California's budget surplus has vanished and its economy is in danger. It can go one of two ways

…California has the nation’s highest cost-adjusted poverty rate, limited opportunities for working-class families and, remarkably, the highest rate of functional illiteracy. No California metro area ranks in the U.S. top 10 in terms of well-paying blue-collar jobs.

The ports, notably Los Angeles-Long Beach, that have long been linchpins of the blue-collar economy, have been losing ground to rivals in Texas, New Jersey and the Southeast.

In flush times, Gov. Gavin Newsom could hand out thousands of dollars of goodies to struggling households and create massive direct subsidy programs for housing and healthcare. Continuing such largesse seems improbable.

A better option is to adopt policies that reintegrate blue-collar and middle-class Californians into the economy. This is critical as we can no longer count on the 1% — who pay roughly half of the state’s highest-in-the-nation income taxes — to bail out the mass of Californians.

There are great opportunities for reestablishing economic diversity. California is naturally positioned to take advantage of the growing move to re-shore industries, a trend driven largely by tensions with China and supply chain issues. The good news is that industries that are most primed for re-shoring — aerospace, medical equipment, defense and electronics — are also big businesses for California. But right now, California’s regulatory and tax regimes discourage new investment compared with states like Ohio, Florida and Texas, according to a recent Hoover Institution study…










https://news.yahoo.com/op-ed-californias-budget-surplus-113043703.html





For the Los Angeles Times, this is actually a decent read. These authors are expert in their field and know of what they wrote about. The problems are clearly stated as are the solutions. In the last decade the areas and certain people in them benefitting the most are the same that will be slammed the hardest by the next few years, unless changes are made.

 

I have a feeling that the leaders from the biggest coastal urban areas will try to ride out deficits and recession hoping to survive until the next big tech boom rather than give up their power to the benefit of all classes of people all across the state.

 

Looks like Newsom has already proposed cuts to balance the deficit

https://www.politico.com/amp/news/2023/01/10/newsom-spending-cuts-california-budget-deficit-00077227

When you look at this and the fact of falling deficits under Biden it’ crazy how Democrats have become the new party of fiscal responsibility while Republicans have become the party of cutting ethics offices, unfunded programs, destroying social security and tax cuts for the very wealthy.

 

They know they're too big to fail. This isn't Flint Michigan - this is California, the 6th largest economy in the world. In the not unlikely event that they go insolvent the Feds would bail them out quicker than a child in San Fran is allowed on puberty blockers.

Most of the options to fix any of this are off the table because of the poor quality of voter in the state. Not necessarily because they're so left wing though that does play a role - plenty of left wing jurisdictions are in a much better financial position than CA.

Part of the problem is the massive exodus of the opposition into neighbouring mountain states. It changes the character and housing affordability of the states they go to and makes insolvency the only thing on the ballot back home.

For all we dislike our opposition, they do play a crucial role. Left or right. CA is a good example of what happens when you lose that.

 

The authors do point to a road map of how California can get out from under its problems and succeed again. It can be done.

 

First of all , all governments except the federal government have no choice but to balance their budgets each year. Secondly Biden has done nothing but increase spending. The only decline has been less spending on the Covid emergency. So stop with the gaslighting us on democrat fiscal sanity that does not exist at the federal level

 

Brandon may have made the dollar as the world's reserve currency so unattractive that an alternative now being set up, will replace it.

If the dollar loses its position as the reserve currency then the federal government will no longer be able to run a huge deficit.

 

Basically, the free lunches could be over.

We have been printing dollars like crazy and the currency held by the public and by the world's banks has been losing value,

but the security and transferability of the dollar have made it worthwhile to continue using the dollar in international trade and holding dollars despite the slow erosion of value.

 

But in late April and early May 2022, Biden attempted to confiscate a huge amount of Russian-owned dollars and 'give it to Ukraine'.

He could attempt that with any nation and they know that.

Brandon also blocked the exchange of Russian dollars in the SWIFT transaction service run from Belgium.

After that to sell Russian oil and gas it has been necessary to set up the Petro Yuan and to trade directly in Yuan or in Rubles.

This new money exchange system has also been joined by Saudi Arabia, Egypt and Turkey.

If it grows the US fed will no longer be exempt from the laws of economics.

And then there will be limits to how much it will be able to bail out states.

Unless we can undo the damage Brandon is doing.

 

And if democrats don’t compromise with the GOP on raising the debt ceiling during negotiations on that matter and make a bipartisan compromise, a default will crash the stock market and interest raise will go up so much that we can’t borrow so much anymore if interest only payments on it consume too much of the budget.