Tuesday, 25 March 2008

A California Destiny?

A few weeks ago....I had a short blog on a town in California that was on the verge of bankruptcy....and the worker's union had sat quickly down to agree to some restructuring....which helped save things.

Well...in the past week....the Weekly Standard folks published a neat little article on Vallejo, California, by Stephen Moore. Its a finely crafted article which explains the entire mess with the unions and how across ALL of California....the same tactic and problem is brewing.

The city workers of California....from the cops to the sanitation crowd, from the fire department to the parks folks....are all up on a wagon and riding as far as they can....on pay and retirement. The neat thing about city retirement throughout California....is that you can start working at 22....earning 3 percent per year on your retirement.....and eventually retire with 90 percent of your paycheck....sat at age 50....and make a killing.

Vallejo....as Mr Moore describes it.....had several fire department members....who made $200k last year in pay and overtime. I sat there thinking.....across the entire state of Alabama....there is likely not a single fire department guy except maybe the chief of the Birmingham fire department....who makes over $80k a year.

When you figure in the retirement side of government....this state is basically bankrupt. The teachers union? Well....by the best estimates....the state is $20 billion in the red...and if you figure in the healthcare program that they are given...its another $48 billion.

Vallejo woke up in January and realized that it would be $6 million short on its monthly budget...and that this was going to increase across the entire year. They are talking almost $135 million on unfunded liabilities. The union quickly grasped that if the city actually did bankruptcy....then all contracts and deals were finished....and they might be screwed back down to a real pension deal....which they can't allow.

As Mr. Moore points out....EVERY single town in California is under this union threat and money pit. Even for Vallejo.....this band-aid is simply enough to slide by for twelve to eighteen months....before more costs pop up and the city management goes to the next bankruptcy threat. It'll become a yearly thing if you examine the all the facts.

So what happens here? Well...you folks who in California....are going to sit back and watch a twenty year decline in business and living cost escalation. The cities that will attempt to survive....will enact property taxes and sales taxes to bring in more money.....to meet the retirement pension scheme that the unions have built. You go and figure a 50-year old cop retiring with a salary of $75k....will likely take home over $65k and have a medical plan that drains additionally on the city revenues.

At some point....house prices will start a steady decline...probably in the three percent per year range. You will see a school district that loses 4 percent of its students yearly. You will watch retirees who pack up and move to Arizona or Nevada to resettle. The Hollywood crowd? The old-timers will stay....but you will notice a steady decline of trendy stars staying in Hollywood and most moving out.

My guess by 2015? At least a dozen California cities.....ranging from 20,000 residents on up to 400,000 residents....will declare bankruptcy. Cities and counties with bonds? Prepare for the wave of banks getting nervous and cities being able to pay back their loans. Political chaos? Prepare for a series of Republican replacing Democrat replacing Republican replacing Democrat. Prepare for regional banks in California with "safe" housing markets suddenly going under or being bought for 20 cents on the dollar. Prepare for a sudden lawyer market where unions sue cities who cut pensions by 40 percent in order to avoid bankruptcy. Prepare for cities who suddenly terminate city workers and contract out all services to contracted companies...to include the police and fire department.

In some ways....its a train wreck that is in motion and you'd wish these folks alot of luck. But the sad thing is that you've folks milking a city for every penny....and simply drawing a city into bankruptcy.

Brain-Washing: Level One

Out in Wildomar, California...the sixth grade there had a real interesting science year so far....and decided to let the folks at the Heartland Institute know that they are totally wrong in denying global warming. So they wrote up twenty-five letters to tell those folks just how wrong they are. Its a terrible thing.....trying to stand against global warming...and not believing in your teacher. Mike Steria, is the teacher in charge....and you simply have to laugh at how well Mike achieved his project with the class. Every single one of them....believe that global warming is absolute.

The trend we now see....is that science teachers will have to bend and basically reshape facts in science....in order for students....with no real background....to understand and pass on the "truth". Challenging teachers....is basically forbidden....so they will accept and just continue passing the message on. Who pays for this? The taxpayer does. Taxpayers rarely get into the teacher evaluation system and demand accountability....they are counting on the school management doing their job. The sad thing.....is that they can't do the job.....and just pass the guy on....to do stuff like this.

What would Orwell think? He'd be smiling and laughing. Its 1984...only better. Its better than Animal Farm....in this case....some animals are merely "smarter" than other animals....so reality doesn't really count for much. As the smarter animals assume their position in life.....they will kick and outmaneuver the rest of the farm's members....thus eliminating questions. Orwell would sit with a tea in his hand and just start laughing out loud.

Where does this go? Each teacher in the chain after this point....will be taught by the students. If data doesn't equal what they learned about global warming...then the teacher is wrong. If facts are presented against global warming...then they are facts. If a video openly display polar bears swimming easily in the water...then they aren't real polar bears. The battle is basically lost.