Before anyone gets their undies in a bundle, I admit that there are *lots* of us who are broke these days. Wages have gone up 2-3% this year, and prices have gone up 10%, so it's pretty easy to find yourself in a bind.
And if you bought a house that was more than you could afford, using a variable rate mortgage "time bomb", you're really in a bind. Locally, there were a bunch of people who refinanced their houses with a swindler. He told people to take out a second mortgage, and he'd invest the money from the second to generate enough cash to not only pay off the second, but subsidize payments on the first mortgage as well. Seems to me that if you can invest money to get that kind of return, the folks running the mortgage companies wouldn't be leaning you money for less - they'd stick their money in that other investment instead.
But they were gullible. Greedy. It was a Ponzi scheme, where the money from new victims was used to pay off the earlier victims, plus provide the promoter with a lavish lifestyle. He's headed for prison, and the government is trying to figure out how to bail out these fools. I'm not in favor of people losing houses, but I don't think everybody else should share the misery caused by their reckless greed.
Anyhow, a few years ago, California got themselves into trouble. They fired their governor, Grey Davis, and hired Arnold Schwartzenegger, a Republican member of the Kennedy family, as governor. He swore he'd "cut up the state's credit card."
Well, he balanced the state's budget, by issuing $9 billion in revenue bonds. That's sorta like going to the bank and getting a loan so you can buy groceries. He could have decided to shrink the state's budget, but apparently the governor's Kennedy side was stronger than the Republican side.
The housing boom helped California out. If the federal government cuts interest rates really low, and banks start offering million dollar mortgages without any proof of income, houses will sell like hotcakes. In fact, they sell better than hotcakes. I've never heard of a hotcake boom.
And the feds changed the capital gains taxes, which helped California's high tech industry.
Between those two factors, California's taxes rose by 40%. The problem was, California ended up spending 44% more. Their state budget has risen enormously.
- 1990-1991 $51.4 billion
- 1995-1996 $56.8 billion
- 2000-2001 $99.4 billion
- 2005-2006 $117 billion
- 2006-2007 $142 billion
The one thing that's saving California is the illegal immigrants, boosting the state economy - but with typical California logic, they're trying hard to get these people to leave. They're coming here to find jobs, they're taking jobs that nobody else is willing to take, and they're working harder than anyone else would possibly work. The alternative of making it easier for people to immigrate legally completely escapes them.
The folks in California turn down their noses at the "Great Flyover" as being low-class. The high-class folks in California, however, have gasoline shortages, electricity shortages, and water shortages because they aren't willing to let low-class things like oil wells and refineries be built.
The answer might be to put up vending machines along the Mexican border. Deposit $2, and you get a packet consisting a permanent visa, a green card, and a map showing how to get to Michigan, Pennsylvania, or Rhode Island. Oh, and yeah, we need to secede from the union, the other 49 states, so Californios can enjoy their snobbish attitudes.