California Going to Pot

In December 2007, I called California's $4B to $10B budget shortfall the biggest (ignored) news story in the country, which means in the world. $10B doesn't sound like much anymore, but it was and is a significant fraction of, what used to be, the budget of the world's 5th largest economy.

Today, CA's budget shortfall stands at a shocking $42B under a $130B budget, and it is skyrocketing. Higher taxes (CA income tax, alone, pushing 11%) are causing revenues to dive, as the additional economic stress breaks the back of what little healthy economic activity is intact.

California's official unemployment rate is almost 11%, but that doesn't include chronic unemployment. The official U.S. rate is only 8.5%, but jumps to over 20% if you consider the chronically unemployed and reinsert pre-Clinton adjustments. CA's numbers are likely disproportionately high, probably placing them in the 25% total UE realm.

The L.A Times is reporting over 530,000 announced layoffs in 2009. I find myself wondering how many small businesses "announce" layoffs to the L.A. Times?

The official numbers certainly do not add up, but what else is new in the land of government incompetence? CA had about 10% official UE at year end '08, which translates to about 1.3M out of 13M personal income tax returns filed. Add only the lost jobs that the L.A. Times knew about in the first two months of 2009, and you have 1.83M out of work for a best case of 14.1% UE, even at the understated, shorter than chronic, post-Clinton rate.

To make things more insane, 2009 finds marijuana to be CA's largest cash crop, more than doubling the grape and wine industry. According to MSNBC, Marijuana accounts for 2/3rds of the remaining economic activity in Mendocino County, where empty housing complexes have been converted into a sprawling degenerate drug dealer metroplex. The county has legalized the growing of marijuana to supply people (many are using FedEx) who meet the following condition(s):

a person whose physician has recommended the use of marijuana to treat cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis, migraine, or any other illness for which marijuana provides relief

(I hear it does wonders for diaper rash)

with the following (funny if they weren't so pathetic) restrictions:

1. Section 9.31.050 makes it a public nuisance to cultivate more than 25 marijuana plants on one legal parcel, regardless of whether the plants are grown indoors or outdoors, or whether the person growing the plants is a qualified patient or primary caregiver.

2. Section 9.31.070 states that the 25 plant per-parcel limitation applies regardless of the number of qualified patients residing on the parcel. The limitation also applies to marijuana cultivated or possessed by a primary caregiver for multiple qualified patients.

3. Section 9.31.090 prohibits the cultivation of marijuana in any amount within 1,000 feet of a youth oriented facility, school or park; any school bus stop; or any church. The distance is measured from the boundary of the parcel containing the marijuana to the boundary of the parcel containing the designated facility.

4. Section 9.31.100 requires marijuana grown outside to be fully enclosed by a fence at least six feet in height, with a lockable gate that is locked at all times when the patient or caregiver is not in the immediate area.

People are fleeing the state in droves, and who in their right mind wouldn't with drug dealers calling the shots?

The problem:

CA used to be the USA's cash cow. Without CA paying ever increasing taxes, the exploding U.S. budget simply cannot survive. Our nation will go bankrupt quickly, as we did during the 1930s. Without the ability to coin money (congress abdicated their constitutional duty to the Federal Reserve, and the Fed will only issue more currency if a profit can be made) there is no other outcome but an extension of the hyper-deflationary Depression already in progress.