Bloomberg News Service States:
“…[California’s] looming cash shortage, brought on by the global credit crisis that dried up the supply of money for loans.”
In an earlier version of my economic model, I had the opportunity to make payroll for years and years. It was an experience, but it never included asking for loans before payday. Maybe that is because my business was simple. We provided a product in exchange for money. We charged more than it cost us to produce the product. Part of our revenue stream went to payroll. The difference between our revenue and our costs was our profit, from which I provided for my family.
California’s cash shortage has nothing to do with the global credit crisis. It has to do with the fact that they spend more money than they take in. Which has a lot to do with the fact that their high tax rates have chased business and productive people to Nevada and Arizona. And maybe, just maybe, something to do with tens of millions of illegal aliens who work under the table but use state services nonetheless.
But Bloomberg attributes California’s budget problems to a ‘credit crisis’, which I’ve seen no evidence of. Something tells me that the New York City budget might just be having some problems it’s own self. Not that that would influence Bloomberg’s news reporting, or his decision to abandon term limits, or anything like that.
An economic downturn, now and then, can be a healthy thing. Grip that podium, Mr. Mayor.