Yeeha! This sucker's goin' down!

Submitted by Bernard Guerrero on Tue, 06/30/2009 - 1:18pm

14 hours until CA starts issuing IOUs. Hat-tip to Calculated Risk.

I call it Clash of the Propositions:

Despite a deadline looming tonight, Gov. Arnold Schwarzenegger and the Legislature were at a loss Monday over how to close the state's massive deficit, and there were no signs a compromise would be reached soon.

If no plan is adopted by 12:01 a.m. Wednesday, the state plans to issue IOUs to contractors, vendors, local governments and taxpayers expecting refunds beginning Thursday. The governor plans to force 220,000 state workers to take a third unpaid day off beginning in July; and the state will forfeit more than $3 billion in budget savings through cuts to education that had to be made in the fiscal year ending today.
...
Simply rolling over the same amount in cuts in the new fiscal year for education would be impossible without suspending the state's constitutional funding requirements under Proposition 98 and losing $10 billion from the federal stimulus package, which requires states to spend a certain amount for education.

From SF Gate.

Amongst the more trenchant comments from CR's site, once the topic of Prop 13 came up....

Rob Dawg (homepage, profile) wrote on Tue, 6/30/2009 - 10:35 am BURN (profile) wrote (in reply to...) on Tue, 6/30/2009 - 10:27 am

@tbgpalisades - Prop 13 is so gone. There is no longer a choice. Might take a couple of years of really hard times to convince the rabble, but Prop 13 will at some point be flushed.

Prop 13 is the only thing working on the revenue side. I know how much people hate and/or misunderstand 13 but you have to understand removing its' protections won't even cause an exodus. There won't be time.

U-Haul 26' one-way Los Angeles to Austin $2151 Aug 1st pick-up
U-Haul 26' one-way Austin to Los Angeles $678 Aug 1st pick-up

Any questions?

"I'm from the Guerreros, and I'm here to help...sort of."

- My way of joking is to tell the truth. It is the funniest joke in the world.- George Bernard Shaw

"I'm from the Guerreros, and I'm here to help...sort of."

- My way of joking is to tell the truth. It is the funniest joke in the world.- George Bernard Shaw

Now they are issuing IOUs

(#172485)

Submitted by nyoos junkey on Fri, 07/03/2009 - 12:46pm.

Which i guess is a bit like launching their own currency with a dollar peg. I wonder will we get a black market for these chits and what the black market will value them at.

Arnie Bucks Ads Appearing on Craigslist

(#172503)

Submitted by Model 62 on Fri, 07/03/2009 - 2:56pm.

already:

I am interested in purchasing a "State of California IOU" as a souvenir.

I'm betting the value curve will look

(#172754)

Submitted by nyoos junkey on Sun, 07/05/2009 - 2:55am.

like every ipo i've ever been involved in. A nice spike due to initial lack of supply followed by a long slide into the red.

I heard some interviews on the BBC world service with state workers over there. One of them seemed pretty stressed by the whole thing and seemed like the kind of person who would look to convert to cash ASAP. I know that banks will be cashing them but then banks cash checks but so do pawn brokers and petrol stations.

Note to Treasury Secretary

(#172507)

Submitted by Zelig on Fri, 07/03/2009 - 3:06pm.

Let Robbie Conal design the scrip. Don't job this one out of state.

Me: We! -- Ali

Should trade at parity for the moment.

(#172486)

Submitted by Bernard Guerrero on Fri, 07/03/2009 - 1:10pm.

I understand that banks are redeeming them for cash, and they're carrying an interest rate of approximately 4%. Any fear that the state will remain unable to scrounge up the cash to redeem by October would result in discounting, though.

-“It is unwise for the government to tell people how they can spend their money” - Barney Frank, Chairman House Financial Services Committee, on on-line gambling, 2009

Now It's a Loss

(#172121)

Submitted by Model 62 on Wed, 07/01/2009 - 10:08am.

Governor, GOP legislators refuse to deal, state coffers empty.

The Uhaul quote is very

(#172109)

Submitted by heet on Wed, 07/01/2009 - 2:05am.

The Uhaul quote is very interesting as a metric for desirability/movement. Austin is hot as balls this time of year, btw. Surface of the sun hot. It sounds like a nice place till you have to suffer for 5 months. My 2nd year there we had like 30 days of 100+F highs.

Over here on E Street, we're proud to support Obama for President. - Bruce Springsteen

on th euhaul quote

(#172483)

Submitted by nilsey on Fri, 07/03/2009 - 12:15pm.

U-Haul 26' one-way Los Angeles to Austin $2151 Aug 1st pick-up
U-Haul 26' one-way Austin to Los Angeles $678 Aug 1st pick-up

Any questions?

seems like there are lots of 26' uhaul trucks available in austin and uhaul doesn't mind sending them to LA. however, it seems uhaul either has few uhaul truck in LA or doesn't want them going to austin where they will languish.

Member of the Forvm Five

I believe that's precisely what the....

(#172487)

Submitted by Bernard Guerrero on Fri, 07/03/2009 - 1:28pm.

...the guy quoted was getting at. That is, demand for long-haul trucks is strong in LA vs. supply (possibly implying net outflow) but weak in places like Austin, implying a net inflow and a need to get incoming trucks back out to where they can be rented.

There could be multiple confounding factors, of course. Cost-of-living and average wage levels may impact the Austin pricing, there may be significant demand in LA for big trucks for intra-city moves, etc. That said, there has been net emigration from California to the rest of the Union for some time, now:

http://www.latimes.com/news/nationworld/la-me-growth20dec20,1,4888994.story

The end quote is meaningful, I think.

The exodus is in some ways similar to the early 1990s, when a national recession, tumbling housing market and massive cutbacks in Southern California's defense industry at the end of the Cold War prompted 1.2 million people to move to other states.

But Roth said the trend should be less severe this time because the state's economic problems -- and image problems -- are not as great.

"It won't be the lasting problem we had in the 1990s," Roth said. "It will go away."

Mr. Roth's prediction has a certain bittersweet quality to it as of 2009. Texas' economy is surviving the downturn in far better shape than California's, which would account for a strong difference in long-haul moving truck demand.

-“It is unwise for the government to tell people how they can spend their money” - Barney Frank, Chairman House Financial Services Committee, on on-line gambling, 2009

The datum doesn't mean much without a comparison

(#172135)

Submitted by stillnotking on Wed, 07/01/2009 - 10:50am.

Perhaps from last year at this time.

The other day I heard that ignorance and apathy are sweeping the country. I didn't know that, but I don't really care.

Well, it's meaningful in that....

(#172488)

Submitted by Bernard Guerrero on Fri, 07/03/2009 - 1:31pm.

....it indicates a strong likelihood of a difference in demand for trucks going in each direction at the moment. I agree that without y-o-y comparisons it is impossible to tell whether it has gotten larger or smaller recently. Though the relative strength of the job markets hints at an answer....

-“It is unwise for the government to tell people how they can spend their money” - Barney Frank, Chairman House Financial Services Committee, on on-line gambling, 2009

The U Haul data is open to interpretation.

(#172119)

Submitted by Zelig on Wed, 07/01/2009 - 9:39am.

Perhaps people moving from California to Texas feel compelled to bring everything they own, however those fleeing Texas to set down roots in California might want to leave all their old crap behind. Not complicated.

Me: We! -- Ali

Not Quite at a Loss

(#172087)

Submitted by Model 62 on Tue, 06/30/2009 - 9:25pm.

The Legislature has approved a constitutional, legal plan that rights the budget with fee increases, spending cuts, and budget gimmicks. Arnie has said he'll veto it unless he gets state employee pension reform, which he considered including in those failed initiatives he backed a couple of years a couple of years ago, included in this year's budget deal.

Due to quirks in the various budgetary gimmicks, further delay adds $3B to the state's deficit, making the job that much harder.

I'd include a link to the relevant calitics.com post(s), but the site's 504'd. That's probably Arnie taking advantage of the crisis to further his ideological goals, too.