California Budget: A Giant Sink Hole

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.

California Budget Is Already in the Red 10 Weeks After Passage

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.

About Nathan A. Martin 120 Articles

Nathan A. Martin is President of Wingman Investments, LLC, and author of the book Flight to Financial Freedom – Fasten Your Finances. He sees people, both young and old, facing a new era where they are forced to be responsible for their own financial success or failure. His message is clear; become financially literate or be a victim of the external forces that are impacting everyone. Nathan possesses an undergraduate degree in Professional Aviation and Business as well as a Master’s degree in Aviation Management and Operations.

A former Air Force and retired airline pilot, his flying took him the world over participating in many operations including the invasion of Panama, and combat time during Operation Desert Storm. Experience has come over 26 years of flight - logging more than 12,000 flight hours both civilian and military, and as the owner of a corporate aviation management company whose focus was aircraft efficiency.

Influenced by his parents entrepreneurial activities, Nathan began his business and investment training early in life and has used that knowledge every step along the way... from business school to his own corporations and personal investments.

Visit: Nathan's Economic Edge

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