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.

Total Recall: Arnie Needs to Go

In 2003 Gray Davis was subject to a "recall" and was forced out of office. Why? Because of his poor handling of California state finances. That was peanuts compared to the situation Govenor Schwarzenegger is in and the looming disaster:

After negotiating nonstop from Saturday afternoon until late Sunday night on a series of budget bills that would have closed a projected $41 billion deficit, state lawmakers failed to get enough votes to close the deal and adjourned. They returned to the capital late Monday morning only to adjourn until the afternoon, though it was far from clear whether they would be able to reach a deal.

California has also lost access to much of the credit markets, nearly unheard of among state municipal bond issuers. Recently, Standard & Poor’s downgraded the state’s bond rating to the lowest in the nation.

California’s woes will almost certainly leave a jagged fiscal scar on the nation’s most populous state, an outgrowth of the financial triptych of above-average unemployment, high foreclosure rates and plummeting tax revenues, and the state’s unusual budgeting practices.

It's only a matter of time before they beg for a bailout.

It brings to mind when he shot Sharon Stone, playing his wife, in Total Recall: Consider that a divorce.

"Green Collar Jobs" Myth Exposed in California

The Wall Street Journal had a great article on Saturday about how the Kindergarten Cop brought in tough environmental measures to California and it's hurting the economy. (read)

Gov. Arnold Schwarzenegger was all smiles in 2006 when he signed into law the toughest anti-global-warming regulations of any state. Mr. Schwarzenegger and his green supporters boasted that the regulations would steer California into a prosperous era of green jobs, renewable energy, and technological leadership. Instead, since 2007 -- in anticipation of the new mandates -- California has led the nation in job losses.

The regulations created a cap-and-trade system, similar to proposed federal global-warming measures, by limiting the CO2 that utilities, trucking companies and other businesses can emit, and imposed steep new taxes on companies that exceed the caps. Since energy is an input in everything that's produced, this will raise the cost of production inside California's borders.

(...)

The green lobby has lectured us for years that global warming is all about the sanctity of science. Those who question the "scientific consensus" on catastrophic atmospheric changes are belittled as "deniers." Now, in assessing the costs, the greens readily cook the books and throw good science out the window. "To most of the most strident supporters of this legislation," says Mr. Niello, "the economic costs don't really matter anyway, because we are supposedly facing an environmental apocalypse."

Mr. Schwarzenegger fits into that camp. He recently declared: "I recommend very strongly that we move forward . . . . You will always have people saying this will lose jobs."

Meanwhile, the state is losing jobs, a lot of them. California's unemployment rate hit 9.3% in December, up from 4.9% in December 2006...

Expensive regulation comes in, and businesses move out. Supposedly, Arnie was a free marketer and you would have thought he could forsee this. Sir, you are no Ronald Reagan.

Schwarzenegger a Bust in California

California tax refunds to be delayed starting Feb. 1

Controller John Chiang said Friday he must delay $3.7 billion in payments next month because lawmakers have failed to address California's growing deficit.

With a $41.6 billion shortfall over the next year-and-a-half, the state is on the brink of issuing IOUs.

Wow! Can you imagine if you're expecting a return, how you'd feel about that? It's not all Arnie's fault, but he never addressed California's growing bankruptcy seriously. They have great anti-smoking and environmental laws though.

I can't think of a nicer place in the world to live and it's going to ruin. It looks like a default is on the way.

I know he was a success in movies and all that, but I've never seen an interview with him where I didn't roll my eyes. His governorship seemed like a joke and it looks like it is.

Touching Thanksgiving Message From the Governor of California

I love Thanksgiving turkey. It's the only time in Los Angeles that you see natural breasts.

-Arnold Schwarzenegger