16 Reasons Why California Is The Next Greece

blonde brunette california greece party
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It’s a new year in California and another budget crisis, potentially bigger than last year.California is $25 billion in the hole.

The first step in filling that gap involves a major bond auction on Thursday. But investors have started fleeing muni-bond ETFs in anticipation of a tepid auction.

Therein lies the key similarity: Like Greece, California relies on investors and can’t print its way out of debt.

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permalink=”california-has-a-25-billion-budget-deficit-despite-last-years-devastating-cutbacks-1″
title=”California has a $25 billion budget deficit — despite last year’s devastating cutbacks”
content=”Read more >
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permalink=”last-year-schwarzenegger-terminated-part-or-all-of-six-major-programs-healthy-families-calworks-adult-day-health-care-in-home-supportive-services-california-food-assistance-program-and-transitional-housing-placement-2″
title=”Last year Schwarzenegger terminated part or all of six major programs: Healthy Families, CalWORKS, Adult Day Health Care, In-Home Supportive Services, California Food Assistance Program and Transitional Housing Placement”
content=”Read more here >
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[slide
permalink=”next-year-the-deficit-will-be-just-as-bad-and-so-on-for-years-3″
title=”Next year the deficit will be just as bad. And so on for years”
content=”See more projections from the State Legislative Office >
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[slide
permalink=”the-25-billion-gap-does-not-include-over-200-billion-in-loans-and-other-unstated-debts-4″
title=”The $25 billion gap does NOT include over $200 billion in loans and other unstated debts”
content=”Source: Fog City Journal

California owes $8.8 billion in short-term loans that have to be paid off by June [2010], and over $120 billion in outstanding bonds and interest that will be paid over decades. The state’s pension fund, CalPers, has $16.3 billion more in liabilities than assets, plus California also faces a $51.8 billion expense for the health and dental benefits of state retirees and future retirees.
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[slide
permalink=”california-has-the-lowest-sp-debt-rating-of-any-us-state-a–5″
title=”California has the lowest S&P debt rating of any U.S. state: “A-“”
content=”Check out: S&P Downgrades California To The Status Of A Third World Country
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[slide
permalink=”lost-decade-california-employment-and-energy-use-are-back-at-99-levels-6″
title=”LOST DECADE: California employment and energy use are back at ’99 levels”
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[slide
permalink=”california-has-gone-from-overfunded-during-the-tech-bubble-to-underfunded-across-all-the-state-pension-plans-7″
title=”California has gone from overfunded during the tech bubble to underfunded across all the state pension plans.”
content=”The state has been trying to axe those notoriously generous pension contracts for years. Last week Schwarzenegger achieved a partial rollback.

Graph from Milken Institute.
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[slide
permalink=”over-50-percent-of-homeowners-are-underwater-in-vallejo-modesto-el-centro-and-stockton-8″
title=”Over 50 per cent of homeowners are underwater in Vallejo, Modesto, El Centro and Stockton”
content=”Read more >
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[slide
permalink=”the-average-home-in-merced-ca-has-lost-65-value-in-four-years-9″
title=”The average home in Merced, CA has lost 65% value in four years”
content=”Source: Zillow.com
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permalink=”7-of-americas-most-unemployed-cities-are-in-california-10″
title=”7 of America’s most unemployed cities are in California”
content=”Including the record breaking El Centro at 30.4% unemployed.”
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permalink=”california-has-fallen-from-1-in-per-pupil-spending-to-48-11″
title=”California has fallen from #1 in per-pupil spending to #48″
content=”Source: BeyondChron

Since the late 1970s, California has fallen from first in the nation in per-pupil spending, nearly to the bottom at number 48. With California’s annual budget falling from $103 billion three years ago to $80 billion currently during what’s often called the Great Recession, schools — including the world class University of California system — continue to face deep cuts in funding, fewer teaching positions, and a reduced ability to educate students.
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permalink=”california-has-7-emergency-rooms-per-one-million-people-americas-fewest-12″
title=”California has 7 emergency rooms per one million people — America’s fewest”
content=”Source: LA Times

A national report card released… by the American College of Emergency Physicians gave California a failing grade for access to emergency care. The state ranks last in emergency departments per capita, with only seven per 1 million people, compared with the national average of 20. And it ranks 43rd in the country for Medi-Cal reimbursement.
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permalink=”in-23-years-california-erected-23-prisons-and-only-one-university-13″
title=”In 23 years, California erected 23 prisons and ONLY ONE university”
content=”Source: BeyondChron

To get a handle on the damage California’s current approach to incarceration is having on its citizens, consider this: In a recent 23-year period, California erected 23 prisons — one a year, each costing roughly $100 million dollars annually to operate, with both Democratic and Republican governors occupying the statehouse — at the same time that it added just one campus to its vaunted university system, UC Merced.
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permalink=”ca-spends-859-million-per-year-on-imprisoned-illegal-immigrants-14″
title=”CA spends $859 million per year on imprisoned illegal immigrants”
content=”Source: LA Times

There are roughly 19,000 illegal immigrants in state prisons, representing 11% of all inmates. That’s costing $970 million during the current fiscal year. The feds kick in a measly $111 million, leaving the state with an $859 million tab.
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permalink=”california-spends-500-million-each-year-on-wildfire-damage-and-damage-control-15″
title=”California spends $500 million each year on wildfire damage and damage control”
content=”Source: California
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[slide
permalink=”the-big-one-california-has-no-central-bank-and-cant-print-money-to-stave-off-debt-16″
title=”THE BIG ONE: California has no central bank and can’t print money to stave off debt”
content=”This is everything.

The inability of Greece to give itself some monetary flexibility was devastating, and it’s the reason the UK is not facing an acute crisis, despite a very high level of debt. Eventually, California will need a bailout from DC, but while European leaders came together for Greece and the PIIGS, could you imagine our fractious Congress saving Europe — especially if the GOP takes over in November?

Photo: KaCey97007 on flickr
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[slide
permalink=”but-california-isnt-alone-17″
title=”But California isn’t alone…”
content=”Here’s Niall Ferguson’s Complete And Definitive Guide To The Coming Sovereign Debt Crisis >
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