In life, they say you’re either motivated by the stick or by the carrot. After living in fantasyland for so many years, Californians will now get the stick.
California voters, famous for their ballot propositions that propose bond issuances that they can not afford to pay (see samples from last election here – CA Propositions 2008– $17 Billion in bond requests! most passed! These people have NO sense of reality), have finally been forced to face the music. Today the state controller’s office is withholding $3.5B of payments (tax refunds and some program money) due to a cash shortage in the state.
They have finally hit their “Zero Hour” and they don’t know what to do. Now tax refunds won’t come to citizens until this is squared away and some programs are not receiving funding. They have a $42 billion short fall. And do you know who is going to bail them out? You get one guess – YES! Correct! it’s YOU! And after the federal government bails out everyone, and our dollar plummets due to the excessive money printing, THEN we will all be screwed (use search and refer to Jim Rogers or Marc Faber related articles on my site for an explanation). Who is going to bail out the USA?
Unfortunately, Americans as a whole have not learned their lesson as of yet – we still have a “Fantasyland” scenario at the federal level because they’re not required to balance a budget, and they can keep selling Treasury Bonds to China and Japan (etc) to fund their fantasy life. But zero hour is coming for the USA too. And when THEY can’t sell their bonds anymore, then we will ALL GET the STICK.
And just a note on the current King of Fantasyland, aka President Obama (who replaced the previous King), apparently, another one of his choices for cabinet is a tax evader – the private car provided by the PRIVATE EQUITY firm Daschle consults with was one of VARIOUS items not claimed. on his taxes He’s been in the Senate for 5,000 years- no way he didn’t know he was breaking a tax law. By the way, if he proposed tax reductions in his time in the Senate, I would not hold him so hard to this – but since he is in the tax and spend crowd (as opposed to mainstream republicans, who borrow and spend, and now Obama who will be the best of both perhaps!), he should be held to a higher standard. And c’mon Daschle probably voted FOR the tax provision he’s avoiding – who knows…
Even though Daschle “fixed” his memory lapse and paid back $146,000 in back taxes (WSJ article here), we are reminded yet again why you don’t want these people touching your money. They’ll raise your taxes but feel it’s ok to avoid taxation themselves.
As I have mentioned many times, this is all dangerous for your money and the stabilility of our currency. Stay safe out there,