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A World Of Hurt Is Comin' Our Way

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Unfunded federal liabilities of $108 TRILLION
National debt of $13 TRILLION
Annual federal budget deficit of $1.5 TRILLION

Those kinds of numbers make our state's upcoming budget deficit of $20 billion seem kind of trivial, no?

The big difference between California and the federal government, of course, is that we can't print up our own money to fix the problem by "kicking the can" down the street for another generation to pay.

Much like a normal household, we have 4 ways in which we can bring our budget into balance:
  1. Reduce expenses
  2. Increase income
  3. Borrow
  4. Receive a gift from a rich relative
Having lived in California for my entire life, I am not hopeful that we will reduce our expenses... voluntarily.    Our politicians have never had the backbone.  More thoughts on that down below.

What I have witnessed and experienced is our state's preference to raise income.  To you and me, that means increased taxes and fees.  You'd have to be nuts not to think that more of this is coming our way.

We've also shown an inclination to borrow our way out of our troubles.  Now, I don't have a problem with any entity - a person or a government - borrowing money, as long as the term of the loan matches the expected lifespan of what's being purchased.

For instance, if we issue state bonds with a maturity of 30 years, and those funds will be used for the construction of a dam or other significant piece of infrastructure, I'm OK with that.  What I can't abide by is when we borrow long-term funds for short-term expenses.

The $15 billion Arnold borrowed on our behalf when he first came to office comes to mind.  That money has long been spent, and we'll have to pay the bill for a very long time.

The last option is a gift from a rich relative.  In our state's case, that would be Uncle Sam.  What plays in our state's favor is that we are one of Uncle's favorites.  We are the epitome of Too Big To Fail.

Here's the problem, though:  We're not the only state with financial problems.  If Uncle gives us some money, he'll have to give all of his other financially inept nieces and nephews some money, as well.

For that to have any chance of passing muster with the House and Senate, they will have to force us to swallow some very bitter medicine.  We will have to go on some sort of austerity plan.

That plan will necessarily consist of tax increases and service cuts.  For the long-term, the shrinking of government will be great for California, as it may provide political cover to our spineless state "leaders" to make the cuts that are long overdue.

My concern is with the short-term.  What will be the likely reaction from the people that pay taxes being asked to pay even more, and from the people that receive the benefits being told that the trough is empty?

I think the recent events in Greece spell that out quite clearly.

If we don't have violent protests this summer (and next), I will be shocked.  We will have civil unrest.  And unlike the recent violence we've seen from people upset their tuition is going up and/or their services are being reduced, I believe that the formerly-passive tax paying public might jump into the fray as well.

Enough is enough.

So what can you do to reduce the negative impact of what might be coming our way?

On the financial side, you should have already started your own austerity program.  If not, start one now.  In the coming months and years, financial liquidity will rule.  Money gives you options.  The more of it you have (or keep), the more options you have.

The more dependent on the state or a job you are, the less able you are to act in your own best interests.  Flexibility and adaptability will help to ensure your success.

Personally, for the last 2 years, my family has worked to reduce our dependence on any one person or stream of income.  If one fails, we're not decimated.

We have a cash reserve which now allows us to buy what we need when the best prices present themselves.  When we look to buy something, our first instinct is to look at Craigslist or Freecycle first.  If it's not available, we look to buy it online (specifically with out-of-state companies to save the nearly 10% sales tax), THEN we'll look at buying from a retail store.

Our focus is on the preservation of OUR capital, not on the cash flow of the state.  They have shown that they don't deserve our loyalty.

Regarding civil unrest, I strongly recommend each and every one of you learn how to defend yourself and your household.  I've got to believe most preppers have already got this mindset, but if you haven't taken some concrete, practical steps to learning about safety awareness and some flavor of self-defense (from martial arts, to pepper spray/stun gun, to firearms training), please do so now.

If you need more incentives, look at your local newspaper, and count up the number of stories on robberies, home invasions and assaults.  Do that every day for a week.  Nice, huh?

You never know when violence can erupt.  In Philadelphia, for instance, they are having increasing problems with "flash mobs".  A viral text message is shared, and suddenly a few thousand people show up in one spot.  They're not there for a poetry reading.  You might find yourself in the middle of this.

See how well calling 9-1-1 works in that situation.

I've got a new, favorite saying:  Audentes fortuna juvat.  It's Latin for, "Fortune favors the bold."

Our coming times will not be kind to the meek or passive.  Bring a bit of boldness into your life.

You can follow Chief Instructor at Accept The Challenge.
Join the APN Forum at www.AmericanPreppersNetwork.net
Visit the California Forum at www.CaliforniaPreppersNetwork.net

Anonymous said...
May 6, 2010 at 1:38 PM  

The governor (perhaps the next governor) should declare an emergency and use his emergency powers to cut the state bureaucracy. 1)Request a list of the least valuable/productive state workers and fire them (except for public safety). 2)ask every school to assign one (and only one) teacher to a classroom and fire all teachers not assigned to a classroom. Years ago a teacher worked the entire school day and could teach more then one subject. We have about twice as many teachers as we need. If this still falls short of balancing the budget then as for another list of the 10% least effective public workers and fire them too.

Chief Instructor said...
May 10, 2010 at 9:54 AM  

I'd start with all of the departments and commissions we have that aren't specifically required by our state constitution.

After that, let the axe swing freely in all other departments.

It's going to be very interesting to see how this all pans out. It's almost New Budget time, and I haven't heard a peep coming out of Sacramento on what's going to be the plan for quite a while.

Anonymous said...
May 11, 2010 at 7:26 PM  

The system is broken. The politicians could not get elected without the support and donations from unions and other special interest groups. Since the general public is pretty much split between parties they don't determine the outcome of an election and therefore are ignored by the politicians. So The simplest answer for the politicians is to let the debt build up and keep taking care of the unions and special interest groups and eventually everyone will accept that the only solution is higher taxes.
By the way I have been in unions and I don't blame the working stiff for the crap going on it is the people who run the unions who are screwing things up.

Anonymous said...
May 13, 2010 at 8:31 PM  

It's gonna happen. It really is. We are sitting here talking about it going about our business as if we didn't totally believe it. But there is no way out. We (the government) are borrowing to put off the inevitable and that only makes things worse. Sooner or later it will fall apart. Certainly when interest rates climb again we will be unable to pay the interest on the debt. We are standing on the precipice looking over the cliff at the next great depression. I can remember asking my parents why they didn't do something when the great depression first began and she said "no one knew what was coming. Everyone thought it was a short term thing and it would get better". It's happening again as sure as you are sitting there. Don't waste the time you have left. Pay off your debts, sell your new car,stock a year or two of food, plant a garden, get some chickens, get ready! Obama is clueless and the Democrats (and Republicans) in congress are literally looting the treasury and ignoring reality. I don't know how long this will last or how bad it will get but you better prepare for the worst. This might be a long nightmare.

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