By Patrick McGreevy and Michael Rothfel

Reporting from Sacramento — Gov. Arnold Schwarzenegger and lawmakers scrambled Wednesday to avert a financial meltdown, and public officials across California braced for annihilating cuts on the day after voters trounced their leaders’ rescue plan for the state.

Within two hours of returning from Washington, D.C., the governor huddled behind closed doors with Democratic and Republican legislative leaders to grapple with a projected $21.3-billion budget shortfall for
the coming fiscal year and stop state government from running out of money by July.

View Article . . .

18 Comments

  1. When you depend upon the federal governmet to make various economic projections, one is just asking for trouble.

    The Latest in Junk Economics: Marginalist Panaceas to Today’s Structural Problems

    by Michael Hudson

    It looks like bookstores are about to be swamped this summer and fall by a forest of advice for which publishers gave respectable advances a year ago as the economy was going off the rails. Seeking to minimize the risk of cognitive dissonance, the marketing strategy seems to be to offer advice by well-placed or celebrity insiders on how to recover the kind of free lunch that American pension plans – and popular hopes for easy wealth – have long assumed to be part of the natural law of economic growth, if only it can be better managed. The fantasy that people want to buy is that the happy 1981-2007 era of debt-leveraged price gains for real estate, stocks and bonds can be brought back…

    For the time being we are being fed Wall Street defenses of the Bush-Obama (Paulson-Geithner) attempt to re-inflate the bubble by a bailout giveaway that has tripled America’s national debt in the hope of getting bank credit (that is, more debt) growing again. The problem is that debt leveraging is what caused our economic collapse. A third of U.S. real estate is now estimated to be in negative equity, with foreclosure rates still rising. So publishers have only a short time frame to sell the current spate of books before people wake up to the fact that attempts to renew the Bubble Economy will make the financial overhead heavier….

    What needs to be written about is what the marginalists leave out of account and what academic jargon calls “exogenous” considerations, which turn out to be what economics really is all about: the debt overhead; financial fraud and crime in general (one of the economy’s highest-paying sectors); military spending (a key to the U.S. balance-of-payments deficit and hence to the buildup of central bank dollar reserves throughout the world); the proliferation of unearned income and insider political dealing. These are the core phenomena that “free market” idea strippers have relegated to the “institutionalist” basement of the academic economics curriculum.
    …
    The irresponsible cheerleaders applauding a bubble economy as “wealth creation” (to use one of Alan Greenspan’s favorite phrases) would like us, their audience, to believe that they knew that there was a problem all along, but simply could not restrain the economy’s “irrational exuberance” and “animal spirits.” The idea is to blame the victims – homeowners forced into debt to afford access to housing, pension-fund savers forced to consign their wage set-asides to money managers for the large Wall Street firms, and companies seeking to stave off corporate raiders by taking “poison pills” in the form of debts large enough to block their being taken over. One looks in vain for an honest acknowledgment of how the financial sector turned into a Mafia-style gang more akin to post-Soviet kleptocrat insiders than to Schumpeterian innovators.

    http://www.itulip.com/forums/showthread.php?p=98659#post98659

  2. Hi Catherine, When the mainstream media starts picking up on the absurdity of political double-speak, can the end be far off?? Is there a government entity left that can monitor the clearly fraudulent activities of the administrative branch of government? Looks like congress and the judicial branch are fast asleep. Too bad there aren’t a few lawyers in all three branches that might step up and call the blatant and repeated bluffs of these politicos.

    http://www.youtube.com/watch?v=1uuWVHT1WUY&eurl=http%3A%2F%2Fwww.godlikeproductions.com%2Fforum1%2Fmessage800418%2Fpg1&feature=player_embedded

  3. Hi Catherine,

    I read your blog with interest; however, I am wondering why you do not point out WHO these people are that have run the FED since I have been alive, WHO owns the Central Banks around the world, WHO owns our Mass Media Propaganda Machine, WHO did 9/11 and WHO is attempting to control the thoughts and knowledge of all humans?

    They are called Jews/Zionists/Marxists/Racists/Thugs. You only live once Catherine, please live with honor, integrity and truth. For only with knowledge, may truth rule and justice prevail.

Comments are closed.