HASTA LA VISTA CALIFORNIA!
9 ŞUBAT 2011
In the iconic 80s movie “the Terminator” Arnold Schwarzenegger’s character would say “hasta la vista baby” to his defeated enemies. California has been defeated not by Schwarzenegger but by the global crisis and in a way much worse than that which in the Terminator beat its enemies. According to data gathered by the economic press in the USA, the situation of California is much worse than it looks.
It is not a good thing to bear news of a disaster, but the budget deficit running to USD 19 billion and the condition of the state’s bonds leave no room for more optimistic predictions. California is to make USD 12 billion worth of budget cuts in 2012. This means the state will spend USD 12 billion less in 2011 compared to 2010. In 2010, California, where taxes have also risen, was also noticeable for being the state with most foreclosures.
There have been 546,699 foreclosure demands in California in 2010. This figure means that four in every hundred residences in California came under foreclosure! There has been a very sharp fall in real estate prices in California. The properties in this state have on average lost 63 per cent of their value in the past four years. 2011 did not begin well for California. As of New Year’s Day, 725 new laws have become effective. 20 per cent of the population of Los Angeles receives some form of social aid from the state. The number of people unemployed in California is roughly equal to the total population of Nevada, New Hampshire and Vermont.
The unemployment record within California currently rests with the city of El Centro. El Centro has an unemployment rate of 24.3 per cent. In California, which pays the most for electricity in the USA, 25 per cent of the population under 65 is not covered by health insurance. In and around Sacramento, California, one in every six stores shut down in 2010. The state, which during the 70s spent the most on education, today ranks 48th among all the states in terms of education spending. These conditions have naturally lead to increased criminal activity. Criminal behaviour among students in San Diego is out of control. Criminality rate in schools is around 31 per cent. In the meanwhile, the police are having a hard time doing their duty due to budget cuts.
The police cannot fight increased robberies, burglaries and acts of vandalism. In towns like Stockton, the police have admitted their inadequacy. In the past 23 years, 23 prisons and only one university have come into service in California. According to the Wall Street Journal the value of retirement pensions unpaid by California ranges between USD 120 billion and USD 500 billion. These figures show that there will be greater problems in 2011 for California, which was once considered to be one of the best places to live in the world.
Although the markets may still be told optimistic stories, this cannot go forever. According to 2006 data, California accounted for 13.5 per cent of the USA’s gross domestic product and was the country’s most important manufacturing and trade state. Had California been an independent republic and not a state of the USA, it would have been the eight largest economy in the world after the USA, Japan, China, Germany, Britain, France and Italy. According to data from the same year, GDP per capita in California was USD 41,663. The USA average value was USD 37,714. If the situation in California, which is so economically developed, is so; it is not very likely that things are much better in less well developed states.