California the Deadbeat

July 10, 2009 by  
Filed under Fools of Finance

deadbeat_californiaThe political and economic conditions in California have degraded so much that now banks won’t accept the IOUs that state government is using to “pay” people. That’s good. If they continued to do so, California would have effectively created its own paper currency, backed by nothing but ineffective politicians.

The entire IOU scene is hilariously chaotic. Almost immediately, Craigslist became a market for trading IOUs at discounted values. Then the feds step in and declare that California’s IOUs are actually investment securities that are subject to SEC oversight. I suppose that if this goes on much longer, the Obama administration will have to create a new regulatory bureaucracy for “securities” issued by deadbeat state governments. An appropriate name would be the CUSC or the  “Completely Unsecure Securities Commission.”

I feel bad that I am singling out California state politicians for criticism. After all, the local politicians are equally inept. Case in point: Los Angeles is also broke yet ponied up $1.4 million to help “celebrate” the life and death of a drugged-up, self-mutilating entertainer. Can things be any more ridiculous? Can a tax-funded “Whacko Jacko Memorial Park” be far behind? This is what happens when the entertainment industry runs things. Maybe they should declare the entire city “Neverland” and sell admission tickets to everyone who enters.

Do I feel sorry for Californians? Nope. Most of them voted for the fools of finance that run state government. Others are too [insert negative term here] to leave the state and find a more rational environment in which to live. Or maybe they love the exhilarating feeling of wondering when the next wild fire or earthquake will break out. Perhaps they are concerned that Mexico will take over what they leave behind. Wait – isn’t that happening already?

I know and respect a number of folks who live and work in California. I just can’t figure out why they stay. It’s going to get worse and they have options. Oh well. I suppose its none of my business, as long as the federal government resists the call to bail out the state’s finances. In my book, California is not “too big to fail.”

Image credit: Mr Jaded

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17 Responses to “California the Deadbeat”
  1. Rick Beagle says:

    I would like to point out that the deregulation of the energy markets (thank you state Republicans), support for the rape of the California economy by Enron (thank you Bush), and constant social warfare (thank you right winged nut jobs), all combined to destroy what used to be a cash cow in terms of taxes for our country. For the partisan hacks out there, here is the poster child result of Republican governance and intervention. What a shame….

    The flames will surely be directed at my post, but geez, someone has to say it.
    Rick Beagle

  2. Brian says:

    This state has and is in control of the Democrats, who have destroyed everything that worked in this state. The constant social warfare goes like this:

    Democrat: Tax everything and everybody

    Right Wing Nut Jobs: Keep your hands out of my Pockets.

    The state is broke because people that don’t pay taxes can vote themselfs a raise whenever there is a election. Every ballot always contains a new bond issue for schools and pet projects, with no reliable income stream to pay for it. Should there be a social net? Yes, but only for a short time and it should not become a way of life or a lifelong benefit for someone.

    Sorry Rick as someone who lives here it is not all the Republicans fault for everything that happens, and since you blame republicans for everything who is the real partisan hack here?

    Don’t worry they aren’t issueing you a IOU in place of your welfare check. At least not yet.


  3. Rick Beagle says:

    You have been duped Brian, and yeppers the Republicans wiped out the coffers of California.

    Do you remember those rolling blackouts? There are tapes where the guys at Enron were laughing at the billions they were sucking from your state. What do you think the economic impact of rolling blackouts had on the small business community in the world’s sixth largest economy?

    The Rethugs then used the anger generated by that to propel an incompetent into the governors chair. I like Arnold, I really do, but he is a terrible governor.

    As for the social warfare underway there, if you think it is tax based you are an idiot. There I said it. The Conservatives have been at war with the homosexual community in California since Reagan (who, in a bit of irony was a friend to the homosexual community), and now have found traction with their continued ongoing hate campaign against that community. It is pervasive, and damaging to the social fabric by driving a wedge between neighbors.

    It is revolting what the Republicans have done to such a wonderful state, and the fact that you would stand up for them is truly stunning. How can people be so stupid?

    The only solace that you can have is that you too get to join the ranks of welfare states run into the dirt by Republicans. Take a look at how much California paid into our treasury before Republicans and after? Expand that search and look at every state with a Republican governor. I am not saying Democrats are always the best, but statistically speaking, Republicans have been wrecking our economy both at the state and national level….

    And you, the gurus of economics are letting them get away with it without even so much as whimper. I had no idea how much loyalty those bribes… err tax breaks bought.

    Just wow. Where is the hell did the real fiscal conservatives go?
    Rick Beagle

  4. MasterPo says:

    Here’s Democrat philosophy on taxes:

    If it moves, tax it!
    If it keeps moving, tax it more!
    If it stops moving, subsidize it.
    If it still won’t move, create a program to fund it in purpetuity.

  5. lurker carl says:

    “Where in the hell did the real fiscal conservatives go?”

    That’s what I’d like to know. There don’t seem to be many on either side of the political fence. As far as differences between the Democrats and Republicans, that fence is practically flat on the ground. Both parties are bent on destroying our current form of government. Except that the one currently in power is doing it faster than the previous one.

    Why are political appointees in positions of great power now called a “czar”? That worries me, republics shouldn’t have Emperors.

  6. Brian says:

    Rolling blackouts: Caused by a Democrat controled house and senate signed into law by Gray Davis Democrat. Part of the bill told the power companies not to sign long term agreements for power, but, to purchase short term or current market conditions and that allowed companies like Enron to really jack up the price on energy. Davis big idea was to create a program called “Flex your power” which is simply tturn off the light when not in use. Rolling Blackouts occured in certain parts of the state that wereeserviced by PGE.

    Social Warfare: That would be Perez Hilton calling Miss California a genital name because she gave her opinion on the question of gay marriage, Yep that evil Hilton is really a closet Republican thug allright.

    So Rick Beagle if you would really like to comment on the state of California, maybe you should move out here and live the life.


  7. MasterPo says:

    Don’t forget too that CA just passed some law that it will no longer us electricity from coal powered generation plants with in the next 5 years. Only “renewable: energy sources.

    Get ready for higher rates and less juice my Left Coast friends!! :-O

  8. Rick Beagle says:

    “Rolling blackouts: Caused by a Democrat controled house and senate signed into law by Gray Davis Democrat.”

    That is an outright lie. Look that up again. Oh and who was best buds with Enron and kept FERC reigned in? That’s right, the Bush clan.

    “That would be Perez Hilton calling Miss California a genital name because she gave her opinion on the question of gay marriage, Yep that evil Hilton is really a closet Republican thug allright.”

    Another freaking lie, ever heard of Anita Bryant? Proposition 10, or maybe Harvey Milk? Geez, the audacity….

    “So Rick Beagle if you would really like to comment on the state of California, maybe you should move out here and live the life.”

    I did live there…. When the Rethugs started taking over, I moved.

    MasterPo, just because people chose not to kill other people to feed our electric needs does not make them fiscally irresponsible. Wasn’t there a nice little article about Tennessee this weekend?

    LurkerCarl, I actually agree with Paul Krugman, and while I have some serious problems with the handling of the bank bailouts, in principle I agree with the thought process behind the that giveaway and the stimulus. I also agree that the stimulus was not nearly large enough, and another one needs to hit the country before the end of the year.
    IMHO we need to have our Depression thinking caps on. While fraud should be watched out for, there is a need for radical insertion of capital into the market (FDR style).

    Rick Beagle

  9. George Callas says:

    Yep…When politicians give it all away to mexican illegals, what you have in the end is the bankruptcy which Calif. richly deserves at this time. Those of us in the know have seen the handwriting on the all since the early 1950’s when gutless politicians on both sides of the aisle, turned a blind eye to the mexican scourge which has been invading our state ever since. What we need to do is to forge another “Son of Proposition 13″ and shove it down the collective throats of our politicians. That is the only way they will learn the hardest of lessons., which is that only citizens have a say on what goes on in California and that those who don’t belong here need to be run out of town at the point of a bayonet, if necedssary. To bad that we will need the armed forces to do this now because there are tens of millions of mexican freeloaders here already and they won’t leave until they are taught to feel the pain

  10. MasterPo says:

    Rick – What the blazes are you talking about?!?! We get coal from right here in the good ‘ol USA (glad to see you’re so well informed).

    BTW, you gonna take my deal on taxes or not? Come on. Stand true to your words. Put your money where your convictions are. :-)

  11. Rick Beagle says:


    You must have missed where I said no. I am intrigued by the offer for you to provide capital to people in need, but your point is? It, like many talking points lately, appears to be some sort of grandstanding exercise wherein the instigator cries, “AHA!”, but no one is quite sure why. Feel free to give money to charity, because you have it, and it is the right thing to do.

    As for the Tennessee issue, you must have missed this little tidbit. There are other links, but that should kind of drive home the hidden cost to that coal solution you were touting.

    Rick Beagle

  12. MasterPo says:


    I don’t doubt that some amount of coal somewhere is imported. But far and away the majority is American made. Even still, I wasn’t aware we killed people to take their coal.

    As for my offer, no grand standing. I’m 100% serious. You think it’s no biggie to for Americans to pay $2,000 (or more) a year in taxes just for the sake of paying it then I expect you to lead by example and send a $2,000 check right NOW to the IRS just for the sake of paying more tax. And if you send me a copy of the cancelled check before July 31st I will send a check of my own money to charity. It’s that simple.

    Or is your stances simply typical liberal speak to tell others they should pay more taxes and do all you can to avoid paying it yourself? Be a leader – practice what you are preaching. That’s all I ask.

    You are familar with the saying that money talks and Barbara Streisand walks….

  13. Rick Beagle says:


    I like you, but I swear some times you get so focused on your perceived issues that you start babbling like an idiot. You are a thoughtful person, and it pains me to see you get your head stuck in the punch bowl. :-)

    First of all, I did not say that coal was imported, but rather it’s use was tantamount to putting a bullet to our heads. It is not clean and it is unsafe.

    Secondly, I did not say that $2000 wasn’t a lot of money, but what I did say was that people in the highest end of the tax bracket should not have had their taxes reduced (Bush’s infamous tax cuts) when the end result of that action increased our debt with the Chinese. I also stated that increasing local taxes to offset budget deficits might be necessary and should be considered along with service cuts.

    It is confusing as to which of these statements put you on your quest for that infamous “Aha moment” that you are looking for, but you are seriously misguided if you think I am sending $2k to the IRS. I am liberal, which despite the right winged rhetoric to the contrary does not equal stupid. Go play your silly game with the bobble heads over at your site…..

    And cut back on the koolaid, it is starting to affect that fertile mind of yours.

    Rick Beagle

  14. MasterPo says:

    Coal unsafe?! Perhaps for the miners. But I never heard of anyone dying in a coal electric generation accident. Or a coal electric plant blowing up and contaminating thousands of square miles. Or leaking coal dust into the ground resulting in 3-headed babies.

    And you called me “greedy” (go read the other thread) for not wanting to pay an extra $2,000+ in meaningless taxes on some mythical quest to undo something that isn’t being done while the rest of the world does nothing itself. You said I was “greedy” for wanting to hold on to my hard earned money. It’s right there in black&white.

    It’s really very simple. I’m only going to explain it one more time:

    If you think average American (of which I consider myself, not a “rich” person though I suppose I am since I make over $50,000) can and should pay $2,000 or more in taxes to save the environment I ask you to put your money where your beliefs are and send a check to the IRS right here and now for $2,000. If you do that and send me a copy of the cancelled check by July 31 I will send a check of my own money to charity and post the cancelled check on my blog as proof I did.

    I’ll make it even easier for: You don’t seem to mind saying $2,000 is no big deal for me to have to figure out how to pay but I’ll be kind to you. If you send *ANY* amount – $1k, $500, $100, just $5 – to the IRS right now as a tax payment just for the sake of paying more taxes because we all should pay more to help the environment I will send my check to charity too.

    That sounds pretty fair to me.

  15. Rick Beagle says:

    I answered you in another thread MasterPo, but let me repeat it here. My electric company offers -and has for some time now – the ability to pay extra to insure that our electric power is green and to help fund research into green energy. It was my assumption that this was pretty standard fare, but the more I learn the more I realize how much further along we are here in the NWest with regards to this issue. In conclusion MasterPo, I have been doing what you asked for years. Not to mention my own personal dollars spent to try and reduce my household’s electric consumption (I still have a ways to go, but we are at least trying). Let me see if there is a way to show this to you without a lot of personal data being revealed….. Would a link to our electric company and the program I am referring to suffice?

    As for coal being safe, scroll up a bit and clink on the link I provided. Coal is a terrible solution at the present time.

    Rick Beagle

  16. MasterPo says:

    If “green” is soooo much better and soooo much the way of the future, why do you need to pay MORE for it?

    Can you give me an example in history where technology progress has resulted in LESS availability and HIGHER prices?

    I’d be glad to “go green” with my electric. Please send me a check to cover the extra cost ’cause I can’t afford it. But since you can and feel it’s so important I know you won’t mind helping me be green too. Thanks in advance!

  17. MasterPo says:

    ps- Rick,

    Lasy year LIPA (Long Island Power Authority) had a massive push to get everyone on LI to save electricity (i.e. use less). They even mailed a CF bulb to everyone on the island claiming if every house replaced just one standard bulb with this CF it would be huge savings of power.

    And we (Long Islanders collectively that is) did that and more. We *significantly* reduced our electric usage last year.

    Guess what?

    This past spring LIPA wanted to **RAISE** electric rate to nearly **DOUBLE** what they were before now!

    Reason: People were now using too little electricity and they couldn’t afford to pay expenses!!

    So tell me again why I should save energy, go greeen, etc.

    pps- Did you send your IRS check yet?

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