It seems clear as the economic recession moves forward that an increasing number of our leaders in politics and their analysts are bringing forth concern that soon California will be in bankruptcy. The budget deficit by some calculations is over $50 billion US dollars. Their entire budgetary plan is only $125 billion US dollars per year. The credit rating for California is the lowest in the Union and as of now they are borrowing money to make ends meet. The money they continue to borrow is going to get more and more expensive as their credit rating continues to plummet. California is a true example of the ineffective policies of our American leadership.
When looking at the facts one can’t deny that there are major problems in California. The state’s pension fund is in crises as Calper’s currently has over $18 billion US dollars more in liabilities as the asset column continues to fall.
They have closed parks, poor roads, larger than normal classrooms, poor welfare services, and massive layoffs. The unemployment level is out of control as there are nearly 10 counties with unemployment rates with over 20 percent. This means that if you combined the unemployed people in Vermont, Nevada, and New Hampshire that it would equal the same number in California!
Recently it was reported that nearly a $60 billion US dollar bill for health care reform for retired people was brought to the state government. This report comes out as several hospitals are being shut down. They simply can not afford to stay open. They are constantly filled with illegal immigrants who do not pay their bills thus adding to an already struggling state deficit as their southern border remains porous. They have had patient deaths come about because they simply didn’t have the resources to provide care. It has been estimated that 25% of Californians do not have health insurance if they are less than 65 years old.
To make things even more difficult they recently fired nearly 22,000 teachers throughout the state to save money. California has been cutting billions from their educational system in an effort to help balance the budget.
Without federal funds the state simply can’t afford to go on. The United States however has hit its legal limit on its borrowing capacity as its own commitments are coming due. The federal government is nearly on the verge of a default on its debt and doesn’t have more money to lend California. The US Treasury can postpone the date on its commitments but not for long. The US Debt is larger than most 1st world countries according to the International Monetary Fund (IMF). The world is on the verge of loosing confidence in the dollar.
So with that California is on its own when taking care of its massive financial problems. I would say that they are definitely heading toward bankruptcy and the domino sadly won’t stop there as our entire country begins to feel the pains of poverty. It’s clear that even the Governator couldn’t fix this mess. I’m sure Arnold did the best he could but obviously many take issue with the way things have been handled up until now. Obviously California needs a bit more than a little chapter 7 bankruptcy information as things are getting uglier by the minute.
