Aug 25

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Aug. 24 (Bloomberg) — California will delay paying $2.9 billion of subsidies to schools and counties in September, a month earlier than projected, to save cash amid an impasse that has left the state without a budget for 54 days.

The state’s top financial officials — the controller, treasurer and finance director — told lawmakers today that the 90-day deferrals need to start next month instead of October to make sure there’s enough money to pay bondholders. The amount is in addition to $3.2 billion the state pushed back in July.

California began its fiscal year on July 1 without a spending plan after Republican Governor Arnold Schwarzenegger and Democrats who lead the Legislature remained deadlocked over how to fill a $19 billion deficit. Controller John Chiang has warned he may need to issue IOUs within two weeks to pay for everything from supplies to contracted services and health-care costs if the impasse continues into next month.

“This is the salt in the wound,” said Rick Pratt, assistant executive director of the West Sacramento-based California School Boards Association, which represents districts statewide. “It’s the state taking its cash flow problem and making it a school district problem,” he said. He said deferrals from previous years have raised costs while the state has cut aid.

The deferrals will help the state meet four major payments in October that total about $1.74 billion, according to H.D. Palmer, a spokesman for Schwarzenegger’s budget office. He said that includes about $803 million in interest on general- obligation bonds.

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Jul 30

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PD FILE, 2009 The entrance to the Bohemian Grove in 2009.

Gov. Arnold Schwarzenegger is scheduled to address a throng of rich and powerful men on Friday under the towering redwoods at the Bohemian Grove as the annual encampment along the Russian River in Monte Rio enters its final weekend.

No one other than Bohemian Club members and their guests will hear the governor’s speech, which is – like everything that transpires during the 17-day midsummer enclave – done in absolute privacy.

Plutocrats and powerbrokers, including former presidents, annually flock to the 2,700-acre wooded retreat where neither women, other than grove employees, nor outsiders of either gender are permitted.

“It’s a private gentleman’s club,” club spokesman Sam Singer said. “People are coming to get away from the duties of daily life. They don’t desire to be on the front page of The Press Democrat or The New York Times.

“In real life, they get there often enough,” he said.

The club has about 2,000 members.

Mixing their revelry and weird rituals with serious issues, the Bohemians hear from a series of speakers, this year including media mogul Rupert Murdoch, who discussed “the future of news” and former secretaries of state George Shultz and James Baker on international relations and terrorism threats.

The speakers list, including ex-President George H. W. Bush in 1995 and not-yet President Richard Nixon in 1967, remains a well-guarded secret. Continue reading »

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Jul 19

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Soldiers watch for criminal activity in the US-Mexico border.

SACRAMENTO, Calif. — Gov. Arnold Schwarzenegger on Friday mobilized members of the California National Guard as part of a federal effort to deter drug trafficking and illegal immigration along the border with Mexico.

His order supports President Barack Obama’s plan to have 1,200 National Guard troops assist with federal border protection, customs and immigration agents.

The move comes amid a national debate over an Arizona law that directs police to conduct immigration checks when they are questioning people about possible legal violations. There must be a “reasonable suspicion” the person is in the country illegally.

Obama asked California to deploy 224 Guard members for as long as a year, but California National Guard spokesman Lt. Patrick Bagley said as many as 260 soldiers and airmen will head to the border by Oct. 1. Continue reading »

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Jul 03

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Gov. Arnold Schwarzenegger

The Schwarzenegger administration today ordered State Controller John Chiang to reduce state worker pay for July to the federal minimum allowed by law — $7.25 an hour for most state workers.

The instructions from the Department of Personnel Administration exclude roughly 37,000 state workers in six bargaining units that recently came to tentative labor agreements with Gov. Arnold Schwarzenegger.

Some employees, such as doctors and lawyers, would get no pay because federal exempts them from any minimum wage requirement. Managers, supervisors and others who don’t get paid for working more than 40 hours per week would receive $455 per week until a budget deal got done. Continue reading »

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Feb 28

Jamie Dimon, chairman of JP Morgan Chase, has warned American investors should be more worried about the risk of default of the state of California than of Greece’s current debt woes.

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Governor Arnold Schwarzenegger is desperately trying to reduce California’s $20bn deficit Photo: BLOOMBERG

Mr Dimon told investors at the Wall Street bank’s annual meeting that “there could be contagion” if a state the size of California, the biggest of the United States, had problems making debt repayments. “Greece itself would not be an issue for this company, nor would any other country,” said Mr Dimon. “We don’t really foresee the European Union coming apart.” The senior banker said that JP Morgan Chase and other US rivals are largely immune from the European debt crisis, as the risks have largely been hedged.

California however poses more of a risk, given the state’s $20bn (£13.1bn) budget deficit, which Governor Arnold Schwarzenegger is desperately trying to reduce.

Earlier this week, the state’s legislature passed bills that will cut the deficit by $2.8bn through budget cuts and other measures. However the former Hollywood film star turned politician is looking for $8.9bn of cuts over the next 16 months, and is also hoping for as much as $7bn of handouts from the federal government.

Earlier this week, John Chiang, the state’s controller, said that if a workable plan to reduce the deficit and increase cash levels is not reached soon, he will have to return to issuing IOU’s, forcing state workers to take additional unpaid leave and potentially freezing spending. Continue reading »

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Jan 14

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SAN FRANCISCO (Reuters) – California’s main debt rating was cut on Wednesday by Standard & Poor’s, which said the government of the most populous U.S. state could nearly run out of cash in March — and another rating cut might follow.

The state government’s budget gap of nearly $20 billion over the next year and a half leaves it in a precarious situation, requiring tax increases or spending cuts, either of which may slow economic recovery, the agency said in a statement.

See also:

California’s worst-in-nation credit rating cut again (Sacramento Bee)

California downgraded by S&P, weighing on state’s bonds (MarketWatch)

“If economic or revenue trends substantially falter, we could lower the state rating during the next six to 12 months,” S&P said after cutting the rating on $63.9 billion of California’s general obligation debt one notch to A- from A.

The new level is four notches above “junk” status, a level at which many investors refuse to buy debt.

“The big question is, is there any fear they will get downgraded out of investment grade (so) you may have to sell … that’s where I think it would get interesting or hairy,” said Eaton Vance portfolio manager Evan Rourke.

Bond prices did not move much, though, since many expected the downgrade, he said.

S&P’s downgrade was overdue because the state’s revenues have been so weak, said Dick Larkin, director of credit analysis at Herbert J. Sims Co Inc in Iselin, New Jersey. “Frankly I can’t understood why it took S&P so long,” he said. “They could have made that decision back in September.”

$1 BILLION SHORT IN MARCH Continue reading »

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Oct 21

As if Schwarzenegger does not have enough other problems to solve:
California Budget Is Already in the Red Only 10 Weeks After Passage


california-is-set-to-ban-big-screen-plasma-tvs
California is set to ban big
screen plasma TVs

Big screen plasma televisions are to be banned in California because they use too much energy.

In a world first, Governor Arnold Schwarzenegger has given his backing to the crackdown on sets more than 40 inches wide.

These liquid crystal display and plasma high definition sets can use as much as three times the power of smaller cathode ray models.

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Oct 21

Yes, Lindsey Williams is repeating himself all of the time, also advertising his new DVDs and he could have said all of it in maybe 5-10 minutes but …

… I did not want to keep this information from you.

Remember this is just “information” of what Lindsey Williams has been told.


“Within two years you will not recognize America.”

“After two years you will be so poor you will not be able to rebel.”

“Gold and silver are all you can rely on.”

“By 2012 the dollar will be dead.”

“War is planned after two years, starting in the middle east area and spreading to the entire world.”

October 19, 2009

Part 1 of 8:

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Oct 11

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Oct. 10 (Bloomberg) — California Governor Arnold Schwarzenegger will know within a month whether a $1.1 billion drop in revenue collections is part of a growing budget shortfall or an isolated event, his budget spokesman said.

Revenue in the three months ended Sept. 30 was 5.3 percent less than assumed in the $85 billion annual budget, state controller John Chiang reported yesterday. Income tax receipts led the gap, as unemployment reached 12.2 percent in August.

“The culprit here appears to be estimated quarterly personal income tax statements,” H.D. Palmer, the governor’s budget spokesman, said yesterday. “The numbers are cause for concern, but the issue now for us is to determine if this is a one-time event or whether it has more long-term implications.”

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Jul 21

arnold-schwarzenegger
Arnold Schwarzenegger, governor of California, speaks at a news conference in Sacramento, California, July 1, 2009. Photographer: Ken James/Bloomberg News

July 21 (Bloomberg) — California lawmakers reached an agreement with Governor Arnold Schwarzenegger over how to close a $26 billion budget deficit that pushed the most-populous U.S. state to the brink of insolvency.

The deal, reached by legislative leaders after two months of frequently acrimonious negotiations, would slash spending for schools, public works and welfare programs amid the longest recession since the 1930s. If approved by the full Senate and Assembly, the agreement will also siphon money from municipalities, force companies and individuals to pay income taxes sooner and make it more difficult to receive state aid.

“We came to a basic agreement, a budget agreement,” Schwarzenegger told reporters outside his office last evening. “This is a budget that has no tax increases and this is a budget that is cutting spending and it deals with the entire $26 billion deficit.”

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Jul 07

Don’t miss:
Day of Reckoning for California and, ultimately, for all of America:
“Why I Expect a Default on California’s Bonds”


A group of the biggest U.S. banks said they would stop accepting California’s IOUs on Friday, adding pressure on the state to close its $26.3 billion annual budget gap.

The development is the latest twist in California’s struggle to deal with the effects of the recession. After state leaders failed to agree on budget solutions last week, California began issuing IOUs — or “individual registered warrants” — to hundreds of thousands of creditors. State Controller John Chiang said that without IOUs, California would run out of cash by July’s end.

But now, if California continues to issue the IOUs, creditors will be forced to hold on to them until they mature on Oct. 2, or find other banks to honor them. When the IOUs mature, holders will be paid back directly by the state at an annual 3.75% interest rate. Some banks might also work with creditors to come up with an interim solution, such as extending them a line of credit, said Beth Mills, a California Bankers Association spokeswoman.

Meanwhile, on Monday morning, a budget meeting between Gov. Arnold Schwarzenegger and legislative leaders failed to produce a result. Amid the budget deadlock, Fitch Ratings on Monday dropped California’s bond rating to BBB, down from A minus, the latest in a series of ratings downgrades for the state.

The group of banks included Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and J.P. Morgan Chase & Co., among others. The banks had previously committed to accepting state IOUs as payment. California plans to issue more than $3 billion of IOUs in July.

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Jul 02

arnold-schwarzenegger-00
California is inventing its own currency

AFTER weeks of trying to fix California’s budget, Governor Arnold Schwarzenegger and state legislators have fought one another to a standstill.

A day after the state Senate failed in a late-night bid to close part of a deficit now projected at $US26.3 billion ($A32.6 billion), California Controller John Chiang took steps to begin issuing IOUs to tens of thousands of companies and individuals owed millions of dollars by the state.

Mr Schwarzenegger declared a fiscal emergency, ordering state workers to take a third unpaid day off each month.

A meeting between Mr Schwarzenegger and the state’s top four legislative leaders ended abruptly within half an hour. Assembly Speaker Karen Bass, a Democrat from Los Angeles, charged out of the Governor’s office, clearly distraught, and walked briskly down the hall.

Related articles:
State’s budget gap deepens $2 billion overnight (San Francisco Chronicle)
Schwarzenegger declares emergency in California (AFP)
Schwarzenegger to shut state offices to save money (Sydney Morning Herald)
Governor dumps plan to build prison hospitals (San Francisco Chronicle)

“He broke it. He should fix it,” Ms Bass said tersely, alluding to Mr Schwarzenegger’s refusal to accept a budget deal that would have averted IOUs but not closed the entire deficit. “Nothing more to say.”

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Jun 29

California is on track to run out of cash by the end of July.

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Gov. Arnold Schwarzenegger tells reporters that he is resolute about state fiscal reforms. Schwarzenegger’s high-stakes strategy could close the budget abyss or cause a meltdown of state government.
(AP)

Reporting from Sacramento — Gov. Arnold Schwarzenegger, seeking to conquer what could be the last budget crisis of his tenure, is engaged in a high-stakes negotiating strategy with lawmakers that could force him to preside over a meltdown of state government.

As legislators have scrambled to stop the state from postponing payment of its bills and issuing IOUs starting next week, the governor has vowed to veto any measure that fails to close the state’s entire $24-billion deficit.

In doing so, Schwarzenegger has sent the message that he would rather allow the state to begin shutting down than let lawmakers push its troubles off for months by closing only part of the shortfall. The latter prospect could swallow up the rest of his governorship.

“Whatever needs to be done,” Schwarzenegger told reporters outside his Capitol office Friday when asked why he would be willing to delay payments to needy Californians. “I know that there is a history in this building of always being late with the budget, to drag it out and to kick that can down the alley. . . . I don’t think we have this luxury this time.”

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Jun 22

“Our wallet is empty, our bank is closed and our credit is dried up.” (Governor Arnold Schwarzenegger)


arnold-schwarzenegger
Gov. Arnold Schwarzenegger saying this month that he would veto any budget bill that included new taxes beyond what he had proposed.

In Hawaii, state employees are bracing for furloughs of three days a month over the next two years, the equivalent of a 14 percent pay cut. In Idaho, lawmakers reduced aid to public schools for the first time in recent memory, forcing pay cuts for teachers.

And in California, where a $24 billion deficit for the coming fiscal year is the nation’s worst, Gov. Arnold Schwarzenegger has proposed releasing thousands of prisoners early and closing more than 200 state parks.

Meanwhile, Maine is adding a tax on candy, Wisconsin on oil companies, and Kentucky on alcohol and cellphone ring tones.

With state revenues in a free fall and the economy choked by the worst recession in 60 years, governors and legislatures are approving program cuts, layoffs and, to a smaller degree, tax increases that were previously unthinkable.

All but four states must have new budgets in place less than two weeks from now — by July 1, the start of their fiscal year. But most are already predicting shortfalls as tax collections shrink, unemployment rises and the stock market remains in turmoil.

“These are some of the worst numbers we have ever seen,” said Scott D. Pattison, executive director of the National Association of State Budget Officers, adding that the federal stimulus money that began flowing this spring was the only thing preventing widespread paralysis, particularly in the areas of education and health care. “If we didn’t have those funds, I think we’d have an incredible number of states just really unsure of how they were going to get a new budget out.”

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Jun 20

June 19 (Bloomberg) — California’s credit rating, already the lowest among U.S. states, may be cut several levels by Moody’s Investors Service as government leaders seek ways to eliminate a $24 billion budget deficit.

The move would affect $72 billion of debt, Moody’s said in a statement today. California’s full faith and credit pledge is rated A2 by Moody’s, five steps above high-yield, high-risk status, or junk.

Related articles:
Judgment Day: Broke California Faces Shutdown
California nears financial meltdown as revenues tumble

A downgrade may increase the state’s borrowing cost and raise the yield paid to investors on its bonds. Standard & Poor’s put California on watch for a possible reduction earlier this week, and Fitch Ratings did the same thing May 29. The rating companies cited the most-populous state’s deficit — amounting to more than 20 percent of the general fund — and lawmakers’ inability to agree on how to close the gap.

“If the Legislature does not take action quickly, the state’s cash situation will deteriorate to the point where the controller will have to delay most non-priority payments in July,” Moody’s said in a report today. “Lack of action could result in a multi-notch downgrade.”

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Jun 13
redwood-tree
California’s famed redwood forests will have to close to visitors

The state of California is in crisis and time has almost run out. Arnold Schwarzenegger, the Governor, has spent this week haggling with state legislators to agree cuts to basic services in one of the world’s largest economies.

The state’s top finance officials warned that unless an emergency austerity plan is agreed by Monday – and there is little chance that it will be – they will not be able to borrow the billions of dollars needed to keep the current government functioning. If California was a company, it would have gone bust months ago.

The breadth and depth of Mr Schwarzenegger’s cuts are unprecedented and no one in the state, not even its dozens of billionaires, will be unaffected. His more radical proposals include wiping billions of dollars from the education budget, with the school year shortened and larger classes.

Hundreds, possibly thousands, of police and firemen will be laid off, and state employees who keep their jobs face pay cuts of at least 10 per cent.

Parks will close, shutting access to thousands of square miles of beaches, redwood forest and other attractions that draw 80 million visitors a year. Thousands of prisoners will be released early and the notorious St Quentin penitentiary will be among state buildings put up for sale.

All financial aid for university students, affecting 200,000 people from low-income families, will end.

Local governments will no longer have to provide absentee ballots in elections, nor run programmes to help infants exposed to drugs. Even stray animals will no longer be kept alive for the statutory three days.

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Jun 11

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The skyline of downtown Los Angeles is pictured at sunset (Reuters)

SAN FRANCISCO (Reuters) – California’s government risks a financial “meltdown” within 50 days in light of its weakening May revenues unless Governor Arnold Schwarzenegger and lawmakers quickly plug a $24.3 billion budget gap, the state’s controller said on Wednesday.

Underscoring the severity of California’s cash crisis, Controller John Chiang, who has previously warned the state’s government risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.

Additionally, the revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger’s budget plan by $827 million, Chiang said.

He warned California’s state government is speeding toward a financial disaster unless officials act urgently to balance its books.

“Without immediate solutions from the governor and legislature, we are less than 50 days away from a meltdown of state government,” Chiang said in a statement.

California’s revenues have been on a dramatic slide as a result of recession, rising unemployment and its lengthy housing downturn.

The state’s revenues from personal income taxes tumbled by 39.3 percent in May from a year earlier while revenues from corporate taxes fell by 52.1 percent and revenues from sales taxes sagged by 7.6 percent, according to a report released by Chiang’s office.

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May 26

California ‘IS’ broke and the US ‘IS’ broke too.


California is the salad bowl in which the world serves up its more exotic lifestyle experiments. Mix sunshine with self-indulgence and dress it with surf-wear and you get a glimpse of how we might live in the future – if we could only afford the plastic surgery.

Unfortunately, it appears that even Californians can no longer afford the lifestyle of the Valley Girl.

The Golden State is almost bust, but its inhabitants, even if they believe it, do not want to know and they certainly do not want to pay for it. The state has been running huge budget deficits for years; the till in Sacramento, the state capital, is now empty and the last-ditch attempt by Arnold Schwarzenegger, the Governor, to balance the books with a series of tax increases and budgetary shuffles was roundly rejected by voters in referendums a week ago.

With a $21 billion (£13 billion) deficit and the lowest credit rating of any American state, the choices are few and grim. California cannot hope to borrow such large sums, except at extortionate rates, which leaves the option of massive cuts in public spending – the sacking of thousands of teachers.

California could run out of cash in a few months. Mr Schwarzenegger has already warned that 5,000 state employees face being fired. The state education budget is in line for a $5 billion cut, alongside the end of funding for parks and the closure of at least one state agency.

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Mar 14

March 13 (Bloomberg) — California teachers organized protests in more than a dozen cities today as about 26,000 may lose their jobs because of spending cuts the Legislature approved last month to keep the state from running out of money.

School districts across the most-populous U.S. state have been warning thousands of teachers that they may be fired as a result of California’s declining tax collections. The plan signed by Governor Arnold Schwarzenegger last month cut $8.4 billion from schools and community colleges out of $15 billion trimmed from state spending through June 2010.

“These cuts are going to hurt an entire generation of children and damage California’s public education system for years to come,” David Sanchez, president of the California Teachers Association union, said in a statement.

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Mar 04

Posted for the information on the FEMA camps and for the army combat unit deployed within the U.S.:
Army combat unit to deploy within U.S. (CNN)
Pentagon: 20,000 Troops to Bolster Domestic Security (Washington Post)


The gloves come off

During the Bush Administration, FEMA was given hundreds of millions of dollars to retrofit former military bases and other existing infrastructure so they can be used as “camps.”

Not camps as in summer camps. Camps as in prison camps and perhaps even concentration camps.

One of the first thing the Obama Administration did was to legitimize their existence.

These camps, which can be found in every state in the union, currently sit empty and are intended to be pressed into service in the event of an “emergency.”

Funny that we’ve made it over 200 years without needing a national network of on-demand concentration camps.

Why do we need them now?

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Feb 28

Federal water managers plan to temporarily cut off water this March to thousands of California farms. The state has said it probably would deliver just 15 percent of the water contractors have requested this year.

The state delivers water to more than 25 million Californians and more than 750,000 acres of farmland.

“It’s too late,” he said. “It’s going to sound horrible coming from a farmer because you never turn down help, but come on, this thing is over with.”



Layers of sun-baked earth are exposed in an area of the San Luis Reservoir near Gustine that was previously underwater but was dried out in January because of drought conditions. (Patrick Tehan / Mercury News)

SACRAMENTO, Calif. (AP) — Gov. Arnold Schwarzenegger declared a state of emergency Friday because of three years of below-average rain and snowfall in California, a step that urges urban water agencies to reduce water use by 20 percent.

“This drought is having a devastating impact on our people, our communities, our economy and our environment, making today’s action absolutely necessary,” the Republican governor said in his statement.

Mandatory rationing is an option if the declaration and other measures are insufficient.

The drought has forced farmers to fallow their fields, put thousands of agricultural workers out of work and led to conservation measures in cities throughout the state, which is the nation’s top agricultural producer.

Agriculture losses could reach $2.8 billion this year and cost 95,000 jobs, said Lester Snow, the state water director.

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Feb 23

“The world’s richest elite and those who fully understand the situation are buying gold like hot cakes.”

Events over the past five months since the carefully orchestrated storm was set for bank “bail outs” should make it clear to any American not walking around in a self-imposed coma that we have crossed the Rubicon. As I have written for many years: Non essential businesses will continue to go under as Americans only have enough disposable income for absolute necessities like shelter, food and transportation to their jobs or the unemployment office. This massive give away by Congress since last September is simply sealing our fate.

Americans are frightened, confused. Already we’ve seen several tragedies where fathers have killed their entire families and themselves because he’s lost his job and the bills were piling up. We will see more and worse. We the people are now being held hostage with a gun to our head to aid and assist in the final destruction of our constitutional republic. We are being held hostage with the gun of government to our heads to fund the final destruction of capitalism, freedom and liberty.

We the people are being held hostage with the gun of totalitarian government to fund the continuation of the unconstitutional, immoral invasions of Iraq and Afghanistan based on lies and manipulation. To fund organizations who conduct massive vote fraud (ACORN), filth in the Arts and schools and more killing of unborn babies. Fund the furtherance of one world government as the impostor president is openly shoving communism down our throats with the approval from most members of Congress.

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Feb 17


Unemployed construction workers demonstrate in Los Angeles, California.

(CNN) — California Gov. Arnold Schwarzenegger issued 10,000 layoff notices Tuesday, affecting a wide spectrum of state employees and aimed at dealing with the state’s budget crisis, a spokesman said.

California lawmakers resumed negotiations late Tuesday after the longest legislative session in state history over the weekend resulted in a budget impasse.

“Every state employee who receives a salary under the general fund is affected, and the governor began issuing layoff notices for the least-senior employees in various agencies,” said Aaron McLear, the governor’s press secretary.

The layoffs would begin on July 1, which marks the fiscal year, and includes jobs in the Departments of Health and Human Services and Corrections, among others, McLear said. Another 10,000 layoff notices could be issued on Wednesday in other departments, he said.

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Feb 17

Gov. Arnold Schwarzenegger warned lawmakers about potential job cuts last week.
Gov. Arnold Schwarzenegger warned lawmakers about potential job cuts last week.

(CNN) — California lawmakers were told to bring their toothbrushes and prepare for a long day Tuesday, with the goal of passing a budget as the state faces a $42 billion deficit and 20,000 layoff notices were set to go out to state workers Tuesday.

“Bring a toothbrush, bring any necessities you want to bring, because I will not allow anyone to go home to resume their lives … as long as we know … that 20,000 people will be laid off,” Senate President Pro Tem Darrell Steinberg, D-Sacramento, told lawmakers late Monday.

Lawmakers had missed a Monday night deadline to reach a budget deal, prompting Gov. Arnold Schwarzenegger’s move on the layoff notices, Schwarzenegger spokesman Aaron McLear told CNN late Monday.

The Republican governor, who declared a fiscal emergency in December, has butted heads for months with the Democratic majority over alleviating the state’s $11.2 billion revenue shortfall this fiscal year alone. The cuts would save California $750 million for the year. The state’s $42 billion deficit is for the current and next fiscal years.

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Feb 03

I said many, many times that the U.S. is broke.

Things are much, much worse than you have been told.

This will be the ‘Greatest Depression’.


California, the eighth largest economy in the world, is broke.

“People are going to be hurt starting today,” said Hallye Jordan, speaking on behalf of the state Controller. “There’s no money.”

Since state legislators failed to meet an end of January deadline on an agreement to make up for California’s $40 billion budget gap, residents won’t be getting their state tax rebates, scholarships to Cal Grant college will go unpaid, vendors invoices will remain uncollected and county social services will cease.

At least, temporarily. Services and payments will resume once state legislators come to an agreement on the budget.

“This time, there are real-world consequences,” said H.D. Palmer, spokesman for the California Department of Finance, in a report by KCRA in Sacramento. “Because we have not been able to get to a budget agreement, payments aren’t going to be made.”

“This is an issue of fairness,” said Assemblyman Ted Gaines, R-Roseville, in the KCRA report. “It hurts hardworking families the most. Refunds, in fact, will stimulate the economy, and taxpayers need their money.”

“Included are $515 million in payments to the state’s vendors and $280 million to help people with developmental disabilities. Other public assistance agencies will be left waiting for hundreds of millions of dollars,” reports CNN. “Other public assistance agencies will be left waiting for hundreds of millions of dollars.”

“I see the will during the negotiations even though these are very, very tough things that we talk about, where we go into areas that we have never, ever dreamt of going into and trying to solve,” said Governor Arnold Schwarzenegger. “So you will be very surprised when the whole thing is done. We’re still not there yet. There is still a lot of work that needs to be done but we are moving slowly forward with this process.”

“If there is no deal by Friday, state government workers will take their first furlough day,” reports the San Diego Union Tribune. “Schwarzenegger has ordered state employees to take two days off a month without pay through June 2010 to save about $1.4 billion.” Continue reading »

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Jan 27

Source: San Jose Mercury News

Posted: 01/26/2009 08:00:00 PM PST

Deadline is real: 5 days to fix California’s budget

Five days are left to cut a deal on the state budget. If not, on Sunday, California, the world’s eighth-largest economy, will become the world’s biggest deadbeat.

Related article: California prepares to stop paying bills (WorldNetDaily)

Having raided every state fund and borrowed the max, the state will start issuing IOUs. College students won’t get Cal Grants. Counties will borrow from reserves to cover social services. State contractors won’t get paid, and taxpayers won’t get refunds. The state already has shut down billions of dollars worth of construction projects. By April, as bills mount up, California, for all practical purposes, will stop functioning as a state.

It’s shameful that things have come this far, but there’s still time to stop things from getting worse – if enough Republicans, at least three in the Assembly and three in the Senate, agree to balance severe cuts to state services with new or higher taxes. Doing so, however, will risk retribution from the rabid right of their party.

All is not totally bleak. House Democrats’ version of President Barack Obama’s $825 billion stimulus includes $10 billion in immediate relief to California, in Medicaid payments for the poor and education aid. That would lop off a quarter of California’s $40 billion deficit. It pays to have friends, like House Speaker Nancy Pelosi, in high places.

But $10 billion won’t necessarily translate into fewer cuts or taxes. Gov. Arnold Schwarzenegger’s proposed budget included $10 billion in phantom solutions: an improbable $5 billion in borrowing against future lottery proceeds and $5 billion in money shifting that’s probably unconstitutional.

So $30 billion in hard choices remains regardless – and less than a week to make them.


Source: Bloomberg

Schwarzenegger Says Deal Is Close as Cash Runs Short


Governor Arnold Schwarzenegger of California attends the inauguration ceremony of U.S. President Barack Obama at the Capitol in Washington on Jan. 20, 2009. Photographer: Ken Cedeno/Bloomberg News

Jan. 26 (Bloomberg) — California Governor Arnold Schwarzenegger said legislative leaders are closing in on an agreement to eliminate the $42 billion budget shortfall threatening to leave the state out of cash as soon as next week.

“We are getting closer and closer,” he said during a press conference. “We’re getting there, but it will still take a few more days to get there.”

Schwarzenegger, a Republican, told reporters in Sacramento the state won’t have enough money to pay for all of its bills “within the next week or 10 days.” With that in mind, Schwarzenegger said he and lawmakers were working.

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Jan 17

“The suspension of payments is the latest radical move by officials to help keep the state from running out of cash as Gov. Arnold Schwarzenegger and the Legislature battle over how to avoid insolvency.”


John Chiang announces that his office will suspend $3.7 billion in payments owed to Californians starting Feb. 1, because with no budget in place the state lacks sufficient cash to pay its bills.

Reporting from Sacramento — The state will suspend tax refunds, welfare checks, student grants and other payments owed to Californians starting Feb. 1, Controller John Chiang announced Friday.

Chiang said he had no choice but to stop making some $3.7 billion in payments in the absence of action by the governor and lawmakers to close the state’s nearly $42-billion budget deficit. More than half of those payments are tax refunds.

The controller said the suspended payments could be rolled into IOUs if California still lacks sufficient cash to pay its bills come March or April.

“It pains me to pull this trigger,” Chiang said at a news conference in his office. “But it is an action that is critically necessary.”

The payments to be frozen include nearly $2 billion in tax refunds; $300 million in cash grants for needy families and the elderly, blind and disabled; and $13 million in grants for college students.

Even if a budget agreement is reached by the end of this month, tax refunds and other payments could remain temporarily frozen. Chiang said a budget deal may not generate cash quickly enough to resume them immediately.

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Jan 15

UK jobless rise of 40000 in a week just ‘tip of the iceberg’ (Telegraph)

Schwarzenegger Says Deficit has ‘Incapacitated’ State (Bloomberg):
Jan. 15 (Bloomberg) — Governor Arnold Schwarzenegger said California has been so “incapacitated” by a fiscal crisis that threatens to leave it unable to pay bills within weeks that the only issue he and lawmakers must consider is how to fix it.

Charter misses $74 mln in debt interest payments (Reuters):
NEW YORK, Jan 15 (Reuters) – Charter Communications, the fourth largest U.S. cable operator, said on Thursday it missed interest payments of $73.7 million as it continues to negotiate a debt restructuring with bondholders.
The company said it has until Feb. 15 to make the payment and avoid default, which could push it into bankruptcy.

ECB cuts rates by 50 points to 2% (Financial Times):
Eurozone interest rates fell by half a percentage point to their lowest in more than three years on Thursday as the European Central Bank said that it expected the recession to deepen and signalled that borrowing costs could fall further.
Jean-Claude Trichet, ECB president, warned that growth forecasts published only last month would have to be revised downwards in a sign of the ferocity of the downturn.

Pfizer May Fire 2,400, One-Third of U.S. Sales Force (Bloomberg):
Jan. 15 (Bloomberg) — Pfizer Inc., the world’s biggest drugmaker, may fire almost a third of its U.S. sales force, or as many as 2,400 workers, in a plan under consideration by senior management, people familiar with the discussions said.h the discussions said.

JPMorgan chief says 2009 will be bleak (Financial Times):
The US financial and economic crisis will worsen this year as hard-hit consumers default on credit cards and other loans, Jamie Dimon, chief executive of JPMorgan Chase, has predicted in an interview with the Financial Times.

JPMorgan Profit Drops 76 Percent on Asset Writedowns (Bloomberg)

Yet another blow to the US newspaper industry (Guardian)

Aircraft industry shocked by view from ground (Financial Times)

Airbus forecasts ‘very challenging’ year (Financial Times):
Airbus on Thursday said its new commercial aircraft orders had fallen sharply last year, as the European aerospace group forecast “a very challenging year” for the industry in 2009. Net new orders fell by 42 per cent last year to 777, from a record 1,341 won in 2007.

Irish government fears IMF intervention (Guardian)

Ireland plans drastic cuts to prevent debt crisis (Telegraph):
Ireland is to demand pay cuts for civil servants and public employees to prevent the budget deficit soaring to 12pc of gross domestic product by next year – becoming the first country in the eurozone to resort to 1930s-style wage deflation to claw back competitiveness.

If anyone doubted scale of crisis, work even halts in Dubai on world’s tallest tower (Scotsman)

Hedge funds ‘encourage bankruptcies’ for profit (Guardian)

Spain’s Debt Costs Rise at Bond Sale After S&P Alert (Bloomberg)

Banks gird for commercial property collapse (FinancialWeek):
Some of the biggest financial institutions have huge, potentially troublesome commercial real estate stakes, Standard & Poors data shows. Based on information in their most recent financial reports, Citigroup and Barclays each had more than $20 billion worth of commercial mortgage-related investments. Merrill Lynch, acquired by Bank of America last year, had some $19.7 billion in such investments, according to S&P.

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Dec 24

The State of California will run out of money within two months, forcing Governor Arnold Schwarzenegger to start settling bills and paying employees by issuing “IOU” notes, his chief financial officer has revealed.

John Chiang, the state controller, admitted on Monday that a spiralling budget crisis, which has left California spending billions of dollars more each month than it can raise in taxes, will see his coffers run dry some time in mid-February.

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Dec 23

SACRAMENTO, Calif. (AP) – California’s chief financial officer warned Monday that the state would run out of money in about two months as hopes of a Christmas budget compromise melted into political finger-pointing by the end of the day.

Republican Gov. Arnold Schwarzenegger began the day on a cheerful note, suggesting that negotiations with Democratic leaders could lead to a budget deal as early as this week to help close the $42 billion shortfall that is projected through June 2010.

“Yesterday we sat there for hours and we worked through it step by step and we made some great progress,” the governor said during a morning news conference in Los Angeles. “So we feel like if we do that two more times like that, I think we can get there … before Christmas Eve or Christmas Day.”

The thaw didn’t last long, as legislative leaders later in the day criticized Schwarzenegger and indicated their work was done until the start of the new year.

The governor faulted lawmakers for “failing to take real action” in addressing the state’s budget deficit but said he will continue working with them on a solution that includes spending cuts, new revenue and an economic stimulus plan.

Assembly Speaker Karen Bass responded by suggesting the governor should sign an $18 billion package Democrats sent to him last week containing both cuts and tax increases.

“The single biggest roadblock to having construction on the 405 (freeway) move forward is Arnold Schwarzenegger,” said Bass, a Los Angeles Democrat.

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