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Has The State Of California Become The Epicenter Of The Economic Collapse Of America?

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Once upon a time, California was the state that everyone wanted to move to.  The endless sunshine, the gorgeous weather, the beaches, the lure of Hollywood and a booming economy made it extremely attractive to millions of Americans who wanted to fulfill their “California dreams”.  But those days are long gone.  Now, the state of California has become an economic nightmare.  In fact, many would argue that California has now become the epicenter of the economic collapse of the United States.  Everything that once made California great is now being swamped by a tidal wave of unemployment, foreclosures, crime, budget cuts, traffic, taxes and natural disasters.  There is a reason why every year now many more people leave the state of California than move into it.  The state of California is suffering a slow economic death, and if something is not done it could end up being one of the biggest financial disasters in history.

The economic crisis of the past several years has hit California so incredibly hard that it is hard to describe.  According to the U.S. Labor Department, the unemployment picture in the state continues to deteriorate, with an overall unemployment rate of 12.5 percent in January.

12.5 percent may not sound that bad, but the truth is that the situation in many of the urban areas is much worse.  There are now 8 counties in the state of California that have unemployment rates of over 20 percent.

In this economic environment, not even teachers are safe.  Just last week, the state of California handed pink slips to nearly 22,000 teachers across the state.

It is hard to even convey how bad things are in California right now.  California has always been a “boom or bust” state, but what is happening now is really unprecedented.

In fact, the number of people now unemployed in California is equivalent to the populations of Nevada, New Hampshire and Vermont combined.

Businesses are shutting down at an alarming rate.  For example, in the area around Sacramento, California there is one closed business for every six that are still open.

Just think about that.

One out of every seven businesses has already shut down.

And unfortunately things are going to get even worse.

But that is the last thing that people in California want to hear about now.

All of these economic problems are playing havoc with the state budget as well.  At this point the state of California is essentially dead broke.  Yet they have to keep borrowing more and more money because revenues have fallen off so sharply.  Basically what California is doing is they are piling up the biggest mountain of debt that any U.S. state has ever accumulated, and there is no hope that they will be able to do anything about it any time soon.

The following is how Ralph E. Stone of the Fog City Journal recently described the California government’s colossal financial problems….

How bad is the problem? Consider that California has a $20.7 billion deficit in the general fund budget over the next 16 months. California owes $8.8 billion in short-term loans that have to be paid off by June, and over $120 billion in outstanding bonds and interest that will be paid over decades. The state’s pension fund, CalPers, has $16.3 billion more in liabilities than assets, plus California also faces a $51.8 billion expense for the health and dental benefits of state retirees and future retirees.

So what can the state of California do?  Well, they can either raise taxes or they can cut spending.  Considering the fact that taxes are already at an incredibly oppressive level in the state, that is not a great option.  Not that they won’t try to suck more money out of the taxpayers anyway.

What California should be trying to do is to cut spending, but the very deep cuts that have been made already have not made that much progress.

Bob Herbert of the New York Times recently described California’s massive budget problems this way….

California has cut billions of dollars from its education system, including its renowned network of public colleges and universities. Many thousands of teachers have been let go. Budget officials travel the state with a glazed look in their eyes, having tried everything they can think of to balance the state budget. And still the deficits persist.

But it is not just California’s government that is experiencing a financial crisis of unprecedented magnitude.

California’s overstretched health care system is also on the verge of collapse.  Dozens of California hospitals and emergency rooms have shut down over the last decade.


The reality is that many hospitals and emergency rooms simply could not afford to stay open as they were endlessly swamped with immigrants and poor and homeless who were not able to pay for the services they were getting.

As a result of these hospital and emergency room closings, the remainder of the health care system in the state of California is now beyond overloaded.  This had led to brutally long waits, diverted ambulances and even unnecessary patient deaths.

And the number of Californians who are unable to pay for their emergency care is only increasing.

According to one new study, approximately 1 in 4 Californians under the age 65 had absolutely no health insurance last year.

But perhaps now that Barack Obama’s health care scheme has passed, maybe the cost of caring for everyone in California will be taken care of by the American taxpayers.

Thanks Obama.

The high unemployment rate and the cuts to the budget in California have also created an environment where crime and gang activity can flourish.  Not that crime and gangs were not gigantic problems before.  But now thousands upon thousands of young men who can’t or won’t find jobs have nothing better to do than sell drugs and terrorize entire neighborhoods.

In fact, there are many areas of California where you just do not go out of your home at night.

Then there are the devastating droughts, the thousands of wildfires, the endless earthquakes, and the crippling mudslides which California now experiences almost every single year.

No wonder so many people are flocking to leave the state.

But what happens in California eventually spreads to the rest of the United States.

Keep in mind that 13 percent of the U.S. gross domestic product comes from the state of California.

Counted by itself, California would be the 5th largest economy in the entire world.

So to think that these problems can be isolated to California is complete fantasy.

In fact, there are some areas in the United States, such as Detroit, that are just as bad as anything that is going on in California.

So the reality is that this is a national economic cancer that is spreading rapidly.

The economic nightmare that people in California and Michigan are experiencing will be coming to your area sooner or later.

Are you ready for that?

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  • joe

    why dont you give the real reason for californias problems. millions of immigrants to house, feed, educate, doctor, and incarcerate

  • MarkinSanDiego

    The problems here in CA have been growing for decades, under both Democrats and Republicans – some people blame the proposition initiatives for locking in spending, other people blame spendthrift politicians, others Proposition 13 which locks in property tax rates. . .however the REAL reason is the shift in income distribution. In the “glorious 50′ and 60’s, most California residents had real jobs at real middle class wages (dare I say Union wages?) Aircraft factories, car factories, steel factories as well as high-tech, etc. Manufacturing left decades ago, leaving the major employers (other than Silicon Valley) CarpetLand and HotTub City – basically an economy of cutting each other’s hair!

    There are still the rich areas – Malibu to Newport and La Jolla, but these small enclaves are full of “vacation homes” and a lot of owners pay no income tax here.

    I agree – as California goes, so goes the nation.

  • tyler

    Immigrants? It wouldn’t be as bad if they were legal but in fact there ILLEGAL and don’t speak english. Theres a huge difference. I lost all respect for you.

  • “Then there are the devastating droughts, the thousands of wildfires, the endless earthquakes, and the crippling mudslides which California now experiences almost every single year. No wonder so many people are flocking to leave the state.”

    Are you for real?
    Endless earthquakes? There’s hasn’t been much damage since Crescent City and before that Northridge, almost TWO DECADES AGO.

    Drought? Two years doesn’t make a drought unless you are trying to ram through the peripheral canal.

    Jeez, look at Hawaii and the entire Colorado Plateu if you want draught.

    Fact is, the ‘writer’ is either a) completely ignorant about basic facts on the ground or b) licking his chops to finally be able to afford a house in the golden state.

    Next ballot initiative in 2011 will overturn Prop 13. That will drive the boomer parasites to suck off another state medical system and allow the working families to finally buy housing at the historic 1.5 annual income ratio.

  • Concerned Reader

    About two years ago I was watching a news show(katey Couric?) and it dealt with the decline of California. It showed an entire family loading up their car and heading east for better opprotunities. During the last depression, families headed to California in hopes of escaping economic turmoil(Grapes of Wrath), but now it is just the opposite. Kind of ironic?

  • Tom


    If you’re going to criticize immigrants for not speaking English, then you had better make sure your posting doesn’t contain any grammatical mistakes. Don’t you know the difference between their, there, and they’re?

  • Lunatic Fringe

    It is very difficult to isolate one or two causes for California’s decline. Years ago, I studied their public pension benefits. Absolutely unsustainable. To retire workers at 75-100% of salary is unheard of. That in a working life span of 25 years.

    Illegal immigration is a huge drain on infrastructure costs. Immigrants consume far more services than their tax contributions cover.

    California is flat out screwed. I welcome that shining example to all those that covet 50k cars, 1M dollar homes, and a tax rate already thru the roof. Bankruptcy is California’s only option. Embrace bankruptcy, get it over with, and rebuild. Or continue to die this prolonged lingering death.

  • In big picture terms, Californica is the canary in the coal mine and it’s already feet-up at the bottom of the birdcage. It’s the end result of 75 years of socialist/communist propaganda that America has miserably failed to counter. See here:

    Along with the People’s Democratic Republic of Taxxachusetts (Cambridge & Amherst), it’s vaunted “education system” is responsible for churning out vast numbers of delusional socialists that vector their filthy disease worldwide. It’s also a major production and distribution point for worldwide socialist media propaganda that spawns these parasites. See Amy (The Useful Idiot) Goodman on Free Speech TV and Soros’ LinkTV.

    It’s not rocket science that the first thing an enemy seizes are media outlets and socialists dominate all but 45% of FNC. Their primary distribution point is non-commercial broadcasting but the American Right establishment won’t engage in that battlespace because they won’t spend any money if they can’t make a profit off of their own demise. They don’t seem to understand that when your enemy spends in excess of $500 million dollars on non-commercial propaganda, people like Obama get elected with predictable results.

    The best thing that could happen to California, as well as the US, is for their public universities to shut down since they serve as petri dishes for the ideology that enslaves. Until Americans realize the extent and effectiveness of socialist media propaganda, especially in the non-commercial space, the rest of America will continue to become more like California and to paraphrase Churchill, America and the world will fall into the abyss of a new dark age.

  • james bond

    First, prop 13 was the best thing to happen to CA and it should be passed everywhere else. Sky high taxes are part of the problem, not the solution.

    Second, California’s problem is that liberalism costs more than they can afford. Try printing the drivers license test in 150 different languages and teaching school in a hundred languages. It adds up. Then spend millions promoting crap like queer marriage and voila! you have California. And like the writer said, the rest of the country is right behind them.

  • MarkinSanDiego

    Proposition 13 will never be done away with, because the voter profile is still 70% older and more middle class, AND homeowners. . .we just bought a house in April 2009 (at full tax assessment), but as we grow older, our taxes will be fixed – so it DOES benefit younger people who buy a house. 30 year old people who are against Prop 13 always change their minds when they buy a house.

  • hopium

    Fact is, the ‘writer’ is either a) completely ignorant about basic facts on the ground or b) licking his chops to finally be able to afford a house in the golden state.


    Hahahahahah! Golden State…sure it is. You could not give me a house in that dump of a State. This shill makes it sound like the land of OZ….I have been to California over the last 2 months, and let me say….glad I am just visiting and passing through….

  • johnomd

    California’s problems were mainly a problem of hubris. Limits and restraints that applied to mere mortals just didn’t apply to CA. Why, we can raise spending, cap taxes, pour unlimited money into education and healthcare while not worrying about the strains of immigration, and we can do it all w/ no trade-offs. Debt doesn’t matter, because we will just keep growing forever, because we’re better than everyone else at everything. People will beg us to borrow their money, and that’s not ever going to change, so why worry. Humm, who else does that sound like in today’s political environment?

  • Mik

    Yes, posting without grammatical errors will bring back the quality of our schools and reopen the closed hospitals.


  • What major country in the world outside of China is not running a deficit? Something is structurally wrong with the “system.”

    Aimlow Jow

  • Tom


    Did I say posting without grammatical errors will bring back the quality of our schools and reopen the closed hospitals?


  • jumpback

    i agree with rightalk. as a 4th generation californian who left in 1965 to see the world it distresses me to see what is going on in california. futhermore, your situation will spread to the whole country soon because of what our masters are doing in the imperial capital.

  • lk

    california’s problems is every states problem, and that is retooling of the us economy from a manufacturing to a service economy.once manufacturers jumped ship, the state like every other state went into a slow tailspin.immigration has absolutely nothing to do with it. no one is going to support their families working at walmart or subway, at least not for’s bagging groceries and phd’s working at call centers, thats the real problem. this country needs to start supporting american american

  • Brittanicus

    Want to start cutting the California budget crisis in half? Halt the Sacramento assembly from supporting millions of illegal alien family benefits. Send them back, from wherever they came from? Learn more a NUMBERSUSA

  • bbc

    Looks like it’s time to make cuts to the biggest drain on all the states…Welfare!!!
    …or find a way to enjoy going broke!!!

  • H Huynh

    Yes, Calif. could save a lot of money by cutting supports for big families (families of 5+ kids). In these families,the fathers are not on taxed payroll. They are divorced fathers or working to receive CASH only. The kids and the moms are taking care by the government! Maybe California was not belong to the US at first place. Now, the originators have to receive the benefits as renting out the lands.

  • You’re right bbc! Stop the corporate welfare in it’s tracks, this is the biggest drain on every economy virtually the world over. Too big to fail, too big to nail, too big to jail? I don’t think so…

    The 2011 budget for the US is around $3,000,000,000,000 (that’s 3 trillion dollars), and roughly 53% of that amount will be spent by the Pentagon alone. How much of that budget is allocated for “welfare”? Less than 2%. Cutting “welfare” would not solve any problems.

    Immigrants are not the cause of all of the country’s woes either. They pay taxes and buy products and services like everyone else. Most of California, and almost the whole US population, are immigrants or immigrant progeny. Illegal immigration has been occurring here for over 500 years, it’s not going to stop, that’s for sure.

  • BuckOfama

    @lk – Have you actually ever tried to buy American? Good Luck. Nothing is made here any longer. Even your Ford or GM vehicle was made in Mexico. We’ve been undone by our own greed and largess.

  • Steve

    When you read stories like the one about the pension of the fire chief in San Ramon, it’s hardly surprising that California is broke.

  • Charles Moreira

    Now where are all those paperback writers who wrote that “sunshine” industries – namely, information and services industries were the “third wave” which would replace “sunset” industries such as manufacturing and agriculture?

    OK! Silicon Valley industries provide employment but only to the very highly skilled, while service industry jobs don’t pay as much as manufacturing jobs and they (lowly paid service jobs) are in the majority.

    Anyway, the sun never sets as it is always shining somewhere on planet Earth at any one time, and like sunshine, manufacturing activities have simply moved somewhere else, while those in the supposedly advanced countries have presumably “moved up the value chain” to “higher” paying information and services jobs – or so do the liars, charlatans and spin doctors proclaim.

    The State of California is a living testament to that.

  • Paul

    WOW and just think they also have the highest number of ILLEGALS- of course that cant be it since we are told that they work REALLY HARD! Until we stop giving away the stuff in the stores the stores will continue to close for going broke. Señor PAY YOUR TAXES!!

  • CharlesSolomon

    Federal Government Subsidizing industries making produced products HERE competitive, Creating And Subsidizing AnAmerican Universal National Health Care System as the other countries already have in place and operating.
    SEC Regulation of Wall Street Financial Companies
    outlawing “hedge funds” “coupon defaults” and “derivatives”, three of the most Illegal and
    damaging “finacial instruments” ever thought up.
    There are so many areas to cover AND they CAN be solved with a little TLC and “correct law Enforcement” to begin the rebuilding of America.

  • Drew

    Yet the good weather will stay, no?

  • Trust no man ,Trust only G-d

    They are not the only ones dont you
    know we all have a number on our forehead and we are like sheep to the slaughter!
    Welcome to the beginning of sorrows….
    Just another fufillment of prophecy written in the Word of G-d.

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