Contributed by Chriss Street: In another abrupt surprise, the respected Chairman of the Orange County’s Treasury Oversight Committee resigned on April 16. It seems he was asked to read into the public record at a meeting of the Board of Supervisors a letter by county Treasurer Shari Freidenrich stating that she had complied with the county’s Investment Policy Statement mandates. The community was already reeling from discovery that….
Contributed by Chriss Street: Like the Titanic that ignored warnings and ran full-speed into a massive iceberg, Orange County is taking enormous financial risks rather than addressing its gapping cash-flow deficit. The county quietly entered into $518 million of illiquid and unsecured interest rate wagers, mostly financed from payroll and savings accounts of local schools and other government agencies.
Contributed by Chriss Street: Orange County’s financial crisis spirals out of control as the State of California filed a law suit to force return of $73.5 million of property tax revenue the County skimmed from schools and community colleges last November. At the time, it seemed bizarre that the “Most Conservative County in America” would increase spending by $145.8 million, then grab the school’s cash and cancel layoffs of 490 union workers.
Tuition at the California State University will be double of what it was in 2007-08. But it’s still not enough. Now CSU threatened taxpayers and prospective students with stunning enrollment cutbacks, unless—this smells of extortion—it gets its tax increases on the ballot and passed. University of California is also jacking up tuition and cutting enrollment. And yet, a lavish multi-billion-dollar building boom continues on campuses around the state.
Republicans are trying to tar President Obama with gas prices that are creeping up on $4 a gallon and are shooting for an all-time high. The strategy is working. Obama’s approval rating on handling gas prices has plunged. In San Francisco, gas is already $4.50. Yet across the Bay are five oil refineries that together are the largest exporters of petroleum products in the nation.
Optimism has always been the hallmark of California—especially when it comes to tax-revenue projections. Now the independent Legislative Analyst’s Office laments that Governor Jerry Brown’s budget is another extravaganza of optimism, particularly the projections of how much moolah can be extracted from wealthy residents. Which the Governor expects to skyrocket, magically.
There never was that “giant sucking sound” that Ross Perot had warned about during his quixotic presidential campaign in 1992—the sound that manufacturing jobs would make as they head south to Mexico. Turns out, he was wrong. The jobs went south silently. However, yesterday in San Francisco, there was that sound. From money going east. Lots of it. From fundraisers.
High-speed rail works if it links big urban areas and has lots of riders. The most successful is the Tokyo-Osaka Shinkansen: 150 million passengers per year. Even Amtrak’s slower route between New York City and Washington DC is profitable, though the rest of Amtrak is not. In theory, California’s High-Speed Rail Project falls into that category. In Reality, it has turned into a scandal before construction has even started.
California is broke again. The “balanced” budget last summer turned into a pile of overoptimistic assumptions. Out-of-money date is March 8. $3.3 billion must be dug up, pronto. Last fall, California had to borrow $21 billion to make it to April. Now all eyes are on Facebook. Its IPO will singlehandedly solve all budget problems forever—just like Google’s IPO had done.
With IPO hype blowing like a maxed-out hairdryer into my face, I Googled … Friendster—the shining star of social networking that everyone had drooled over. Turns out, in 2009, Friendster was bought for a pittance by MOL Global, a Malaysian company. In 2011, it discontinued social networking activities and rebranded itself as a gaming site. But there is one valuable asset it still has: user information.