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-- Posted Wednesday, 20 May 2009 | Digg This Article | | Source: GoldSeek.com

Rick’s Picks

Wednesday, May 20, 2009

“Phenomenally accurate forecasts”

As California goes, so goes the nation?  Let’s hope not, since voters looked all but certain on Tuesday to force the deepest spending cuts since statehood was achieved in 1850. We have no qualms endorsing spending cuts over tax increases, but in this case the cuts will be so severe that it’s possible only basic services will survive. A certain casualty will be the state’s once-vaunted higher education system, which looks set to take a $2.3 billion hit on top $3 billion in reductions already baked in the cake. At the grade-school level, 27,000 teachers have already been laid off, but another 25,000 would face joblessness if tax-and-spend measures on the ballot are voted down. That would represent 15% of the state’s public-school teachers and a possible boost in class size from 35 to 50 students from 20 to 35.

The almost certain failure of Tuesday’s ballot initiatives will also push the state’s borrowing needs into the stratosphere, placing a commensurate burden on taxpayers for years to come. California legislators had been planning to borrow about $13 billion in the coming fiscal year, but that figure will likely have risen to about $20 billion by Wednesday morning.  Under the circumstances, what incentive would anyone have to live in California, assuming one is not trapped in a home worth less than its mortgage?  Ordinarily, we might expect a huge exodus to Nevada, where property values have crashed to levels that down-and-out Californians could afford. Trouble is, the casino jobs that might otherwise lure Californians to Las Vegas and Reno have  largely vanished, and the gambling industry remains in its worst funk since Bugsy Siegel took Horace Greeley’s advice to Go West, young man.

Almost as scary as California’s fiscal future is that of New York. Suffice it to say, the state’s financial problems, like those of California, are beyond remedy. We’ll take them up at a later date, but first let us say, R.I.P California.

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Rick's Picks publishes a daily trading newsletter for gold, stock, commodity, and mini-index traders 240 times per year. Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers' initials will be used unless express written permission has been granted to the contrary. All Contents © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com 

-- Posted Wednesday, 20 May 2009 | Digg This Article | Source: GoldSeek.com

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