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January 9, 2009

The "Cook the Books" Financial Collapse

-- by Dave Johnson

Every book is cooked these days. This is a lot of what has led to the financial collapse. The banks lied about the assets they were holding. The ratings agencies lied about the assets they were rating. Appraisers lied about the value of houses they were appraising. Everybody lies these days...

And the unemployment rate? Great Depression jobs parallel may not be far flung | U.S. | Reuters

"... if unemployment were still tallied the way it was in the 1930s, today's jobless rate would be closer to 16.5 percent -- more than double the stated rate."

Posted by Dave Johnson at January 9, 2009 9:37 PM


Comments

Russ left this message, before I messed up something with the comments, so I am putting it back /DJ:

politicians lie to get what they want. presidents and vice presidents lie to get what they want. employers lie to get what they want. employess lie to get what they want. customers lie to get what they want. all i have to do is lie to get what i want. oh BTW with all the lies being told everywhere when someone tells the truth no one believes it. next time someone tells you a bold faced lie ____________ (fill in the blank)

Posted by: Dave Johnson [TypeKey Profile Page] at January 10, 2009 8:49 AM

As goes CA, so goes nation? No the folks leave CA.

"...With this history at their back, state leaders might have understood that people have a propensity to get up and move when a better life is to be had elsewhere. But no. After more than 150 years of being a destination, California is becoming a place entrepreneurs, investment capital and the hardy workers who made it a global leader in agriculture, technological innovation and scientific research are fleeing. This exodus is the marker of something deeper than a national recession. It's a sign that the attempts by state leaders to spend their way back to prosperity are killing California.

While it has the sixth highest tax burden in the nation, according to the nonpartisan Tax Foundation, California is facing a breathtaking $40 billion budget deficit this year. This comes on the heels of a decade-long spending spree. Last year the state budget was $131 billion, up from $56 billion in 1998.

Citizens are burdened by all manner of state regulations. To mention just one example, this year a new law enacted by ballot initiative bans cages chicken farmers use on the grounds that it is inhuman to put birds in cages that prevent them from spreading their wings. Complying with the new law will cost farmers hundreds of millions of dollars, which will force many to leave the state. And that will force us to buy our eggs from other states and, possibly, others nations, such as Mexico."

WSJ Saturday

Posted by: Mace [TypeKey Profile Page] at January 10, 2009 5:22 PM

The Wall Street Journal editorial board says business leaders are leaving California?

What a joke.

Have you ever even BEEN to California? They sure haven't.

By the way, California Republicans still refuse to say WHAT spending they would cut.

Posted by: Dave Johnson [TypeKey Profile Page] at January 10, 2009 6:00 PM

It was an opinion piece by Rep Nune (R), CA. He goes on...
"And just as a fallen tree can divert the flow of water in a creek, bad economic policies divert the flow of investment. Entrepreneurs and investors, seeking the path of least resistance, leave when it becomes easier to make a living in more business-friendly states. In 2000, according to the state's Department of Finance, about 150,000 people moved into California. But in the years that followed the in-migration slowed, and in 2005 it reversed, when a net 52,000 people moved out. In 2008, the outflow topped 135,000 people.

Consequently, Idaho, Utah and Wyoming all have unemployment rates around 5% at a time when California is suffering an unemployment rate of 9%. Californians are moving east and creating jobs in their new home states...."

He recommends...
"- End budget stalemates. This is easier than it sounds if we enact this reform: Automatically adopt the governor's proposed budget, provided it is free of tax hikes, if the legislature fails to pass a budget by its constitutional deadline. This reform would give the legislature a compelling reason to move the budget along briskly, and it would end the continual government shutdowns resulting from partisan bickering and gridlock.

- New spending controls. To prevent overspending, we need mandatory limits on the growth of government. State spending should not grow faster than inflation, and a 3% budget reserve must be established to prevent unanticipated expenditures, such as natural disasters, from creating a deficit...."

Good idea?


Posted by: Mace [TypeKey Profile Page] at January 10, 2009 6:53 PM

This is just silly stuff. Automatically adopt the Governor's budget, as long as it conforms to Republican anti-government ideology...

Cute.

And not a word about WHAT spending to sut. We already are barely repairing the roads and bridges. We already have 30-40m kids in classrooms. We already have huge lines at the DMV. We already have cut back law enforcement and firefighting.

So of course no specifics on how we are supposed to cut $40 billion out of the budget, while letting oil companies take our oil for free, and letting the rich avoid sales taxes on yachts, and letting corporations dodge real estate taxes.

Posted by: Dave Johnson [TypeKey Profile Page] at January 10, 2009 9:07 PM

You seem to be very dependent on rich people and rich capitalists to solve your problems. Reminds me of the ancient fable of the golden goose. The wisdom of the ancient's returns with a vengance.

The ebudget tells me you pay $7 billion dollars interest out your $94 billion dollar tax revenue. Your legislature has done you wrong. Any solutions with more borrowing is sticking it the K-12 students to pay back out of their pockets in five years. Game is up. Why don't stick to my fellow baby boomers and cut their state salaries, construction, health, roads, bridges, lunch money.

Posted by: Mace [TypeKey Profile Page] at January 11, 2009 6:45 PM

Mace - if you were from California you would know that the reason we pay all that interest is because Schwarzenegger used borrowing to solve the budget problems in the past, because the Republicans will not allow tax increases.

He got rid of the vehicle tax, and immediately had a big deficit.

And now Schwarzenegger and the republicans, not the Dems in the legislature, are asking for more borrowing.

The other problem in the state is Republicans say "cut spending" but refuse to say WHAT spending and then vote against every single budget proposal without offering their own.

Posted by: Dave Johnson [TypeKey Profile Page] at January 12, 2009 2:38 PM

Dave, I've read a couple times of a government kept unemployment statistic which does include discouraged workers (not so sure it includes those working part-time who wish to be working full-time; is there such a stat including all three types?)--but I've seen it so rarely I tend to forget how it's designated.

I believe in most European countries anyone out of work is considered unemployed--am I correct? Or are there other criteria? I ask bcz MCMers are fond of comparing US to European Country X to prove how much better our system is, etc.

I'd appreciate a rundown on the various unemployment stats maintained by the Feds--and how to find and use them.

My vague recollection is that before the holidays, maybe in Nov. I saw that the unemployed including discouraged was in the teens. But it is a vague memory....

Posted by: jawbone [TypeKey Profile Page] at January 13, 2009 11:22 AM

Posted by: Dave Johnson [TypeKey Profile Page] at January 13, 2009 4:12 PM

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