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.
#38–Thomas==I think you are right. But telling all the creditors they will from this date forward get nothing is the functional equivalent.
So, will California ever tell their group of retirees that the state will not make good on their pensions? Seems like a disaster, but so does the current predicament. I can’t see the Feds stepping in.
I’ve always wondered why people in the Congo should pay off the debt created by Edi Amin and all similar scenarios. Of course, it is because countries like the USA say pay off your debt or we won’t loan you any more money or trade with you etc. So then it becomes “real politic.” I think more countries SHOULD tell all creditors that when they deal with dictators, they risk their entire investments. What a change that could make.
If a government that promised to delivered goods for taxes doesn’t deliver those goods, can the taxpayer stop paying?
CA is in a world of hurt. If they cut the social programs, it shows they were wrong, that a welfare state cannot survive.
If they raise taxes, the people will revolt. Of course, this will never happen because they need a majority to approve it.
Their one and only option is to cut the programs. Period.
It’s only bankruptcy if you have more responsibility than you have resources. Get rid of the programs and the responsibility falls back on the people to provide for themselves. Of course, this will be hard since they will still be taxed to their ears to pay for what is left.
Interesting times . . .
The unions are sucking California taxpayers dry. Time for bankruptcy so the rip-off contracts can be redone.
John, what a wonderful article. And exactly on target. The only ones wanting to continue to prop up california, and the parasites.
WASTE THEM.
Funny that unions are barely 6% of the USA workforce but somehow that tiny minority is “sucking taxpayers dry”.
Are you sure this isn’t why Schwarzenegger didn’t suddenly pull a 180 from stopping spending to giving the Dems everything they want?
He’s deliberately running the ship to ground to force the State into bankruptcy. It’s the only thing that makes sense considering how he had clear foresight when he originally ran for office about the problems to come.
iTS INTERESTING TO NOTE, THAT WHEN THE SWARTZ got the job, he BASICALLY said it was CRAP.
The WHOLE state was in for trouble.
The problems CAME as he tried to change things..
HE COULDNT.
There is only 1 way out…
“Government work should be a refuge, not a gold mine.”
You are 100% right! I met some 20 year old kid recently who wants to be a CHP officer because the starting pay is supposedly 70k a year. . .ironically, he also claimed to be a Ron Paul Republican. I then told him, it is incongruent to want to be a CHP officer and a Ron Paul Republican who advocates small government. And this kid claimed that the state of California has $300 billion in assets for the retirment fund of state employees. Meanwhile, the taxes are super high, the roads are bad, the school system is absolutely broken, and the health care system is being run over by welfare recipients and illegals, not too mention the worst gun laws in the entire country to control the masses. California is so foul on so many levels. . .I have no clue what to type anymore other than I lack the vocabulary without using profanity how upset I am with all forms of this most profane of blue Democrat states . . .