Is California too big to fail?

[Liberal_in_LA]

Poll question: Is California too big to fail?

Bail us out folks for the other 49! :hi:

How bad is California’s financial situation?

Well, as of May 11, 2010, California was in the top ten for highest government default probabilities in the world, just below Latvia and ahead of Sicily, and had a 20% probability of defaulting. The spread on California Credit Default Swaps (CDS) was at 254, which is going into Red Alert territory. CDS are a form of semi-insurance used by deep pocket speculators and hedgers to essentially make bets on the probability of an entity defaulting. The higher the spread, the more the implied risk is. These spreads can influence interest rates for bonds, so this is not theoretical at all.

http://caivn.org/article/2010/05/17/california-budget-crisis-its-worse-you-think

[RUMMYisFROSTED]

1. California Uber Alles.

Brown is back!

:woohoo:

[ixion]

2. Like so many talking points this is a red herring: there is no such thing as "too big to fail"

that is: ANYTHING can fail whether you want it to or not.

On a long enough time line, everything fails.

[tishaLA]

3. If CA got back a reasonable percentage of federal tax dollars

this wouldn't be a problem. Instead, we send $2.02 to Mississippi for every tax dollar paid to the federal government, $1.66 to AL, $1.51 to KY...while CA gets back less than 80 cents/dollar. And it's the most populous state, so CA taxpayers are subsidizing red states every year with a de facto federal stimulus package while the state is becoming insolvent.

[frylock]

5. so many people fail to realize this..

if california goes, the nation as a whole is phucked.

[Lance_Boyle]

7. Federal taxes aren't why CA is nearly insolvent. State taxes are.

And it's the fault of the people of CA and no one else that they are unable to adequately fund state operations.

[tishaLA]

12. Prop 13 is part of the problem to be sure

but sending federal taxes to MS, KY, and AL while leaving CA in the lurch doesn't help.

[jaysunb]

15. Correct

prop13 is our lead shoes.... :evilfrown:

[mrdmk]

20. We will not mention $16,000,000,000 removed out of our Treasury to

private corporations in Texas by Bush and company. Then to be told to loosen environmental laws to build more power plants. That was just the beginning of the insult. A new governor in the middle of the mess. Oh, the good Jeb Bush lent us Florida's Treasury Secretary, 'what's her name' to straiten 20 years of mishandling of the publics' money by the Democrats. In the year of 2000, California had the 5th largest economy in the world, by 2008 the economy dip down to the 8th largest. Thanks George, Jeb, Arnold, and 'what ever your fucking name is.' Still, California is responsible for 13% of the U.S. GDP. Also, California has more millionaires than any other state in the United States of America. Maybe we need to tax more? Prop 13 had an impact on the state, but the Bush Administration had a bigger impact and that impact will last for years.

As for California being 'to big to fail, nah, 'to big to be moved' is a better statement. The state is not going anywhere soon...


on edit: wrong HTML slash, or is the slash the whole reason for this thread?

[Johonny]

17. I agree

[Llewlladdwr]

9. This is as it should be.

California is a much wealthier state than Mississippi. Shouldn't they be happy to share the wealth?

[tishaLA]

11. CA is also poorer than MS

which is why we are nearly insolvent. It seems to me that an adequate response to our fiscal situation is to have a more equitable distribution of federal tax dollars instead of taxpayers in MS looking to residents of a failing CA to give them handouts year after year.

[Llewlladdwr]

13. California is NOT poorer than Mississippi.

They've simply spent more money than they have. There's still a huge amount of wealth, both public and private, in California. An adequate response would be for California to get their financial house in order, but it seems highly unlikely that this will happen. At any rate, Federal distribution of tax monies is already equitable as it's based on redistributing wealth from the haves to the have-nots. Are you saying that wealth redistibution at the individual level is good but that at the state level it isn't? That seems to be your point in characterizing the federal tax money Mississippi receives as a 'handout'.

[Freddie Stubbs]

10. Sound like those states have more effective representation in Congress

[Johonny]

18. or just more representation

remember part of the constitution is that the senate is split not by population but by state. Meaning big states these days are massively under represented in the senate. To make it worse because the maximum number of representatives is capped and each state must have at least 1 no matter how small a population, big population states are also under represented in the house. In other words our representative democracy does not represent each person in the country equally.

[Freddie Stubbs]

23. California's 53 Congressmen and 2 Senators vs. Mississippi's 4 Congressmen and 2 Senators?

If CA's members of Congress would work together, they could fix the state's problem of being a donor state.

[petronius]

4. God, I hope so! Give us money, other states, or we'll drag you down with us

:P

[flamingdem]

8. + CA gold (other people's)

[Liberal_in_LA]

19. yep

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[slackmaster]

6. Other - Zombies ahead

[Lone_Star_Dem]

14. Doesn't appear that way.

California's government has become a classic example of being careful what you ask for, because you just might get it.

Unfortunately, my mother and my sister are both employed by public schools there. So far neither have been cut, but each day it's like playing Russian roulette with their jobs.

[Yo_Mama]

16. Sorry, the state is grossly mismanaged

You just can't expect the country as a whole to take care of such problems. In case of disasters, of course. In case of mismanagement, hell no.

This is a hell no situation. CA generates about its pop share of total GDP - about 12 or 13 percent. Letting it go bankrupt would be a better option than bailing it out.

[salin]

21. When I lived there in the 90s... it was a "more fed taxes are paid than received" state.

If for a decade or more California subsidized other states... it doesn't seem unreasonable for some of that money to come back.

[Cleita]

22. Until we get rid of rule by minority or the 2/3 vote needed to pass anything

in the legislature, California will be a failed state.