California Close to Insolvency

"But California is projected to be $346 million short of the funds it needs to pay all its bills in February. By March, the state would be so far in the red that even continuing to suspend payments would not cover the shortfall. California would be insolvent, making the issuance of IOUs likely.

State officials have already designed an IOU template, Chiang said, and have been negotiating with banks over whether taxpayers could cash or deposit them if they are issued. The state could be forced to pay as much as 5% interest on delayed tax refunds if they are not paid by the end of May, Chiang said."

Banks, autos, and now this!

Everyone here ready to bail out California…and the numerous states and cities about to follow suit?

You think a government can afford not to pay the pensions and social security it promised its servants?

Not if they want to stay in power.

You will pay, plain and simple.

[quote]orion wrote:
You think a government can afford not to pay the pensions and social security it promised its servants?

Not if they want to stay in power.

You will pay, plain and simple.

[/quote]

Another detail of America in which you are mistaken.
Orion, meet Calpers.
http://www.calpers.ca.gov/index.jsp?bc=/about/facts/home.xml

[quote]DrSkeptix wrote:
orion wrote:
You think a government can afford not to pay the pensions and social security it promised its servants?

Not if they want to stay in power.

You will pay, plain and simple.

Another detail of America in which you are mistaken.
Orion, meet Calpers.
http://www.calpers.ca.gov/index.jsp?bc=/about/facts/home.xml
[/quote]

It was a subtle truth.

Regardless, we will pay.

Solvent; insolvent; insolvency.

In chemistry, a solvent is usually a liquid within which an otherwise solid solute is dissolved.

In finance: what is it that a solvent person or entity dissolves, which an insolvent person or entity fails to dissolve?

Also, if it is the insolvent person or entity that gets dissolved: doesn’t that make financial solvency and insolvency misnomers? Chemical solvents do the dissolving rather than getting dissolved; and furthermore it is the solvents that are associated with dissolving, not the “insolvents”.

Maybe this is why the politicians don’t understand economics – maybe they majored in Chemistry before they went to law school, and then when they look at economics they get everything backwards?

[quote]DrSkeptix wrote:
orion wrote:
You think a government can afford not to pay the pensions and social security it promised its servants?

Not if they want to stay in power.

You will pay, plain and simple.

Another detail of America in which you are mistaken.
Orion, meet Calpers.
http://www.calpers.ca.gov/index.jsp?bc=/about/facts/home.xml
[/quote]

There is No Crisis in California’s Pension System

The Republicans may be blaming retirement costs on budgetary problems, but the reality is that the PERS and STRS systems are fundamentally strong and near full funding. In January the Wall Street Journal said:

After years of steep under-funding, pension plans are now healthy, thanks to several years of double-digit investment gains and rising interest rates

.

Simply put, PERS and STRS are excellent at earning gains for the retirement system and are much more efficient with money than private retirement funds. The assets of the fund have almost doubled over the last decade and are at a record high of almost $230 billion. While market volatility is a concern, CALPERS has instituted a smoothing formula, so that public employees can rely on more uniform pension payments whether stocks go up or down, unlike 401k plans. On a percentage basis, CalPERS is allocated almost the same amount of public dollars that went into the system 25 years ago.

That was from March, 14th 2007

[quote]Headhunter wrote:
"But California is projected to be $346 million short of the funds it needs to pay all its bills in February. By March, the state would be so far in the red that even continuing to suspend payments would not cover the shortfall. California would be insolvent, making the issuance of IOUs likely.

State officials have already designed an IOU template, Chiang said, and have been negotiating with banks over whether taxpayers could cash or deposit them if they are issued. The state could be forced to pay as much as 5% interest on delayed tax refunds if they are not paid by the end of May, Chiang said."

Banks, autos, and now this!
[/quote]

Interest + my measly tax refund sounds better than just my measly tax refund.

[quote]orion wrote:
You think a government can afford not to pay the pensions and social security it promised its servants?

Not if they want to stay in power.

You will pay, plain and simple.

[/quote]

They won’t be able to give paychecks to state police or state subsidies to schools. Firefighters are funded locally yet locales will have to use some of their own money to make up the lost state revenue. Teachers will be laid off by the thousands. Anyone working directly or indirectly for California will be effected.

Then, bonds issued by the state will tend toward junk status, making them an even harder sell to anyone who might buy. Look for double-digit interest rates just to borrow any money.

They’ve spent themselves into bankruptcy. “But…but…it was to help the poor! It was to help the aged and the helpless!!” Now they won’t be able to help anyone.

this is what happens after yrs. and yrs. of giving public servants everything they want.i sure as hell don’t have no guarented pension. what happened to the ol fashioned way “save”.the bad part is it’s going on in the rest of the country. just that calif. is first.

[quote]orion wrote:
DrSkeptix wrote:
orion wrote:
You think a government can afford not to pay the pensions and social security it promised its servants?

Not if they want to stay in power.

You will pay, plain and simple.

Another detail of America in which you are mistaken.
Orion, meet Calpers.
http://www.calpers.ca.gov/index.jsp?bc=/about/facts/home.xml

There is No Crisis in California’s Pension System

The Republicans may be blaming retirement costs on budgetary problems, but the reality is that the PERS and STRS systems are fundamentally strong and near full funding. In January the Wall Street Journal said:

After years of steep under-funding, pension plans are now healthy, thanks to several years of double-digit investment gains and rising interest rates

.

Simply put, PERS and STRS are excellent at earning gains for the retirement system and are much more efficient with money than private retirement funds. The assets of the fund have almost doubled over the last decade and are at a record high of almost $230 billion. While market volatility is a concern, CALPERS has instituted a smoothing formula, so that public employees can rely on more uniform pension payments whether stocks go up or down, unlike 401k plans. On a percentage basis, CalPERS is allocated almost the same amount of public dollars that went into the system 25 years ago.

That was from March, 14th 2007

[/quote]

…and this is from the Legislative Analyst in 2008:
Total Contributions Should Rise, Due to Larger Payroll. While the Governor?s budget assumes that required state contribution rates to CalPERS remain steady, it also assumes that the state?s total contributions increase due to payroll growth. Figure 2 shows recent trends in the state?s total contributions from the General Fund and special funds, including the amount assumed in the Governor?s budget. This budget assumes that state contributions grow from $2.7 billion in 2007?08 to $2.8 billion in 2008?09, up 3 percent. Over one?half of this amount (an estimated $1.6 billion) would be paid from the General Fund.

CalPERS is huge by the billions; its administrative costs alone are $350 million per year. It commands capital and investment and health industry standards like no other US agency and it does not answer to the electorate.

It is a defined benefit trust. It is chronically underfunded by 16%. In good times, fine; but in bad times, hundreds of government agencies and the State of California are left holding a billion dollar plus bag.


Why I strain at the term “plain and simple:”

“There are many who lust for the simple answers of doctrine or decree. They are on the left and right. They are not confined to a single part of the society. They are terrorists of the mind.”

–Bart Giammetti, Yale U President, 1986

[quote]toejam wrote:
this is what happens after yrs. and yrs. of giving public servants everything they want.i sure as hell don’t have no guarented pension. what happened to the ol fashioned way “save”.the bad part is it’s going on in the rest of the country. just that calif. is first.[/quote]

I guess you opted to stay private sector. You can ask for a raise and negotiate your rate as you see fit. Public service does not allow that. What it offers is job security and guaranteed retirement. How many people would lock in with thousands of convicted criminals daily from 8-16 hours a day if there was no light at the end of the tunnel? How many would teach children and deal with all the extra take home work and delusional parents if there were no light at the end of the tunnel?

it used to be yrs. back that you went into the public sector for guaranted work, sure you didn’t make as much but you always had a job. the private sector was were you made the $$. now it’s all ass backwards.and we’re stuck paying through the nose for all the guarented benifits. what’s wrong with public sector only having their 401’s. why should i have my taxes raised to support their retirement?

[quote]toejam wrote:
it used to be yrs. back that you went into the public sector for guaranted work, sure you didn’t make as much but you always had a job. the private sector was were you made the $$. now it’s all ass backwards.and we’re stuck paying through the nose for all the guarented benifits. what’s wrong with public sector only having their 401’s. why should i have my taxes raised to support their retirement?[/quote]

Taxpayers are leaving in droves. Everyone with a business is figuring out how to move it out of state.

California already is insolvent. It’s run like France.

[quote]PRCalDude wrote:
toejam wrote:
it used to be yrs. back that you went into the public sector for guaranted work, sure you didn’t make as much but you always had a job. the private sector was were you made the $$. now it’s all ass backwards.and we’re stuck paying through the nose for all the guarented benifits. what’s wrong with public sector only having their 401’s. why should i have my taxes raised to support their retirement?

Taxpayers are leaving in droves. Everyone with a business is figuring out how to move it out of state.

California already is insolvent. It’s run like France. [/quote]

I think they said 144,000 people left this year. I hope I can get out of here myself as soon as possible. I’m sick of paying so much for rent, and no hope of ever owning a home even though I make 60K per year.

Jan. 19 (Bloomberg) – An hour?s drive through California?s Riverside County takes in neighborhoods of deserted homes, boarded-up businesses, busy unemployment offices – and crews working on millions of dollars in new public projects.

Only four years ago, Riverside and nearby San Bernardino, often called the Inland Empire, were California?s economic powerhouse, accounting for more than a fifth of the state?s new jobs. Today, unemployment reigns in the sprawling region east of Los Angeles. The 9.5 percent jobless rate in the two counties matches Detroit?s as the highest of any major metropolitan area in the U.S.

Bloomberg - Are you a robot?

I’d be interested to know what tax bracket they were in. My father-in-law’s in a high one and he’s planning on leaving with his business.

Given the income tax, sales tax, and rent, $60k isn’t much. Actually, $70k is the poverty level for a family of 4 in Los Angeles county.

[quote]PRCalDude wrote:
toejam wrote:
it used to be yrs. back that you went into the public sector for guaranted work, sure you didn’t make as much but you always had a job. the private sector was were you made the $$. now it’s all ass backwards.and we’re stuck paying through the nose for all the guarented benifits. what’s wrong with public sector only having their 401’s. why should i have my taxes raised to support their retirement?

Taxpayers are leaving in droves. Everyone with a business is figuring out how to move it out of state.

California already is insolvent. It’s run like France. [/quote]

Way to go Califuckedourseves. I think if we just made some better wine and cheese, we could really turn things around.

it’s not just calif. it’s every state.everyone wants a hand out. hell i live in a small town(8,000), we have cops pulling in over 110,000 a year. they know how to play the call off and overtime game.and of course whats put in their pension is determined by their hours.which raises my taxes. some where, some time soon. it’s gonna bite everyone in the ass.what ever happened to personal responsibility?

[quote]Headhunter wrote:
Jan. 19 (Bloomberg) – An hour?s drive through California?s Riverside County takes in neighborhoods of deserted homes, boarded-up businesses, busy unemployment offices – and crews working on millions of dollars in new public projects.

Only four years ago, Riverside and nearby San Bernardino, often called the Inland Empire, were California?s economic powerhouse, accounting for more than a fifth of the state?s new jobs. Today, unemployment reigns in the sprawling region east of Los Angeles. The 9.5 percent jobless rate in the two counties matches Detroit?s as the highest of any major metropolitan area in the U.S.

Bloomberg - Are you a robot?

[/quote]
I live in Riverside County.
We used to be the second fastest growing county, the fastest was Clark county (Las Vegas).

Things are actually improving, homes are being sold even though people expect the price to drop further, just because we’re in season. In the summer, this place is a ghost-town.
Friggin’ snowbirds and college girls coming down here on spring break with their damn bikinis and youthful behavior. Uhm, wait. That second one isn’t bad.