The California budget crisis

What caused this  budget crisis?

The proposed state budget takes 3.1 billion from k-12 schools, closes parks, forces state worker furlough’s and more.  County and city budget cuts reduce our police protection, cause limits on fire protection, and close mental health facilities pushing some of the mentally ill into jails and prisoners out of our jails early  on to the streets.

While  state budget reforms are needed, the basic cause of this crisis is the economic crisis in the nation.

 Crisis in the states.

The current  economic crisis has forced the cutting of higher education, of k-12 education, and of social welfare systems.  This crisis was caused by the greed and avarice of the financial class and aided by the politicians of both major political parties.

First came the housing bubble and the selling of near fraudulent home mortgages.  To make a profit m ajor banks and corporations looted the economy creating an international meltdown.  Now, they have been rewarded with bail out money.  The crisis was not caused by students, teachers, public employees  nor recipients of social security.   Now we have cuts in parks,  in universities, in nurses, libraries.  School children did not create this crisis.

The major bankers, finance capitalists in the U.S. robbed the bank last year  – and the federal treasury.  They took hundreds of billions of dollars.  – Goldman Sachs alone took $10 Billion.  For example,  Ken Lewis of Bank of America received an $ 81 million dollar pension.  They have not even been punished.  One thing we should do is arrest the top 100 executives and CEO’s of these companies, give them a fair trial, and throw them in jail.  Until we arrest some people – there will be no real changes.”

Our financial system as a whole crashed not because of one bank. Goldman Sachs ( with Meg Whitman on the Board) certainly played a major role as did JP Morgan Chase, Morgan Stanley, and CitiCorp, along with the many corporate finance institutions  like Bear Sterns, Merrill Lynch, Lehman Brothers, WaMu, Depfa.  We had a systemic breakdown because nearly all of our policy makers, academics, politicians, and pundits promoted  a failed, self serving  ideology of self-correcting financial markets. Finance  profiteers walked off with big bucks while contributing to the  crash  of the system.  

As of  this week we know that the TARP bailout of the banks worked.  While $700 billion was allocated to rescue the banks, now all but $50 billion of that has been repaid.  It was a successful intervention to stop the Wall Street Crisis.  But, now the crisis remains in the states, the counties and the cities.

While we look at the California budget crisis, lets keep the issues in perspective.