California Reaches Depression Era Status!

California’s Bond Default Will Signify US Depression of 2009 Is Here

California has 38 million people, a GDP of $1.8 trillion, and economy larger that India, Canada, Russia or Brazil and its economy is collapsing.  The California unemployment rate has surged to 11.5 percent, the worst since World War II.

Lawmakers are scrambling to close the $24 billion gap after voters rejected ballot measures last month that would have increased taxes, borrowed money and reapportioned state funds.

But Governor Schwarzenegger has vowed to veto any budget that includes new taxes, setting the stage for an ugly battle as the clock ticks toward the deadline.Now  after voters rejected ballot measures last month that would have increased taxes, borrowed money and reapportioned state funds, legislators are still trying to increase taxes and borrow money.

Governor Schwarzenegger has vowed to veto any budget that includes new taxes, setting the stage for an ugly battle as the clock ticks toward the budget deadline.

Last month, California lost 68,900 jobs, a total of approximately 740,000 in the past 12 months, and even with national job losses slowing layoffs will continue through 2010 and average unemployment is predicted to reach 12.1 percent some predict the jobless rate to reach 15 percent.  Those part time workers who have given up looking could reach 25 percent reaching levels not seen since the Great Depression.

Due to California’s immense debt, its bond rating is likely to fall below the minimal level legally required for most money market funds, forcing financial institutions to dump California paper and as the States cash situation deteriorates to the point where the controller will have to delay payments, the State could face a double down grade, so said Moody’s rating service.

State legislators still haven’t gotten the message.  The liberal’s in control of the assembly and senate are still talking borrowing and tax increases and can’t bear to see their sacred financial cows lose funding.  Even as the school systems in some areas have to drop teachers while students who can’t speak english will not have special assistance, education seems to be hardest hit, most significantly from the illegal immigrant population that sends money to mother Mexico, while California taxpayers pay for their health care and unemployment benefits.

The obvious question is will the arrogance to State officials, similar to GM’s executives think that they are too big to fail?

The probability is very high that California will default on its bond obligations, which is why Governor Schwarzenegger was recently in Washington with his tin cup asking to have the Federal Government guarantee its bonds.  The Fed’s have their own financial problems and bond rating to worry about so the answer from Washington was “NO!.”

Moody’s is set for a double downgrade of California bonds.  California State legislators are not getting real on the budget making a default inevitable, which will set off a chain reaction of defaults throughout the bond market.  This will cause the rest of the US economy to slowly implode. California’s economy will be first depression domino to fall followed by twelve other liberal states in dire financial straits that have allowed their social spending to get out of hand over the years as has the Golden State.

The real question is can the bond market in process of recovery handle this shock nationwide.  Considering the massive borrowing by the Obama Administration on absurd billion dollar pork barrel projects such as wind energy, green automobiles, and 9000 earmarks to name a few, ever come back to earth when nationalizing health care in the name of saving money for Americans is the next financial straw to throw upon the camels (taxpayers) back.

Will other nations continue to buy American debt as its states begin to default on their debt?  As unemployment continues to slowly rise will the federal government past the first national sales tax to keep foreign investors interested in purchasing US debt as it’s bond rating begins to falter?

What has the federal government ever run efficiently? What federal jobs are being furloughed?   How can the federal government continue to acquire private businesses and then operate them at a loss?

The Obama administration’s reckless handling of the downward economic spiral blaming Bush is losing its appeal.  The liberal answer of government spending its way to recovery is beginning to be recognized by the American people as a Marxist-fascist fantasy.  Accordingly, Comrade President Obama’s approval rating drops below 60 percent for the first time as Americans begin to wake up to their fate, just ten months before the April tax bills hit.