California has a gapping hole – their government is much too big and it is sucking the life blood out of the California economy. The budget situation is so bad that they have resorted to issuing I.O.U.’s and using accounting tricks in an attempt to do anything but the right thing which is to shrink the size of government.
Even after all their latest tricks, their latest attempts at establishing a sustainable budget are simply falling way short. It’s simple… you must spend less than you take in. That is true for your personal budget, it’s true for a business’s budget, and it’s true for all government budgets despite what idiot Keynesian twisting politicians think or say.
By William Selway and Michael B. Marois
Oct. 10 (Bloomberg) — California Governor Arnold Schwarzenegger will know within a month whether a $1.1 billion drop in revenue collections is part of a growing budget shortfall or an isolated event, his budget spokesman said.Revenue in the three months ended Sept. 30 was 5.3 percent less than assumed in the $85 billion annual budget, state controller John Chiang reported yesterday. Income tax receipts led the gap, as unemployment reached 12.2 percent in August.
“The culprit here appears to be estimated quarterly personal income tax statements,” H.D. Palmer, the governor’s budget spokesman, said yesterday. “The numbers are cause for concern, but the issue now for us is to determine if this is a one-time event or whether it has more long-term implications.”
Read the whole thing here »
There is a limit to how much debt a government can “sell.” California is bumping up against that limit now (California Bond Issuance = FAIL ).
Interest rates begin to rise as “investors” begin to see the risk involved. If the risk becomes too high, they will simply stop showing up altogether and then the only solution left will be to either do the right thing and shrink the size of government, or to do the worst thing and that’s fall back on the lender of last resort, the Federal Government who is in worse shape than the State of California, the only difference being their ability to print money and to thus rob the American people of their productive efforts.
Printing money is not our government’s latest trick, it’s a time honored tradition that has brought down many governments throughout history.