
California Finds Economic Gloom Starting to Lift - 001sky
http://www.nytimes.com/2012/11/28/us/california-shows-signs-of-resurgence.html
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w1ntermute
Watch as the Democrats (now dominating the State Legislature) take all the
credit for this.

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mikeryan
Now dominating the state legislature?

The Dems have dominated the state legislature since 1959 except for 69 to 71
when the Republicans took control of both houses and a brief period from 94-96
when the Republicans controlled the Assembly.

The Democrats can pretty much take credit for everything good and bad.

~~~
nhebb
What he probably means is that California requires a supermajority to raise
taxes. After the last election, the Democrats have that in both houses now.

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daniel-cussen
I found Romney's comparison of California to Greece mostly fair. Saying that
California is like a balmy Mediterranean country with a rich culture and
history is not pejorative. That it has giant public sector workforces and
fiscal problems is perhaps a pejorative comparison, but one that is avowed by
the color of the ink on California's balance sheet.

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anigbrowl
That claim of Romney's was one of the most annoying things in the campaign,
because he is smart and educated enough to know it's bullshit. If California
is so awful, why did he move back to his home in La Jolla? Greece wishes it
had California's economy. Don't fall for such empty soundbites, the comparison
doesn't stand up to even shallow analysis.

~~~
daniel-cussen
First, a 6x difference of GDP points out that they're in the same range of
size. Further, it has about a third of the population of California, making
its people about half as wealthy. Ballpark confirmed.

Now on to debt: Greece owes some money. It's a nation. California owes some
money; it's a state. And, the US owes money. If California were to serve in
full its debt, and arrange that it no longer had to incur debt to pay its
employees, or raise greater taxes to do so, I would say it became solvent--
however, if the day after the United States Treasury defaulted on its multi-
trillion dollar debt, California would find itself in trouble all the same.
So, really, California also owes a share of the US government debt.

Is the similarity enough for California to emulate Greece should the latter
emerge triumphant from this shitstorm? I don't know. But it's enough for a
metaphor about the current problem.

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pyoung
I think it is a stretch to say that a country that is half as wealthy as CA is
in the same ballpark. To flip this around, if you made half of my salary, I
would not say that your salary is in the same ballpark as mine.

I like your point on US debt, but the US is in a unique position in that it
can print money if needed. Because the odds of a default are so
infinitesimally small, I don't think it warrants any discussion when
considering the fate of CA's financial issues.

Greece is in trouble because it entered the EU, lost control of it's currency,
and as a consequence, cannot attempt to use inflation to minimize their debt.
To make matters worse, their economy is a train wreck (professional guilds,
rampant tax dodging, heavy reliance on government programs) making growth in
the face of austerity nearly impossible. CA has neither of these problems (A
dynamic, innovative economy and a strong federal government to rely on for
assistance (as compared to the relatively weak-willed EU)).

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daniel-cussen
In parts:

The size of the ballpark depends on the ball game. As far as heights, if yours
were half of mine we would not be playing in the same league, let alone in the
same ballpark at the same time. But wealth's utility falls off very quickly
(cf. log-utility), and to this day Greece is a member of the OECD.

Greek is in trouble. There's no denying that. California, not so _much_. Still
in some. But the worst may have passed already, because it's better grounded:
on sovereign US soil, that strong federal government you mentioned. It's a
state in a good federation, whereas Greece is in a bad (weak-willed = opt-in)
federation.

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aresant
The housing & job reports feel right and are welcome news.

But did the NYTimes just point to California's current budget as a sign of our
State's "economic stability"?

They quote that the "California Legislative Analyst’s Office projecting . . .
. [that] California might post a $1 billion surplus in 2014"

That is such an irresponsible thing to publish - a "surplus" makes it sound
like the government is totally on top of the situation here and a model for
success.

The reality is that CA would be going off the @!@W$! rails right now in 2012
if voters hadn't just passed Prop 30.

Prop 30 was an EMERGENCY, retroactive (from Jan 1 2012), and "short-term" (7
year) tax on high income earners + a moderate increase in sales tax which is
going to raise $6B a YEAR to pull CA's ass out of the fire.

So while the gloom may be lifting, I remain pessimistic that our state gov't
has any long-term solutions to their continued budgetary missteps.

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dreamdu5t
A surplus of $1 billion means nothing for California's $100+ billion in debt
and unfunded liabilities. We would need a billion surplus every year for
hundreds of years.

[http://www.nytimes.com/2012/09/21/us/california-debt-
higher-...](http://www.nytimes.com/2012/09/21/us/california-debt-higher-than-
earlier-estimates.html)
[http://www.usgovernmentspending.com/california_state_spendin...](http://www.usgovernmentspending.com/california_state_spending.html)

~~~
jfoutz
Well, I don't know California's interest rate on those loans, but if it's
lower than inflation, you'll inevitably win. Also, if the economy keeps
growing, 100 billion in a hundred years will be a lot easier to come up with
than it is today. Think of Dr Evil asking for 1 million dollars.

 _edit_

Just looked it up. Just shy of a 2 trillion dollar Gross State Product? 100
billion is a big number, but 5% debt is not that bad. (the state) Going into
debt during the good times is stupid, going into debt in recession is probably
smart.

~~~
adventured
Not to mention that debt interest is taking up twice as much of the general
fund as a decade ago.

"California's current debt burden is 7.8 percent of the state's general fund
budget of $88.5 billion for the current fiscal year that ends in June 2012.
That 7.8 percent is more than double the 3.4 percent of fiscal 2003-04."

[http://www.ocregister.com/articles/debt-320389-interest-
stat...](http://www.ocregister.com/articles/debt-320389-interest-state.html)

~~~
muzz
Yes indeed California racked up a lot of debt from 2003 to 2012.

However, with the decreasing shortfalls and expected balanced budgets that
debt is no longer increasing and with the projected surpluses it can be paid
down.

The debt is a legacy of the past. Great strides have been made in the past few
years to get the state's fiscal situation in order.

