on a house will be an aggressive repayment schedule. Hell if people can pay for furniture for 5 years wtf not a car at 10?
Gotta keep that debt flowing because we certainly aren't having enough babies to do it and with immigration tightening at least short term, well something has to give and it will be growth.
First off, if California were to collapse I would think the federal government would work out some sort of bailout since this single state makes up 1/6th of the entire nation's GDP. You're right that pension systems have been a systemic problem and it seems to have reached a breaking point. In full disclosure, my grandfather received one of these "golden-handshake" pensions and was taken care of beyond what he probably should have been, but that was the deal. Policymakers for decades failed to adjust and make a sustainable system. Compound that by all the stock market drops, bankruptcies, defaults, and it's no wonder why the pension funds came up short. I need to look no further than my own city which has to inject an additional $9M per year for the next 20 years to make up for pension deficit. Meanwhile there's retired city managers and emergency directors who are pulling in over $300K a year…some of whom had their hands in writing their own pension terms. It's not criminal, but definitely a conflict of interest and the public was completely oblivious.
While too much taxation, regulation, and inefficiency can be onerous and frustrating, too little would likely polarize society back to pre-New Deal life. The owners of production (corporations) are far more wealthy and powerful than Karl Marx probably imagined. Mind you there wasn't much of a middle class before the 1940s. I believe it was an invented class made possible through economic expansion, taxation, innovation, and social programs. Like the pension programs mentioned before, all the aforementioned needs to be balanced to keep the middle class afloat. We've already seen the middle class struggle over the last 30 years. We've teeter-tottered back in forth between left and right policies, but the end result is that we still have problems. I don't know what the solution is, but I'll take the much easier task of identifying that there is a problem.
Let me start this discussion by explaining that I'm not some wild-eyed paranoiac or Bible-thumper: I simply recognize that the economy, guided by the "relatively" free flow of capital via supply and demand, abhors both a vacuum and the efforts of politicians to interfere with it. And it's become increasingly clear that a large percentage of California's public officials, and their clientele, don't want to acknowledge this.
We know where a lot of the "time bombs" are ticking away -- a vastly underfunded public pension system, an over-hyped real estate market, and a growing portion of the general population with little, or no "skin in the game". And without sinking to personal rancor, I want to point out, as I have in other posts, that our neighbor nation to the South has functioned for almost ninety years under a faux "democracy" that in reality is not.
The Golden State is not alone in this; the City of Chicago, in particular, with much more of a "hard case" reputation, is similarly losing its ability to function, and the disease is spreading to the entire state of Illinois; and with the election of Donald Trump, the polarization continues to intensify.
And please, let's try to hold the discussion to socio-economic consequences rather than partisan bickering.
The Chinese would be none too pleased, considering how much of the state they own, and considering how they have become the state's new ruling class.
They have long memories and remember the humiliation of the treaty ports which the western nations seized, taking advantage of their economic and political weakness at the time. They would demand that the US hand over California if it went bankrupt, or if the US itself went broke.
Quite possible this could spark off a US-China war.
Meanwhile, here in the real world - distinct from the feverish fantasies of the "Please, please, please let liberal California fail!" crowd - California sends a lot more $ to the federal treasury than it receives in return. Thus, California is one of the donor states upon which the weak and feeble states like Louisiana and Tennessee and South Dakota depend upon in order not to go belly-up.
And now, back to your regularly scheduled insisting that California must fail, just 'cause that's what your dogma say has to happen. Bummer how the real world just doesn't jibe with the way you really want things to be, though, isn't it?
California doesn't fail because of their state government. That's what many people don't get. Unlike some states that look for their governments to lead, California relegates their government to janitorial, clean up the mess things.
SoCal is the centerpiece for entertainment and it's distribution. Music, movies, television and all the related content and production behind it happens in California, which chooses project work for anywhere else in the world. It's unlikely to be dethroned anytime soon.
Rural California produces crops few other places in the world can. The land of fruits and nuts delivers higher per acre profits than anywhere else in the world....assuming they have water. They also have one of the world's leading wine production areas, timber, marijuana and a host of visit-worthy tourist sites. Cowshwitz may be scary, but it's also one of the most productive cattle raising areas around. The hills still contain mineral wealth and the rocks below still have oil. The steady supply of sunshine promises to eventually become a cheap source of energy for all.
NorCal is the centerpiece of technology development. There's simply no other place on Earth where more ideas can get funded. That promise draws the best talent from around the world. That creates some of the most innovative companies in the world, which in turn draws in other companies that want to keep abreast of the changes in the field.
The area is highly cyclical, which makes its government budgets impossible to keep straight, but so long as the moderate Dems can keep the Bernie Dems from spending everything in these good years, and the populace doesn't go nuts and try and secede from the union, California's going to be fine for many years. Innovation isn't cheap or guaranteed, but it does bring nice paying jobs.
Let me start this discussion by explaining that I'm not some wild-eyed paranoiac or Bible-thumper: I simply recognize that the economy, guided by the "relatively" free flow of capital via supply and demand, abhors both a vacuum and the efforts of politicians to interfere with it. And it's become increasingly clear that a large percentage of California's public officials, and their clientele, don't want to acknowledge this.
We know where a lot of the "time bombs" are ticking away -- a vastly underfunded public pension system, an over-hyped real estate market, and a growing portion of the general population with little, or no "skin in the game". And without sinking to personal rancor, I want to point out, as I have in other posts, that our neighbor nation to the South has functioned for almost ninety years under a faux "democracy" that in reality is not.
The Golden State is not alone in this; the City of Chicago, in particular, with much more of a "hard case" reputation, is similarly losing its ability to function, and the disease is spreading to the entire state of Illinois; and with the election of Donald Trump, the polarization continues to intensify.
And please, let's try to hold the discussion to socio-economic consequences rather than partisan bickering.
I'm no fan of Jerry Brown, but he has brought a measure of fiscal sanity to the state--not nearly as much as I would like, but enough that all 3 rating agencies have upgraded the state's bond rating to AA- (the 4th highest possible). That's still a notch or two below the typical state, so it's nothing to brag about, but we've gone in a more positive direction than some other large states such as IL, CT, NJ, & PA which have all been downgraded in recent years, in the case of IL, quite severely.
I worry the next governor who's elected will be much more of a spendthrift than Jerry Brown. Hence I worry about all the issues about California that you've brought forth. Plus, I worry about earthquakes. Both NorCal and SoCal are long overdue for major earthquakes. Our federal government has racked up huge amounts of debt and racking up more to bail California out of a major earthquake or two is also pretty scary. The state's finances certainly aren't in a position to absorb such a financial hit, either.
For the most part, I don't think California's real estate market is overhyped. It's supply and demand. Supply in the form of new housing is severely restricted because the popular areas are built up and red tape and NIMBYs severely limit development; yet the demand is there, so prices skyrocket. There seem to be fewer crazy loans than there were in the 2003-2008 period, although I can't know that with absolute certainty.
I'd also argue that the U.S. has been operating under a faux democracy for most of the last 90 years as well. We just hide our corruption a little better. The Mexican people have no illusions about how their country operates, whereas Americans still do.
While I disagree with some of the details of your time bomb thesis, I believe your overall assessment is correct. I'd say the U.S. is a ticking time bomb in lots of ways. I've gotten closer to God because it's becoming increasingly clear to me that most people in America are not interested in doing the difficult things that would be necessary to put our country on a better track.
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California Failure
