Schwarzenegger May Be Lifting the Heaviest Weight of His Life: The Burgeoning Deficit of California!
Schwarzenegger May Be Lifting the Heaviest Weight of His Life: The Burgeoning Deficit of California!
This $1.8 trillion dollar economy is the eighth largest economy in the world. Its economy literally rivals the size of Italy or France. There are 36.5 million people there which make it home to 1 out of every 8 Americans. So this place is massive by any metric. However, it’s “not too big to fail”.
In fact, Governor Schwarzenegger has declared in last month’s speech that “California is in a state of emergency”. He went on to say that “this deficit is a rock upon our chest and we cannot breathe until we get it off.”
Aid to students and to the poor delayed? And tax refunds delayed?!?
These are very sobering words. In fact, the state Controller John Chiang has warned the state that the state could run out of cash as early as next week!
You’ve seen the signs that say “California or bust”. A new one might be “California going bust”.
There are already some payments that he may have to defer due to the lack of cash in the state’s coffers. Chiang has already imposed a delay on tax refunds and has threatened to stop paying some bills.
Even worse…aid to students and to the poor could be halted and some state offices may reduce their hours.
Even Moody’s warned of a possible downgrade of the state’s credit rating. If this happens, it would make it even more difficult for them to borrow and it would make whatever borrowing they could get much more expensive.
So how bad is it? The state’s deficit is growing at around $29,000 a minute or around $500 a second. So, the “deficit clock” outside of the governor’s office is whirling at a mind boggling rate.
The governor has been battling it out with their legislature because it is the only state that takes a 2/3 vote to pass a budget. This requirement has hampered his ability to get new sources of revenue approved as well as cuts implemented.
(If they don’t get something worked out soon, their whole state government may be the “girly men”!)
The former body builder has proposed a wide range of spending cuts and tax increases to help to bring the deficit down from: a three year increase in the state’s sales tax to an alcoholic beverage tax of 5 cents a drink, to taxes on auto repairs and on golf games (which have remained free from taxes up until now).
In all, he’s proposing 17 billion dollars in spending cuts, 14 billion dollars in additional revenue and 10 billion dollars in borrowed money to bridge the gap. The deficit is anticipated to balloon out to $40 billion over the next year and a half.
So the “2/3rds rule” delay has caused them to not be able to raise enough cash before the recession hit. Also, the housing crisis hit the state much harder than many states and so it will probably come out of its recession much later than that of the overall nation. This “housing crisis” has caused depletion of tax revenues.
I think this example of what is going on in California shows what could happen to the entire nation if things aren’t dealt with soon.
So here’s what could “profit” and “plummet” in this type of an environment!
This outlook keeps a dark cloud over the nation which has continued to hinder stocks and “at best” keep them in a locked trading range presently.
It’s times like these when there’s no wonder why gold jumped from $853 last week when I wrote on it up to $ 920 today. I think this gloomy economic outlook could help gold soar even higher and eventually take the U.S. dollar much lower.
Sean Hyman
Schwarzenegger May Be Lifting the Heaviest Weight of His Life The Burgeoning Deficit of California - To learn more about this author, visit Sean Hyman's Website.
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California…ah the land of Hollywood, Silicon Valley, wine and cheese…what an American story right? Well, they’d better do something and quick, if they want the story to have a happy ending!
This $1.8 trillion dollar economy is the eighth largest economy in the world. Its economy literally rivals the size of Italy or France. There are 36.5 million people there which make it home to 1 out of every 8 Americans. So this place is massive by any metric. However, it’s “not too big to fail”.
In fact, Governor Schwarzenegger has declared in last month’s speech that “California is in a state of emergency”. He went on to say that “this deficit is a rock upon our chest and we cannot breathe until we get it off.”
Aid to students and to the poor delayed? And tax refunds delayed?!?
These are very sobering words. In fact, the state Controller John Chiang has warned the state that the state could run out of cash as early as next week!
You’ve seen the signs that say “California or bust”. A new one might be “California going bust”.
There are already some payments that he may have to defer due to the lack of cash in the state’s coffers. Chiang has already imposed a delay on tax refunds and has threatened to stop paying some bills.
Even worse…aid to students and to the poor could be halted and some state offices may reduce their hours.
Even Moody’s warned of a possible downgrade of the state’s credit rating. If this happens, it would make it even more difficult for them to borrow and it would make whatever borrowing they could get much more expensive.
So how bad is it? The state’s deficit is growing at around $29,000 a minute or around $500 a second. So, the “deficit clock” outside of the governor’s office is whirling at a mind boggling rate.
The governor has been battling it out with their legislature because it is the only state that takes a 2/3 vote to pass a budget. This requirement has hampered his ability to get new sources of revenue approved as well as cuts implemented.
(If they don’t get something worked out soon, their whole state government may be the “girly men”!)
The former body builder has proposed a wide range of spending cuts and tax increases to help to bring the deficit down from: a three year increase in the state’s sales tax to an alcoholic beverage tax of 5 cents a drink, to taxes on auto repairs and on golf games (which have remained free from taxes up until now).
In all, he’s proposing 17 billion dollars in spending cuts, 14 billion dollars in additional revenue and 10 billion dollars in borrowed money to bridge the gap. The deficit is anticipated to balloon out to $40 billion over the next year and a half.
So the “2/3rds rule” delay has caused them to not be able to raise enough cash before the recession hit. Also, the housing crisis hit the state much harder than many states and so it will probably come out of its recession much later than that of the overall nation. This “housing crisis” has caused depletion of tax revenues.
I think this example of what is going on in California shows what could happen to the entire nation if things aren’t dealt with soon.
So here’s what could “profit” and “plummet” in this type of an environment!
This outlook keeps a dark cloud over the nation which has continued to hinder stocks and “at best” keep them in a locked trading range presently.
It’s times like these when there’s no wonder why gold jumped from $853 last week when I wrote on it up to $ 920 today. I think this gloomy economic outlook could help gold soar even higher and eventually take the U.S. dollar much lower.
Sean Hyman
Schwarzenegger May Be Lifting the Heaviest Weight of His Life The Burgeoning Deficit of California - To learn more about this author, visit Sean Hyman's Website.
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Cheryl MatthynssensCheryl is a life skills coach, licensed Chemical Dependency Counselor and a 20 year entrepreneur. Cheryl's dedication to achieving a life of balance led to her expanding her teaching from the simple managing of life's daily challenges to adding financial well being as well. A direct marketer with DrinkACT, she is gaining ground in the online community with her concepts of making sure business owners, entreprenuers and employees have well rounded life styles. She opened up a small affiliate site - The Balance Guide- to help others find resources for mental and emotional well being. Visit Cheryl's blog to see more of the diversity beyond business she has began offering online at www.thebalanceguide.blogspot.com - Visit Cheryl Matthynssens's Website |
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Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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