California must be rescued. It really is too big to fail.
By NewHampster on March 1, 2009 at 6:50 PM in California, Economic Stimulus
I’m no economist and this is just my personal un-educated opinion, not the Noquarter management. But that’s never stopped me from writing about other subjects I take seriously. I take California seriously and sometime early this morning I awoke with a thought I can’t get rid of. California must be rescued at all costs.
This started in the car last night while listenning to the replay of Diane Rehm and guests discuss the weekly news roundup and they kept coming back to that phrase, “too big to fail”.
Too Big to Fail.
Most notably they mean Citi Group and GM. Now I for one think that size does matter and these huge banks should never have gotten so big. But we have them and their 100s of millions of depositors to deal with. That does not mean the Obama administration won’t break them up before they’re done and I do hope they do so I can get my little NH based bank back.
But these entities are so large and effect so many town’s and people that we have to save them. I really believe that. Once again saving GM for instance does not mean it won’t be broken up and the pieces sold to Toyota. More realistic is that Chrysler, not too big to fail, will be broken up with Jeep going to one of the Japanese firms that needs 4×4s.
But back to California. I speak from a mini, wee little state that would barely be missed if it was to be covered by the next ice age. Most of our states are like that, but certain ones are too big to fail. I’m thinking of New York, California and maybe the industrial heartland as a region.
But when we rescue GM we in essence rescue the heartland. Heck, by rescuing GM we’ll be helping a few smaller manufacturers in NH who supply the auto industry. Those suppliers all over the country are the main reason to save GM. I saw the figure once but can’t find it, how many non-GM jobs are there for every GM employee. It’s a big number and they all pay taxes to their states.
And what of New York? New York reaps billions in tax revenues from the financial bailout. So do CT and NJ. Those multiple bailouts don’t just trickle down, they are like a waterfall of cash for New York.
But California is not one industry that we are rescuing. I don’t hear about saving the CA defense contractors because they are already busy building for Iraq, Afghanistan and our future planes. The Silicon Valley? Nope, I don’t think we’re rescuing anyone there. The central valley where my lettuce comes from? Nah. And Hollywood is having a great year as they tend to do in bad times.
California has nothing we will be pouring zillions into that will pass the dollars down to the state and local governments. Nada, zilch. Yet California is the 5th largest economy on Earth!
We should take seriously what Governor Schwarzenegger jokingly said. If some states truly can’t use portions of the stimulus funds, send them to California. If we can throw $850 billion into the stimulus package it seems like we can manage another 50 or so for California.
I’m hoping someone with more economics sense than me will jump in because all I can think is to replace that old saying with this, What’s good for California is good for the country.
Cross posted from Partizane
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When Bush was elected he said California’s energy problem was not his problem. Enron anyone?
Next time you look at evening weather you can’t avoid seeing how the weather blows west to east. What is rain In California is a twister by weeks in the south east.
So too it is with the Califonia economy.
The Feds have stopped the water delivery to quite a large area of farmland which be fallowed. The Governator has declared a state of emergency with water rationing fast approaching.
This affects the health and food supply of the nation. I did hear however, that wine exports hit an all time high recently.
So on behalf of all the residents of California, can ya spare 40 billion? My kids need textbooks.
Welcome to the underground.
Hey TeakwoodKite – fellow Californian,
You didn’t include our 10%+ unemployment. A lot of transplanted Californians are moving back home making the freeways a bit lighter.
Well, like a lot of Californians, we’re planting veggies in the back yard. I encourage the rest of the country to do the same, even without our longer growing season. Anything I plant now has to yield something to eat. Trees and bushes included. Seeds are being sold everywhere. I think that’s great!
Like most Californians we’re just hunkering down to face our latest disaster. Thanks for your concern, New Hampster but anyone who lives in California is used to greeting each day with a fresh disaster to deal with.
Hey, look, a tree fell on my car.
Hey, look, the water’s rising.
Hey look, the sky is filled with smoke and flames.
We’ll get through this. Enron didn’t kill us even though George Bush let them steal millions from us that we never recovered. We’ve lived through a lot and we’re survivors out here. If we’re a model for the rest of the country then here it is:
Be kind to each other.
Plant vegetables.
The roads are in bad shape — huge pot holes — money on infrastructure hasn’t been spent.
Proposition 13 is coming back to haunt Californians.
I went to high school and college in CA — and my father is buried in a military cemetery in CA.
This is my first visit in many years (15?).
Ellen: Would you explain how people afford to live in CA with the taxes being so high? I suppose now they’ll be even higher.
It’s expensive to live here.
Sales tax in L.A. is going up from the 8.25% it is already. But the weird thing is that communities have their own sales tax so you can drive somewhere else where it’s lower.
Just like the George Bush tax cuts, Gray Davis decided to lower the car registration fee when the state was flush with overpriced homes. Now when they have to go back to what they had before, it’s called a tax increase by the Republicans.
Gas is more expensive.
Now you have to remember that L.A. is the third largest Canadian populated city in North America so a lot of people here are used to this level.
CA doesn’t deserve squat!!!!!!! The liberal policies pushed on the nation are in place in CA and we can see the results, they are terrible. Cut the size of your government, reduce pension expenses and exclude illegals from your social services. Before you jump on me for stating this and rebut me with “But we only get 70 cents for every $1 we give the feds, remember that most Californians believe in the wealthiest helping the poor and CA is the wealthiest state with the largest economy in the country. Why should LA and Arkansas pay for your bills? CA is the poster child for bad fiscal management!
California is the canary in the coal mine for the rest of the country. For years, the state built up an inevitably fatal combination of escalating entitlements and business-unfriendly measures. Now, small business is fleeing to more business friendly climes, leaving the entrenched limousing liberals surrounded by the hordes on the government dole. California is showing us the fate awaiting us all as those new Three Stooges of DC, Obama, Pelosi, and Reid work their special brand of economic black magic. We are all so screwed.
Pardon me … I meant “limousine liberals.”
Doc99 – I think the limousing liberals is correct. After all, little Nancy is trying to save all the wetland mice, isn’t she??
LA Budget could hit $1 Billion.
Los Angeles could face nearly a $1-billion shortfall by 2010 because of a mammoth bailout needed for the city’s employee pension funds, which have seen investments tank in the spiraling national recession, according to a city budget report released Friday.
The grim forecast of a $983-million budget gap came as Mayor Antonio Villaraigosa already was considering widespread city layoffs and deep cuts to services because of the worsening financial crisis.
How about an exchange of assault weapons that the Mexican govt is fingerpointing at us about for their criminal citizens who are currently housed in the CA penal system? Costing taxpayers nearly $9 billion dollars a year.
http://www.diggersrealm.com/mt/archives/000506.html
http://video.aol.com/video-detail/60-minutes-cooper-on-mexican-drug-war/541647472/?icid=VIDLRVNWS03
California can only fix California problems. They need to deregulate their economy and cut spending and state aid to illegals. The CA economy would grow if they allowed oil drilling and cut pension benefits and gov salaries by 20%. Before you pounce realize that this is happening in the private sector en masse. They need to cut government and reduce taxes in order to provide incentives for investment without doling special deals to the powerful and well connected.
This is exemplified by the movie industry leaving CA to film in cheaper locales. Film makers only film there when they are heavily subsidized. This is how it is in America now, you only engage in economic activities when your special interest group is relieved from the government burden placed upon the entire economy. Then the rest of the economy has to bare a larger burden and is ultimately taxed more heavily. People, realize Bush wasn’t a conservative and didn’t do a good job on many levels so don’t assume conservative ideas won’t work based on BUSH. Economics is seems straight forward in good times but it really is a counter intuitive art. OBAMA’s socialist policies will destroy the USA and anyone in his administration that supports them is part of the problem.
The problem is that the movie money is leaving the U.S, entirely and going to Canada. Subsidizing movies is no different than subsidizing GM with the difference that American movies are popular around the world and helps our image overseas.
It is just an example of how the economic pie is carved up. The government should not be subsidizing businesses at all. When they do we should realize that they are being over taxed and over regulated. CA needs to solve its problems on its own. Bailing CA out is a bailout of all the ridiculous “crazy” liberal policies that make people feel good, are well intentioned, but fail miserably.(France subsidizes its movie industry in order to extend its cultural reach.) You can’t say CA’s problems were caused by Bush. The real problem we face today is exemplified by your last sentence. Everyone looks at the subsidies says they are wrong and follow that with “Where is mine?”
Thanks for the good thoughts. We need all of them we can get. Unemployment over 10% and everyone who still has a job is terrified about losing it. Housing prices are SO high here (with mortages to match) that a lost job is almost synonymous with losing your home.
Even the weather is strange–day after day with rain.