16 Reasons Why California Is The Next Greece

[bobbyw24]

http://www.businessinsider.com/why-california-is-the-next-greece-2010-05#california-has-a-20-billion-budget-gap-despite-last-years-ravaging-cutbacks-1

 

[HOLLYWOOD]

BTW, Obama is working in the wings with CONgress on a big bailout plan for the states... He needs those mass quantities of electorial votes from; California, New York, New Jersey, Illinois, Massachusetts, & Pennsylvainia in 2010/2012.

 

[InPaulWeTrust]

Yes, probably in the same magnitude as the Euro Bailout...or larger...at least the printer business will be doing well, it's a major boon for their sector.

 

[zdenek795]

As far as I know it is not true.

Californians are 3 x richer than Greeks and there are 4 x more of them.
They are able to pay debts - I think.

 

[torchbearer]

As far as I know it is not true.

Californians are 3 x richer than Greeks and there are 4 x more of them.
They are able to pay debts - I think.

able to and willing to are two different things.

 

[zdenek795]

Isn't it funny that people from poor states are going to pay debts for California - which is the richest state in USA.

Maybe it is the rule that the poor must pay debts for the rich.

 

[Zippyjuan]

California tax payers support other states already. They are one of the states who contribute more to Federal coffers than they receive back in Federal expenditures- ranking #43 out of 50 (we get 78 cents back from every tax dollar we send in http://www.taxfoundation.org/research/show/266.html ). As a percent of its GDP, the California debt is nowhere near that of Greece.
http://seekingalpha.com/instablog/166473-gary-a/47659-california-debt-to-gdp-ratio-is-very-low

California Debt to GDP Ratio Is Very Low. 2 comments
Feb 7, 2010 12:30 AM


California debt to GDP ratio is extremely low. With a nearly 2 trillion dollar GDP, the budget deficit is 26 billion for 2008-2009. Granted, the state cannot issue its own money, but it can issue its own IOU's. Since the dollar is an IOU, I doubt if the federal government wants competition. It is likely that California will be bailed out in some fashion.

Countries like Greece and Portugal run a debt to GDP ratio of around 100 percent, and they cannot devalue their currencies, because their currency is the Euro. The risk of default and weakness seems to be much greater in Europe than in the US. The states are much more debt free in relation to the PIIGS of the EU, ie. Portugal, Ireland, Iceland, Greece and Spain.

 

[zdenek795]

I think every state receives much less than it gives because of cost of federal government.

 

[torchbearer]

I think every state receives much less than it gives because of cost of federal government.

for every dollar we send, how much do we get back after administration cost and fraud?

 

[fatjohn]

California tax payers support other states already. They are one of the states who contribute more to Federal coffers than they receive back in Federal expenditures- ranking #43 out of 50 (we get 78 cents back from every tax dollar we send in http://www.taxfoundation.org/research/show/266.html ). As a percent of its GDP, the California debt is nowhere near that of Greece.
http://seekingalpha.com/instablog/166473-gary-a/47659-california-debt-to-gdp-ratio-is-very-low

If you want to compare with european countries do it right. That means you should add the federal debt and deficit to it for which the state is responsible.

If the EU would also be able to issue debt and have deficits greece could definitely look like cali.

the true deficit of cali is 24,3/1800 or 1,36 percent plus the deficit of the us which is 10,64 (http://www.usgovernmentspending.com/federal_deficit_chart.html) thus the total deficit of the government of california as if it was a country on it's own like greece would be yes 12%

Doing the same for the debt would give like 94-95 percent of GDP.

Now for importance reasons: Greece does has twice the debt the state of cali has. Therefore a larger bailout is needed. And due to that cali is indeed richer it would need less tax increases or budget cuts to get the deficit to zero.