I see where the Governator of Kal-ee-fornee-yuh has asked (more or less demanded) about $4 billion to help close the state's yawning budget deficit. The Austrian muscleman even played the ROI Card, which was perhaps a harbinger of things to come. Most things American, after all, begin in the Golden State. Historically, California has received about 78 cents for each dollar it sends to Washington in the form of taxes. Ahnold pointed this out in his petition. That's more significant than it might seem on first hearing.
California probably contains 13% of the American population, or more than 15% if you actually counted everyone who lives here, legally or otherwise. As is the case with New York state, California has huge budget deficits as far as the eye can see. At least $20 billion over the next two fiscal years (including this one, which will prove to be the mild one). That delta between money sent and money returned (22%) would close the budget deficit almost exactly. Analogizing to the old USSR, in some ways California is sort of the East Germany of the Union. A once-prosperous polity brought low by the fortunes of the country of which it is a part, and for many of the same reasons.
The United States, like the Soviet Union before it, has proceeded over the last 30 years or so with a mindless, corrupt build-up (and use) of a military-industrial complex. While the various Presidents and the Bureau of Labor Statistics would prefer not to talk about it, over the last decade or so the United States only added about one million private sector jobs on a net basis. In the public sector, the number is 2.5 million, or 250% as much. This owes to the relentless increases in military and defense contract spending, all part of the never-ending War on Terror, which has served as the convenient rationale ever since the USSR dropped out of the Cold War.
The economy is now running on fumes. Not even, so much, on the kindness of strangers, since the big traditional donors (Japan, China and UK) are flicking it in insofar as increased purchases of U.S. Treasuries are concerned. They're holding the line. The U.S. deficits, on the other hand, will require about $40 billion in sales of new Treasury debt per week over the next year. There is increasing suspicion, and even forensic evidence, that the Federal Reserve and Treasury have been faking the sale of Treasuries for well over a year. One well-publicized analysis from a Canadian financial group estimated that the Fed had attributed $500 billion in sales to the "household sector" by backing into the category; in other words, there was that much in unsold IOUs last year, and since we know the U.S. doesn't just print money without an offsetting sale of debt (ahem), it must have been all those loyal, patriotic Americans in the boonies running the vacuum attachment under the sofa cushions and coming up with the 500 bil to put us over the top.
Yeah. That's what happened. Having the world's fiat currency does have its advantages, which in combination with the opacity of the Federal Reserve may allow the country, for a little while at least, to extend and pretend while the mythical "recovery" gains traction. I really do regard this financial charade being played at the highest level as The Greatest Show on Earth. I mean, really: when has deception ever been practiced on such an epic scale? The National Debt will soon be at $14 trillion, or 100% of GDP, and the fraction of foreign debt to public debt will soon surpass 60%. Both of these parameters are bellwethers for national breakdown, historically speaking.
Obama, Bernanke, Geithner, Summers - they all know these things. They can look at the dwindling tax revenues and the soaring federal deficits, they can see that foreign economies are no longer in a position to fund our profligate ways; they know that if they simply once performed the simplest of fractional analyses, where the People in the Work Force Who Want a Job = the denominator (WF); and where the People Who Actually Have Any Kind of a Job = J, that the resulting fraction, J/WF, would not produce the percentage 90%, which is the official myth for the employment picture. A simple, statistically-designed, random survey of Americans would result in a real number, and that's the last thing on Earth that Washington wants. It would cut through all the crap about "Birth/Death Models," and "Discouraged Workers," and "Seasonal Adjustments" and all the rest of the nonsense.
We hollowed out the economy by sending millions of good jobs overseas, in our innocent belief that one, kind of tubby, not too bright columnist for the New York Times knew what he was talking about with this "flat earth" stuff. We refused to protect American manufacturing with tariffs, because it interfered with the bottom lines of American multinationals. For the Great American Unwashed, they created a housing bubble so that the commoners could stay afloat by borrowing during the seven years between 2000 and 2007. Now the game is up, but we think that time will bring us back to those halcyon days of nonstop shopping and easy credit.
Meanwhile, those state politicians who actually have to balance budgets, and can't find a "household sector" of their own as a phantom slush fund, are entertaining Dark Fantasies. If Kal-ee-fornee-yuh is East Germany, who is West Germany? Japan, Mexico? Who can the Golden State elope with to escape its collapsing marriage?
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