Tuesday, June 2, 2009

The Inevitable California Bailout

Peter Schiff makes the case that California should be refused a bailout:

California, like many states, expended its bureaucracy as the nation’s bubble economy inflated. When condos flipped like hamburgers and homeowners flush with equity spent like lottery winners, extra tax revenue flooded into Sacramento. However, instead of saving the money for a rainy day or paying off prior debts, the state government simply ballooned its spending. Now that the bubble has burst, and revenues are severely depleted, it is time for California to reconsider its excesses.

Governor Schwarzenegger’s claim that a federal guarantee is not a bailout is ludicrous. No one in the private sector will lend California any money because the state can’t pay it back. Just like AIG and GM, it needs federal help to stay solvent. And although the Federal balance sheet is in far worse shape than California’s, there is one crucial difference: Washington has a printing press, and Sacramento does not. With the ability to pay off debts with newly created funds, a federal default is not a concern.

However, if Obama comes to the rescue, none of the needed cuts will be made. Instead, California will continue to operate its bloated bureaucracy and will be in constant need of more bailouts. In other words, if Schwarzenegger gets his bailout, look for him to utter his famous line – “I’ll be back.”
But hey, Arnie can be proud of his "green initiatives." What a joke.

You know he'll get the money. I'm finding it very grating to follow the news these days.

Hat Tip: Pat

UPDATE: Not a bad quip from Conan O'Brien about his new show debut
After all those months of breathless network preparation, the program began with a semi-monologue in which O'Brien poked fun at himself. He said he's doing a show on the last-place network and has moved to a bankrupt state to do a show that was sponsored by General Motors.


  1. You have to wonder, first the mighty GM goes bankrupt. Next the biggest State California, is getting ready for bankruptcy. Can the USA itself, be that far from bankruptcy?

  2. The problem of course people have it ingrained in their minds that it doesn't matter, they will be saved. GM and Cali are bankrupt: So what? GM and Cali still seem to be functioning, workers get their pensions. You can always get a bailout. It's nothing more than a wise crack on a late night show.