John Dvorak’s Second Opinion: California needs to face the music, go bankrupt – MarketWatch — I normally do not self promote my MarketWatch column on the blog, but this one is apt.
California already has issued IOUs to employees, which were eventually refused by the banks and ironically refused by the state itself. The only real solution to save California from the inevitable actually is the inevitable: Declare bankruptcy, and reset the system.
What will then emerge will be as important as the process and recovery. We will finally get to see, as the saga unfolds, what we saw in the city of Vallejo, Calif., during its bankruptcy proceedings — a pattern of corruption, cronyism, abuse and the defrauding of the taxpaying public. City officials making more than $300,000 a year, firemen making more than $200,000, friends hiring friends.
Government work should be a refuge, not a gold mine.
Yep. Bankruptcy==the default result when government fails to manage. At least for any entity that can’t print money–or can’t print money that other’s will accept.
For those who can, the default result is inflation. Hoary Inflation. Same thing as bankruptcy with all “invested” entities getting cents on the dollar. All depends on how much of the countries wealth has been transferred to the wealthy.
Ha, ha. Yea, there are going to be some pissed off State Pensioners. All quite deserved. Extortionist Unions/Pandering Politicians.
How do I get off this planet?
Next stop, the United States government goes bankrupt. Oh, wait. They already are but they can just print more money. Never mind.
Welcome to the United States Banana Republic.
Yep. Another reason why I am leaving in three years. The well hidden corruption is particularly disturbing, John. Glad you posted here, so I can track your columns.
Well we can always sell off parts of the USA to the Chinese.
#4 Rick Cain
>> we can always sell off parts of the USA to the Chinese.
Well, last week a Chinese delegation dropped by the soon to be closed NUMMI auto plant to see if they want to buy it from Toyota.
And so the penetration of Chinese companies into America starts in earnest.
It’s so ironic… the Communists are coming to save the Capitalists. And you thought that we won the Cold War.
We’re already bankrupt, the only reason the CA Gov refuses to acknowledge it is because we keep printing monopoly money.
What really needs to happen is the Federal Government needs to declare us bankrupt. Then we can be freely given to China to settle all outstanding debts.
#5–Awake==the West did win the Cold War. Its the current economic war we are losing because as Kruschev said paraphrased is that the commies will bury us because our capitalist turncoats will sell us the rope to hang ourselves.
Yes, indeedy. America sold down the drain by the Free Market Capitalists.
Its not a popular subject on the bookshelves==economic warfare. No USA social policy is based on this reality.
Years from now we will claim we were “blind sided.”
Hah, hah. Dipshits.
“Government work should be a refuge, not a gold mine.”
I disagree.
Government work should be a privilege. Public service should be the goal of most of us, for the willingness to help your country and your fellow citizens. Government should NEVER be a refuge for the foolish or inable or a plum job that pays for moving to somewhere better. THAT is the problem with much of the government bureaucracy — they lost their way.
It’s too big to fail.
So that leaves… a big federal bail-out.
#10–Alfie ((((HEY ALFIE!!!!!))) === what lunacy is this?–bible based Econ 1A? Prerequiste: New Testament (KJV?)
“Main street was fine, unemployment low, people were buying…” /// Did the Devil make you say that, or is it a trap that only the Devil will agree with?
I think you are confusing your misguided faith with your misguided self image: you ain’t God. Just a coincidence, but a happy one, that I don’t believe either one of you.
As I understood it, sovereign entities can’t go bankrupt.
Just like Russia, the USA can also go bankrupt. We are not “too big to fail”.
your right john university avenue a pot hole heaven.
store are overpriced like adronicos
rent are troughs the roof im paying 950 for a studio
berkeley is only surviving because of the student.
California needs to legalize marijuana and tax it.
Hear is a picture of NYC shortly after legalizing marijuana:
When you are as crazed on spending as California I don’t think even the drug lords could foot the bill.
They are bankrupt but they are also running everyone that makes money the old fashioned way, earning it, out of state.
Then of course they just up and killed ag business in the valley by cutting off the water in the valley all to make life better for a minnow.
Who cares about humans and jobs? They certainly don’t.
well lets see, old acting governator arni should call up elfin magic house rep dennis “the menace” kucinich and old denny can tell ’em how to really go bankrupt.. (for those of you who dont remember, dennis was mayor of cleveland, oh when he drove the city into bankruptcy.)
OR!
just eliminate all those tax breaks that everyone in californiacation gets…
no need to raise taxes, just make sure no one gets a tax cut..
I hate California….
HOLLYWOOD!
Valley Girl Speak
Going to a formal party means you wear socks!
give me more, guys.
The amazing part of this story is that the democrats have had virtual complete more or less 2/3 majority control over this state for the last 10 years, and they still pop out the same answer; we need more taxes capitalism isn’t working.
I’m not saying that complete control with republicans would not have seen the same fate. They’re politicians, they’re corrupt too. The point is you can’t have one party rule and not expect corruption and sweetheart deals.
In the past couple of years a number of my employees left my company for jobs with the state. When I as an employer can’t compete with the state when you consider compensation and benefits packages, well then I’m sorry folks it’s OVER.
For example, Tracy Jarman (not to pick on her just to illustrate my point) the former San Diego fire chief retired this year at age 53. She was making $165,000/year and now in retirement makes $123,600/yr. That’s $10,300/mo for the next 30 or so years. She’s 53! She will make close to $4M in RETIREMENT not including health benefits. Much more than she made when she was working. This is just one little example in a sea of state and city employees.
The only way to renegotiate this stuff is to declare bankruptcy exactly like Vallejo did and hit the reset button. Good column John.
The state did not issue IOUs to employees. That has been ruled California issued IOUs to contractors and suppliers.
#21 said, “I have no expertise in this area…”
Then STFU!
What smittybc said in #19 makes way too much sense for anyone to pay attention. You mean California was run for years on end by Democrats and it failed? Michigan? Washington DC? This pattern can not be significant. I detect racism in this thread and I’m calling President Carter.
Governments never go bankrupt. They push others into bankruptcy. The state-sponsored looting is just to help a minority to survive the impending crash.
“And you thought that we won the Cold War.”
No, just like the Soviet Union, we’re collapsing _in part_ because of the expenses of it. It just took us a little longer.
I hope the Feds don’t bail them out the way that coward Gerald Ford bailed out New York.
personally i hope california breaks off the mainland and everyone drowns
Bankruptcy. It’s the American way.
California is simply too big. Splitting it into several smaller states would go a long way to solving this problem. Would never happen though, as it is now pretty much a democratic shoe it in the electoral college and in the Senate.
Comedy Central should have a show that does nothing but make fun of California 24/7. There so so much good material coming out of California, they could do this for decades. I guess the only problem is that after a week, it would be just be so pathetic that no one would be laughing anymore.
Even though there are plenty of suggestions for helping to fix this broken state (part time legislators, redistricting, limits on lobbyists, breaking California into smaller states, etc.), I think it is probably too late for any of these “solutions” to have a meaningful effect.
So other than a controlled bankruptcy restructuring (or whatever is the legal alternative is for a state) is there another solution?
John, AFAIK, States (or countries) cannot declare bankruptcy. They can tell their creditors to go f- themselves or they can raise taxes but they cannot declare bankruptcy.
Any state that would allow their infrastructure to be at risk from a company like Enron deserves what it gets.
I’m sure the tech companies could move to Phoenix, Las Vegas, Tucson, Portland, Seattle and/or Salt Lake City if they really needed to. Good luck Kalifornia, your going to need it.