California's financial apocalypse: A concise guide

[baja]

California's financial apocalypse: A concise guide
Gov. Jerry Brown says his state is almost $16 billion short on its budget. The 74-year-old Democrat has a plan to close the gap — but Californians won't like it
POSTED ON MAY 15, 2012, AT 9:45 AM

Gov. Jerry Brown (D) will attempt to tackle California's crippling budget shortfall by slashing social services and limiting state workers to a four-day week. Photo: Kevork Djansezian/Getty Images SEE ALL 26 PHOTOS
California Gov. Jerry Brown (D) has some bad news: His cash-strapped state isn't $9.2 billion in the hole, as projected in January; the Golden State is actually facing a yawning $15.7 billion shortfall. And after years of aggressive budget-slashing and gridlock over increasing tax revenue, Brown doesn't have a lot of options on the table. "The fact is, California has been living beyond its means," he told reporters on Monday. "This is a day of reckoning, and we have to take the medicine." Here, a look at California's bitter pill:

Why did the budget gap grow?
Tax revenue came in $4.3 billion lower than Brown had expected, which he blamed on the still-struggling economy, and courts blocked hundreds of millions in proposed cuts to state health care programs. Also, the Democratic-controlled legislature refused to enact Brown's proposal to trim the social safety net this spring, and Republicans have refused to allow any tax increases, which require a two-thirds majority under California law. The state has already made deep cuts over the past four years to fill a combined $100 billion in deficits, including the $26 billion shortfall Brown inherited when he was sworn in last year.

What does Brown propose to do about it?
The 74-year-old Democrat — who first served as governor from 1975 to 1983 before being elected to a decades-delayed third term in 2010 — has outlined another $8.3 billion in proposed cuts from the budget, which he likened to "a pretzel palace of incredible complexity." About half the cuts would come from social services, inducing $1.2 billion from health care programs for the poor and $1.1 billion from welfare and aid for the home-bound elderly and disabled. State workers would see a 5 percent drop in pay, moving from a five-day, 40-hour week to a four-day, 38-hour week.

But that's not enough, right?
No, it's not. Even if the legislature enacts these cuts in June, California would still come up billions short. But if voters also approve a series of temporary tax bumps Brown got on the ballot for November — a four-year quarter-point rise in the sales tax, to 7.5 percent, and a seven-year increase in taxes on those earning at least $250,000 a year — Brown will be well on his way to righting the state's fiscal ship, as promised. The ballot measure, however, is no sure thing in this "birthplace of the anti-tax movement," says Adam Nagourney at The New York Times. And if it goes down to defeat, California schools automatically take a $6.1 billion hit.

If I don't live in California, why should I care?
First of all, the Golden State, by itself, is the world's ninth-largest economy. And "because of California's sheer size, this will have an impact, however modest, on the overall national picture," says David Dayen at Firedoglake. Brown's multi-billion dollar "austerity hit" will dampen the effectiveness of national economic stimulus measures, as well as "decidedly lowering the productivity of the entire state for decades to come." California's fiscal armageddon should also scare the rest of us into action, says Jennifer Rubin at The Washington Post. "If Greece's economic woes are not a flashing red light for U.S. policymakers, perhaps they will take California's example to heart."

Sources: AP, Bloomberg, Business Insider, Firedoglake, Los Angeles Times, New York Times, Washington Post

[Rohirrim]

California should secede, erase all laws and statutes, and hold a constitutional congress as a new country.

[alkemical]

www.freestateproject.com

[Rohirrim]

www.freestateproject.com

Except New Hampshire couldn't survive on its own. Eventually, it would be sucked up into some larger state, like NY. California would do just fine on its own. Probably much better. The first amendment to the new constitution should be, No political parties will be allowed. ;D

[alkemical]

Except New Hampshire couldn't survive on its own. Eventually, it would be sucked up into some larger state, like NY. California would do just fine on its own. Probably much better. The first amendment to the new constitution should be, No political parties will be allowed. ;D


Not really, but ok.

[cutthemdown]

What they have to do is renegotiate public employee pensions. Then they have to make sure the good teachers get paid well, and crappy ones get fired. Then stop educating all the illegal mexican children. Charge the federal govt for any money we have to spend on the illegals the won't stop at the border or do anything about. Loosen up regulations on land development and ease up on regulations that stifle business. Calif constantly ranked least business friendly, its taking its toll.

Basically in CA the gov does almost nothing. The Legislature is needed to do anything. It's sort of the lamest system in the whole country.

[alkemical]

What they have to do is renegotiate public employee pensions. Then they have to make sure the good teachers get paid well, and crappy ones get fired. Then stop educating all the illegal mexican children. Charge the federal govt for any money we have to spend on the illegals the won't stop at the border or do anything about. Loosen up regulations on land development and ease up on regulations that stifle business. Calif constantly ranked least business friendly, its taking its toll.

Basically in CA the gov does almost nothing. The Legislature is needed to do anything. It's sort of the lamest system in the whole country.

I don't think you should be able to alter anyone's pension if they're going to retire in 10 years.

[cutthemdown]

I don't think you should be able to alter anyone's pension if they're going to retire in 10 years.

It will be worst if the state goes bankrupt on them. Then they get nothing. What will happen is people with money keep leaving the state. If the jobs keep leaving? Without a tax base the pensions won't be paid.

[Requiem]

Trade California for some other countries cool islands somewhere.

[cutthemdown]

hell it would have probably been smarter to pay off Calif debt with that 10 billion Obama is going to waste on high speed trains that probably won't even get built. He gave Calif billions but then said they have to build thing by a certain date. But they are still billions short of what they would need to build the stupid thing.

Calif a mess, and its all the liberals fault. They own calif outright.

[Rohirrim]

hell it would have probably been smarter to pay off Calif debt with that 10 billion Obama is going to waste on high speed trains that probably won't even get built. He gave Calif billions but then said they have to build thing by a certain date. But they are still billions short of what they would need to build the stupid thing.

Calif a mess, and its all the liberals fault. They own calif outright.

24 out of the last 35 years they've had Republican governors, including Reagan.

[baja]

Cal is in trouble because unlike the federal government they can't get the fed to print money endlessly for them.

[cutthemdown]

I don't think you should be able to alter anyone's pension if they're going to retire in 10 years.

Well you have to get them to agree. The unions I mean. We have firefighters and cops who get like 80% of salary in a pension. That is sort of outlandish and unsustainable.

[cutthemdown]

24 out of the last 35 years they've had Republican governors, including Reagan.

That is misleading because the legislature been democratically controlled for yrs. With rules like budgets needed 3/4 majority, and veto overrides repub govs really couldn't do anything. Dem govs either. Brown basically in same boat Arnold was, Grey Davis was, etc etc. Calif has adopted some silly laws like the 3/4 majority for any taxes.

Brown having to put the tax to a vote and calif always votes it down. Also out senators almost always Dem and we haven't voted for the repub since Reagan I think. 1988? So its firmly a liberal state, with progressive ideas on taxing and entitlements. Also lots of high paying public sector jobs. So to try and not own up to the fact liberal ideas have failed in CA is a joke. We get voted least business friendly how many yrs in a row? its finally taking a toll.

Without the rest of the country spending CA service economy is getting killed. We could have about 10% more production in agriculture but so much water gets diverted for wildlife management many fields not getting water. It's just the fact they chip away profits and growth all over, its like a rat taking little bites all over the place.

Whatever though if it makes you feel better to blame the governors the go ahead. Really though neither the repub govs, or dem govs to blame. Grey Davis got raped by the energy producers and we got scammed, and Arnold didn't pursue legal action like he should of. But Arnold really is crap in the eyes of republicans. We hated him. It was really the liberals who turned on Grey Davis and ushered in Arnold. Repubs a huge minority in CA, like 3-1 at least.

[NorCalBronco7]

**** all you trying to talk serious trash about california. Its a ****ing awesome place.

[chadta]

If it makes you feel any better, we have a California up here in Canada too, we call it Quebec, in Montreal students have been rioting for 3 months because of proposed tuition increases, after the increase a student in Quebec would be asked to pay 17% of the actual cost of an university education, which is the lowest in the country. Having to pay 48% here in Ontario my heart really bleeds for them.

[Boomhauer]

Cal is in trouble because unlike the federal government they can't get the fed to print money endlessly for them.

Early retirement with pensions around 80% of previous salary sure as he[[ doesn't help. No matter what Cali does with their annual budget, they can't avoid bankruptcy as it's the only way they can at least halve their pension liabilities, returning to something near sustainable. Until they finally commit to bankruptcy, thus admitting their sociological dream was an illusion of idiots, all they can do is continually cut schools, police/fire, services/repairs, increase taxes/fees and cobble together accounting gimmicks to pass judgement day until next year, then next year, etc. all the while making the economy worse and their grave deeper.

California = Greece = France = Japan = Terminal fundamentals waiting realization.

[barryr]

Nobody in their right mind is going to use CA as a good business model. How many businesses have left CA just the last decade?

[alkemical]

It will be worst if the state goes bankrupt on them. Then they get nothing. What will happen is people with money keep leaving the state. If the jobs keep leaving? Without a tax base the pensions won't be paid.

You can't **** with someone's fixed income for upcoming retirement...it's just wrong.

What if your mom is getting ready to retire and all the time and money she put in gets yanked.


This goes back to the whole: Get rid of theirs, but not MINE mentality in the USA.

[alkemical]

Well you have to get them to agree. The unions I mean. We have firefighters and cops who get like 80% of salary in a pension. That is sort of outlandish and unsustainable.

The citizens dropped the ball in allowing those contracts to be approved.

Face it, people dont' want to OWN the problems...they just want to blame everyone else.

[Garcia Bronco]

The US would never give up that coastal land, but I think a better solution would be for Cally to split in two.

[cutthemdown]

The public employee unions raped the taxpayers. Maybe cant take from ones already retired, but to make it work the govt has to break the unions for the future. Every new employee from a certain point forward takes 25% less on pension or can look for a different career. Get public service in line with private where most don't get pensions anymore. its all 401k, public employee unions like the mob.

[Boomhauer]

You can't **** with someone's fixed income for upcoming retirement...it's just wrong...

If it's at unreasonable and unsustainable levels, of course you can. I'd even include the already retired for pension cuts. Cut'em stated police/fire get 80% pensions. I'm not sure if that still applies, as they've already made numerous concessions, but I do know basic paper-pushers get 80% pensions and similar early retirement.
Add in the massive bureaucrat salaries/pensions (mayors, aids, directors, etc) and the similarly obscene tenured teaching salaries/pensions (another issue being their job security without performance bias) and California is being crushed under "unreasonable and unsustainable levels".

When California declares bankruptcy to cut and reorganize their pension liabilities, I'd agree it would be "just wrong" to issue the next checks at 1/2 their previous levels = still a very generous 40% pension. But I don't see a problem with those levels being reduced around 4-5% (gross) every year over ten years.
- Meaning if you're ten years from retirement, expect 40-30% pension instead of 80% and if you're already retired, start doing what everyone else in California, including Sacramento, is doing and adjust your budget.

[ghwk]

Well you have to get them to agree. The unions I mean. We have firefighters and cops who get like 80% of salary in a pension. That is sort of outlandish and unsustainable.

Agreed.

[mhgaffney]

Nobody in their right mind is going to use CA as a good business model. How many businesses have left CA just the last decade?

Yes -- but the root problem was not high taxes and over regulation.

The root problem was the Republican vendetta in the form of Enron -- under the guise of deregulation.

Enron ripped off the golden state to the tune of ~$40 billion in inflated energy costs -- then disappeared with the loot.

Oregon has sued the Bank of New York to recover its investment in BoNY that evaporated when BoNY stock plunged after BoNY was nailed (again) for securities fraud.

But California had no such option with Enron -- and has never recovered.

[Boomhauer]

Yes -- but the root problem was not high taxes and over regulation. The root problem was the Republican vendetta in the form of Enron -- under the guise of deregulation. ...

That's an interesting spin, but as usual, self-defeating.

Instead of acknowledging what fq'ups they are and moving to fix the problem, simple point randomely and say, "There's the bad guy! It's those evil bankers, Repubs, insert excuse here that we've been telling you about." And the problem not only remains unsolved, but continues to get worse while wasting time/effort on a red herring.

Good for the 'now', terrible for the society and future. How very socialist.

[cutthemdown]

We did get screwed by Enron. Then Arnold did nothing about it. Not sure that was all a repub conspricy though.

[Rohirrim]

We did get screwed by Enron. Then Arnold did nothing about it. Not sure that was all a repub conspricy though.

Enron was Dubya's largest contributor in 2000, including donating $100,000 for Bush's inauguration party. Ken Lay stayed overnight in the Bush WH 11 times.

[baja]

Enron was Dubya's largest contributor in 2000, including donating $100,000 for Bush's inauguration party. Ken Lay stayed overnight in the Bush WH 11 times.

If we survive these times Bush will be in the same conversational corral as Hitler and Stalin as far as damage done goes.

[BroncoBeavis]

Enron was Dubya's largest contributor in 2000, including donating $100,000 for Bush's inauguration party. Ken Lay stayed overnight in the Bush WH 11 times.

That's nice. Considering most of the illegal activities took place before Bush was in office, while Mr Lay was paying Mr Clinton instead.

http://www.nytimes.com/2002/01/23/business/enron-s-collapse-regulations-exemption-won-in-97-set-stage-for-enron-woes.html?pagewanted=all&src=pm

As you can see, it some Clinton SEC rulings that made the whole thing possible in the first place.

[55CrushEm]

California would do just fine on its own. Probably much better.

:rofl:

That's the most hilarious thing I've heard in a LONG time.

Thanks, Roh.

[Rohirrim]

That's nice. Considering most of the illegal activities took place before Bush was in office, while Mr Lay was paying Mr Clinton instead.

http://www.nytimes.com/2002/01/23/business/enron-s-collapse-regulations-exemption-won-in-97-set-stage-for-enron-woes.html?pagewanted=all&src=pm

As you can see, it some Clinton SEC rulings that made the whole thing possible in the first place.

Interesting that you post an article that destroys your point:

''Enron knew the regulatory boxes, and they tried to fashion their businesses to fall outside of those boxes,'' Mr. Barbash said. ''Much of what's been written so far about the company is that it turned itself inside out like a pretzel to fall outside of restrictions -- accounting restrictions, taxpayer restrictions and regulatory restrictions.''

Another former S.E.C. official who is an authority on the Investment Company Act, was more critical.

''This was a case of giving Enron an inch and they took miles,'' said the former official, who spoke on the condition of anonymity. ''They were given a significant new opportunity, and they took it and flew it smasho into the ground.''

How many times did Ken Lay stay in the Clinton WH? Answer: Zero.

[Rohirrim]

:rofl:

That's the most hilarious thing I've heard in a LONG time.

Thanks, Roh.

It's dishonest when you cherry pick one line out of a post and pretend that was the whole point. It's called selective editing. Scumbags like Breitbart make their living with that kind of dishonesty. I guess I should put that in the past tense.

[IHaveALight]

This just in, the political system in America does not work in modern times.
But even after collapse people would still be trying to point fingers at the opposite parties, rather than seeing that it's the political system itself that allows both parties to **** everything up.
Out with the old, in with completely new ideas i say. That's what our founding fathers would do if they were here today.

[Fedaykin]

Calif has adopted some silly laws like the 3/4 majority for any taxes.

So preventing new taxes at the national level is a brilliant conservative idea, but preventing new taxes at the state level is an idiotic liberal idea, eh?

[Rohirrim]

This just in, the political system in America does not work in modern times.
But even after collapse people would still be trying to point fingers at the opposite parties, rather than seeing that it's the political system itself that allows both parties to **** everything up.
Out with the old, in with completely new ideas i say. That's what our founding fathers would do if they were here today.

That's why I agree with those in California who support the idea of holding a constitutional convention and hitting the reboot.

[alkemical]

This just in, the political system in America does not work in modern times.
But even after collapse people would still be trying to point fingers at the opposite parties, rather than seeing that it's the political system itself that allows both parties to **** everything up.
Out with the old, in with completely new ideas i say. That's what our founding fathers would do if they were here today.

The Decleration states we have a right to remove a gov't that doesn't suit the needs of the people.

[baja]

That's why I agree with those in California who support the idea of holding a constitutional convention and hitting the reboot.

Actually even with the cherry picked line it would still be true. California would do just fine on it's own and most likely much better

[IHaveALight]

The Decleration states we have a right to remove a gov't that doesn't suit the needs of the people.

Where do i sign that petition?

[BroncoBeavis]

Interesting that you post an article that destroys your point:

''Enron knew the regulatory boxes, and they tried to fashion their businesses to fall outside of those boxes,'' Mr. Barbash said. ''Much of what's been written so far about the company is that it turned itself inside out like a pretzel to fall outside of restrictions -- accounting restrictions, taxpayer restrictions and regulatory restrictions.''

Another former S.E.C. official who is an authority on the Investment Company Act, was more critical.

''This was a case of giving Enron an inch and they took miles,'' said the former official, who spoke on the condition of anonymity. ''They were given a significant new opportunity, and they took it and flew it smasho into the ground.''

How many times did Ken Lay stay in the Clinton WH? Answer: Zero.

There's no question that Enron abused the exemption given to them by the SEC in 1997. But anyone who looks at the timeline can see what a joke "Blame Bush" is. It's not credible. And I guarantee that if that exemption had been granted by the Bush admin instead of Clinton, you'd be shouting about it from the mountaintops.

Anyway, Enron was literally falling apart within 6-7 months after Bush took office. The first thing they did was restate earnings for 4 years (from 1997-2000, all Clinton years)

The Bush-era SEC was investigating Enron within 9 months of inauguration. To say Enron was a Bush scandal is pure partisan hackery.

The criminal scheme fell apart shortly after Bush took office. But it was set up and executed entirely during the Clinton years.

[Rohirrim]

There's no question that Enron abused the exemption given to them by the SEC in 1997. But anyone who looks at the timeline can see what a joke "Blame Bush" is. It's not credible. And I guarantee that if that exemption had been granted by the Bush admin instead of Clinton, you'd be shouting about it from the mountaintops.

Anyway, Enron was literally falling apart within 6-7 months after Bush took office. The first thing they did was restate earnings for 4 years (from 1997-2000, all Clinton years)

The Bush-era SEC was investigating Enron within 9 months of inauguration. To say Enron was a Bush scandal is pure partisan hackery.

The criminal scheme fell apart shortly after Bush took office. But it was set up and executed entirely during the Clinton years.

It certainly seems to prove the progressive contention that government should use its power to protect the American people from the rapaciousness of greedy corporations through the use of its proper regulatory powers, doesn't it? If the last thirty years hasn't proved that, what possibly could?

And yet, one of the main platforms of Romney and the Republicans is the call for more deregulation. See? Ideology over evidence.

[55CrushEm]

Actually even with the cherry picked line it would still be true. California would do just fine on it's own and most likely much better

How do you figure?

[baja]

How do you figure?

California is one of the few states that could stand alone as a country just fine.

Pacific rim ports

Huge agriculture exports

Great universities

Diverse raw materials

Huge tourism in place

Seventh largest economy in the world today.

[baja]

Oh I forgot California pays more to the federal government than the federal government ships back.

[Arkie]

The Decleration states we have a right to remove a gov't that doesn't suit the needs of the people.

and if that doesn't work, we go to plan B

"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."
-- Thomas Jefferson

[mhgaffney]

That's an interesting spin, but as usual, self-defeating.

Instead of acknowledging what fq'ups they are and moving to fix the problem, simple point randomely and say, "There's the bad guy! It's those evil bankers, Repubs, insert excuse here that we've been telling you about." And the problem not only remains unsolved, but continues to get worse while wasting time/effort on a red herring.

Good for the 'now', terrible for the society and future. How very socialist.

You are naive about how evil the banksters are. Enron was just another face on the same many headed hydra.

Check out Mike Whitney's latest. They are doing it to us - - again.
MHG

The Waltz of the Zombie Banks

By Mike Whitney

May 21, 2012 "Information Clearing House" -- It’s the same everywhere. The banks are keeping houses off the market to trick people into believing that prices have hit bottom. But prices haven’t hit bottom, in fact, they still have a long way to go. So, what’s going on here; what do the banks hope to gain by withholding supply? Here’s a clip from an article in OCHousing News that helps to explain:

“Lenders hope they can solve all their problems by making the housing market hit bottom. If prices bottom, people who bought at the bottom gain equity with rising prices, and they in turn reignite the move-up market which will allow the banks to sell their high-end shadow inventory. Further, rising prices makes for fewer short sales and fewer foreclosures and distressed sellers become equity sales. Rising prices would be a panacea for lenders, which is why the full weight of our government and the federal reserve is working to make house prices go back up. …. they hope they can create an artificial bottom and momentum to carry them through the liquidation of their distressed inventory.” (“11.8% of all loans at least 30 days past due or in foreclosure”, OCHousing News)

Bingo. The banks want to make it appear as though prices have stabilized, because, once they stabilize, then potential buyers will emerge from their bunkers and go on another spending spree. That, in turn, will allow the banks to offload more of their distressed properties at minimal cost. That’s why they’re withholding supply, because it increases demand and buoys prices. But, keep in mind, that “existing inventory” only represents a small portion of the total number of homes that will eventually need to be sold, so analysts who make their calculations based on that number are grossly understating the size of the problem.

Presently, inventory levels are nearly back to normal at roughly 2.37 million units. But what about the vast shadow inventory of distressed properties? Depending on the analyst, that sum is somewhere between 6 to 11 million units. What effect will that have on prices?

Well, if we apply normal supply-demand dynamics, then prices will go down sharply.

Now take a look at this housing graphic and pay special attention to the shadow inventory chart.

As the graph indicates, the current real estate meltdown is worse than during the Great Depression; 3 million foreclosures in 2010 alone, 8 million Americans are presently delinquent on their mortgages, and sales have dropped 80% from 2005 to 2011. It’s a disaster, and it was entirely engineered by the banks and their enablers in Washington. Now the banks are onto their next swindle, faking the numbers to put a floor under prices. They plan to achieve their goal by releasing homes in dribs and drabs so the market never fully-clears, so homeowners are never able to rebuild their equity, and so the 6-year long crisis drags on to eternity. That’s what these zombie institutions are up to. Here’s a clip from Bloomberg:

“In the Miami area, March listings declined 34 percent from a year earlier and prices rose for the fourth straight month, with condos jumping 46 percent and single-family homes gaining 13 percent, according to the Miami Association of Realtors….

The share of home loans in the foreclosure process increased to 4.39 percent in the first quarter from 4.38 percent in the previous three months, indicating that lenders are limiting repossessions, according to the Mortgage Bankers Association data released yesterday….

“Lenders are proceeding with caution and want to avoid risk,” Blomquist said. “They’re not in a rush to foreclose right away.” (“Foreclosures Plunge to Five-Year Low in U.S.: Mortgages”, Bloomberg)

Of course, there’s no “rush to foreclose right away.” That’s the plan, isn’t it; to manipulate the market by controlling supply? Get a load of this article in The Republic:

“More than 80 percent of the repossessed homes in the Portland area are off the market, The Oregonian newspaper reports …..at least part of the delay is likely a bookkeeping maneuver because the repossessed homes haven’t been marked down to their new market value….Another reason to delay selling the backlog is because home prices might crumble if a wave of properties hits the market at the same time.” (“Portland-area lenders slow to release shadow housing inventory”, The Republic)

“More than 80 percent …are off the market.” How do you like them apples? This is such a brazen ripoff, it’s almost laughable! And the banks are pulling the same swindle in Phoenix according to Abigail Field over at Firedog Lake. Here’s a blurb from her article:

“Phoenix: RealtyTrac identifies 6,611 “bank-owned” properties there. An Arizona realty website lists only 275 for sale.” (“Bankers Are Still Wrecking Housing Market Fundamentals”, Abigail Field, Firedog Lake)

Repeat: There are 6,600 distressed homes that should be “for sale” in Phoenix alone, but less than 300 of them are actually on the market.

Why? Because the banks are trying to pull the wool over everyone’s eyes, that’s why.

And there’s more, too. The banks have been keeping these mortgages on their books at artificially high prices (to hoodwink their shareholders) This creates a problem for them when they want to sell the property because, when the sale is finalised, then the bank has to write down the loss. Now that might not seem like a big deal when you’re talking about 2 or 3 houses, but when you’re buried under millions of overpriced mortgages, then you’ve got big problem. In fact, if the banks were to dump all their excess inventory on the market right now, they’d be busted, no doubt about it. So, they’re not going to do that, right? Instead, they’re going to drag this thing out until Resurrection Day.

Did you know that it takes 31 months for a loan to be liquidated once it becomes 60 days delinquent?

31 months for chrissakes. Now, you tell me, if Mr. Dipstick Bankster really wanted to evict your sorry ass faster than 31 months, don’t you think he’d be able to do it?

You bet, he would. After all, the banks own the government, the courts, the cops, the whole shooting match. If they really wanted to boot you out of your home, they could do it without lifting a finger. But, they don’t want to do that, because they need some poor schmuck to cut the lawn, and fix the roof, and flush the toilet. That’s why they’re letting millions of people stay in their homes for free, because they need “live in” janitors to keep the property up while they whittle away at their stinkpile of homes. But, once they get that backlog down to a manageable size, then “Watch Out”, because you’ll be out-on-your-ear!

Do you have any idea of how much it costs the banks to keep people in their homes who aren’t currently making payments?

$60 billion a year, 5 percent of GDP. That ain’t chump change either, but what choice do they have?

None. They have no choice at all, not unless they want to see the walls punched in, the plumbing stripped out, and the shrubbery growing up around the rooftop, because that’s what happens when houses are abandoned for a year or two; they deteriorate into a heaping pile of crap.

Now check this out from CNBC:

“Foreclosure activity in April fell nationally to the lowest level since the summer of 2007…. Foreclosure filings, which include default notices, scheduled auctions and bank repossessions, fell 5 percent in April from March, according to a new report from RealtyTrac, and are down 14 percent from April of 2011.” (“Foreclosure activity in April fell nationally to the lowest level since the summer of 2007″, CNBC)

Remember when everyone predicted that foreclosure filings were going to surge after the robo signing deal was wrapped up? It didn’t happen, did it?

You know why? Because the banks figured out how to sock-it-to John Q. Public one more time by fiddling housing inventory to draw more buyers into their mortgage snare.

This is from an article in the Wall Street Journal:

“… Although banks initiated fewer foreclosures in the first quarter than at any time since 2007, the share of loans in the process remains high…. The national foreclosure rate remains elevated largely because of states that require banks to process foreclosures through the courts. In these so-called judicial states, banks have moved to take back homes very slowly since judges uncovered record-keeping abuses in foreclosure processing 18 months ago. Banks have encountered fewer hurdles in nonjudicial states….(“Foreclosures Show No Sign of Decline”, WSJ)

Don’t get hung up in the “judicial-non judicial” BS. It’s all just smokes and mirrors. What difference does it make?

We already know that 12 million people are underwater RIGHT NOW. Nearly 24 percent of all homeowners owe more on their mortgage than their house is worth. A lot of these people are just going to throw in the towel and vamoose; what do they care? That’s going to add millions more homes to the already-bulging backlog. But even if it didn’t, the humongous overhang that already exists would still be enough to drive prices down another 10 or 15 percent. In fact, the WSJ reluctantly intimates this further along in the same article. Here’s the clip:

“While there are signs that home prices are beginning to rise in more markets, including hard-hit Phoenix and Miami, those communities with a large “shadow” inventory of potential foreclosures could face renewed price pressure once banks take back and list for sale more of those properties.”

Huh? So after all that rigmarole about “judicial-non judicial” the WSJ finally admits the truth; that once the banks “list ..more of the properties” that they’re holding onto, then prices are going to take a nosedive. Why didn’t they just say-so to begin with?

So, the question is: When are the banks going to put more of their distressed inventory on the market?

Answer: Who knows? That’s the advantage of owning the government outright; there’s no pressure to do anything. The banks can take their own sweet-time and drag this depression out for ever. And, that’s probably what they’ll do, too.

Mike Whitney lives in Washington state. - He can be reached at fergiewhitney@msn.com.

[cutthemdown]

California is one of the few states that could stand alone as a country just fine.

Pacific rim ports

Huge agriculture exports

Great universities

Diverse raw materials

Huge tourism in place

Seventh largest economy in the world today.

If Calif seriously tried to do that the federal govt would attack. No doubt they would probably over any state who revolted, but Calif way to important. Especially if Oregon and Washington came with us. There would be no more west coast ports and you would lose what, some crazy % of your agricultural base. Calif does ship money to the donor states though. You are right about that. While people on the board are bagging on Calif, they have be living off our money for yrs. I think only about 15 states give more to the feds then the feds give back. Calif, Fl, Tx 3 of the big ones. NY also I would guess.

[baja]

If Calif seriously tried to do that the federal govt would attack. No doubt they would probably over any state who revolted, but Calif way to important. Especially if Oregon and Washington came with us. There would be no more west coast ports and you would lose what, some crazy % of your agricultural base. Calif does ship money to the donor states though. You are right about that. While people on the board are bagging on Calif, they have be living off our money for yrs. I think only about 15 states give more to the feds then the feds give back. Calif, Fl, Tx 3 of the big ones. NY also I would guess.

WTF I was right about everything I said in that post.

California would do better as a stand alone country closely allied with the USA


...and of course the federal government would not permit that but my post was to someone that thought it ridiculous the idea of California a stand alone country not rather it would be allowed or not.

[BroncoBeavis]

It certainly seems to prove the progressive contention that government should use its power to protect the American people from the rapaciousness of greedy corporations through the use of its proper regulatory powers, doesn't it? If the last thirty years hasn't proved that, what possibly could?

And yet, one of the main platforms of Romney and the Republicans is the call for more deregulation. See? Ideology over evidence.

The way I see it, an influential government regulator set aside both the letter and spirit of the law when he allowed Enron to engage in the kind of shady dealing that led to unprecedented securities fraud.

And yet your answer to the problem is that we need more government regulations. None of it will matter until regulators themselves are held accountable.

[Boomhauer]

We did get screwed by Enron. Then Arnold did nothing about it. Not sure that was all a repub conspricy though.
You are naive about how evil the banksters are. Enron was just another face on the same many headed hydra.

And what would both of say about Cali already being in such dire straights that they had to turn to ponzy schemes, in that case Enron, or even the Devil itself (antichrist + great whore?) to keep their heads temporarily above water? Even their current budget tactics - accounting gimicks to push back payment while charging more to meet upcoming bills - is a ponzy scheme used by a fataly flawed system beyond any point of salvage. Just like Greece.

[El Minion]

So preventing new taxes at the national level is a brilliant conservative idea, but preventing new taxes at the state level is an idiotic liberal idea, eh?

:rofl:

California outperforms U.S., adding 33,900 jobs in May (http://www.latimes.com/business/money/la-fi-cal-jobs-unemployment-reaction-20120615,0,3814932.story)

http://www.trbimg.com/img-4fdb5183/turbine/la-fi-cal-jobs-unemployment-reaction-20120615-001/600
Maria Wilt, center, talks to a recruiter Wednesday at a job fair expo in Anaheim. The state's unemployment rate dipped to 10.8% in May as employers added 33,900 jobs. (Jae C. Hong/Associated Press / June 15, 2012)

By Ricardo Lopez

June 15, 2012, 11:55 a.m.

A correction has been added to this post. See below for details.

California's labor market outperformed the U.S. in May, reviving hopes that the recovery will strengthen as the summer tourism season kicks into high gear.

Employers added 33,900 jobs to payrolls last month, according to data released Friday by the Employment Development Department That’s the largest monthly gain since September 2011, adding jobs in the last 10 months. The gains helped push down the state unemployment rate to 10.8% in May from 10.9% in April.

[For the record, June 15, 1:38 p.m.: An earlier version of this post said the state has added jobs in nine of the last 10 months. April’s job numbers, however, were revised upward showing a gain of 1,300 jobs. May is the 10th straight month of job growth.]

The strong job gains surprised economists after a dismal federal jobs report showed the U.S. created only 69,000 total jobs last month.

"Given what happened at the national level, this is a really impressive number for California," said Esmael Adibi, director of Chapman University's A. Gary Anderson Center for Economic Research. "California was underperforming the U.S. since the recession…[and] is now in 'catch-up' mode. When you do down so deep, you come back stronger."

Eight sectors posted job gains led by leisure and hospitality, with 13,200 jobs added. Professional and business services and educational and health services also showed solid gains, adding 10,500 each.

Three categories lost jobs, however. The biggest losses were in the government sector, which shed 3,300 jobs in May, followed by trade, transportation and utilities; and other services.

Over the past 12 months, California has added 221,500 jobs, a gain of 1.6%.

Strong job growth in the leisure and hospitality sector suggests consumers are once again spending, Adibi said.

“Consumers were very depressed during the recession. Now they’re satisfying their pent-up demand,” he said. “Once you gain a little confidence, people will buy a car, eat out, make a trip.”

Adibi, however, cautioned that he expects the labor force to swell this summer as college graduates enter the job market. And Friday's job report is likely to reinvigorate discouraged workers.

"If the job creation is not very strong in the summer, you’ll see an uptick in the unemployment rate," he said.

Economists are also worried about California's budget woes. State legislators are scrambling to pass a budget to meet a constitutional deadline.

Stephen Levy, a senior economist with the Center for the Continuing Study of the California Economy, said Friday's report was encouraging.

"You don’t want to make a huge deal, but it is a good month," Levy said.

Los Angeles County's unemployment rate fell to 11.4% from 11.6%, adding 8,000 jobs in May. The leisure and hospitality sector performed the strongest, adding 9,100 jobs, mainly in accommodation and food services.

Orange County added almost 6,000 jobs in May, 3,400 of them in leisure and hospitality as employers ramped up payrolls in anticipation of the summer tourism season. On Friday, Disney’s California Adventure theme park in Anaheim opened its $1.1 billion 12-acre expansion dubbed "Cars Land" to much fanfare, with people lining up the night before to enter the theme park.

The Inland Empire also saw job gains; employers added 3,100 jobs to their payrolls, mainly in wholesale trade.