earendil31: (happy)
So California is in fiscal trouble AGAIN because of some archaic 1970's law that prohibits them from raising property taxes on held property.  So people that bought a giant mansion in 1972 are paying the same tax on it now as they were then, while someone that bought the 1 story bungalow next door three years ago is probably paying more than the mansion owner.  And no one wants to raise the taxes.  And everyone wants to keep all their services.  So the government is threatening to drop all kinds of social services like hospitals, police, fire, prisons, etc.

I think none of this will matter.  No one is going to link something like increased crime to a budget shortfall, because the vast majority of voters will not see any more crime.  There will be all kinds of terrible stories about people dying because the open hospital was too far away, neighborhoods that are under attack from teenagers run amok without police to crack down on them, wildfires that burn dozens of homes because fire departments didn't have resources to combat the flames.  And none of it will matter, because it doesn't affect enough people with enough visibility or enough obvious connection to the budget.  I think California is going to have to come up with some....creative alternatives for service cuts.  

They should close LAX for a day.

At first I thought they should close the freeways, but that might cause trouble for emergency services, and we don't want anyone to die to prove a political point.  But closing an airport?  That will save the state money in operations, can be Directly and Openly linked to the budget crisis, and will affect many many people (thousands of rich, even super rich people), with incredibly high visibility (forget national news, this would be an event with global impact).  And it won't cost anyone their lives.  Maximum chaos with minimum mortality!  Rich republicans that have missed their cruises, small business owners that have lost contracts, international CEO's that can't get to the big Hollywood gala.... people will riot for higher taxes, to prevent such a thing from ever happening again.

Of course, this won't happen.  But if it did, it would work.

earendil31: (Default)
This was originally a reply to a post by [livejournal.com profile] nbowa , but I was so happy with it, I put it here, too.

I know a guy that engineers for caltrans (he's building the new bay bridge). They had to work for minimum wage a few years ago, with IOU's for the missed pay...

I'm betting if California went bankrupt, all the bonds would default, therefore all discretionary funding would stop, meaning that all civil engineering projects would stop, all school programs outside the core school day would stop (including the anti-gang programs), most state employees would be at least furloughed if not laid off. All remaining funds would be used to pay police/fire/other emergency types.

Since Ah-nahld raised the possibility, they would be forced to sell assets, in this case meaning the state monuments, parks, zoos, tollways, bridges(!) etc.

In effect, California would become a much more commercial, much more dangerous, much poorer, but much more expensive place. For a very long time, as they would be unable to borrow at sub-astronomical interest rates for years, possibly more than a decade.

Oh, and kiss green power in California goodbye.

Now you answer your questions ^_^ the Fed may step in, if the needed amount is less than a couple hundred billion dollars. To say nothing of the fact that the Speaker of the House is from SF, so that will help the "Save California First" effort. But it would be in the position of buying California bonds, not just giving them money. But I would expect a lot of carnage in the pensions/retirement/benefit realms.

Pretty much, take your run of the mill giant airline bankruptcy and cross it with Chrysler, and add a hedge fund collapse, and you've got a California bankruptcy.

OH! I FORGOT! I'm willing to bet that there are hundreds of billions of dollars worth of credit default swaps on these shaky-for-years bonds California has been selling...everything since Enron, really. And who'll be on the hook for those? AIG.......


earendil31: (Default)

December 2010

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