Thursday, January 20, 2011

California Governor Declares Fiscal Emergency...

Thanks to "Bill" for giving me the heads up on this.  Not sure what that will accomplish other than maybe get the legislature to reduce any spending increases they are working on.  Here's the news report:  LINK

Fiscally California is doomed and eventually will require some kind of Federal Government/printed money bailout, as will several other States. They can raise taxes but that will accomplish little as it will further hasten the exodus of businesses and wealthy people who are legally domiciled in the State.  For proof of that dynamic check out this news story from Illinois, which just raised taxes:  LINK.  Credit to my friend and colleague Hal for that story.

I continue to be amazed the way this country focuses on the financial issues over in Europe, when several large States in this country are technically insolvent.  Someone asked me to comment on the notion that gold/silver are in a "bubble" now.  That idea is little more than laughably absurd.  There's a couple of good comments regarding that in the comment section of yesterday's post.  Needless to say, until this country - and the world - figures out a way to engineer a financial "do over" AND create the framework by which every State/country can not spend more than it earns (i.e. that mechanism would be a strict gold/silver standard), the Central Banks will continue their inexorable fiat money flood and that will ultimately - and eventually - fuel a precious metals bubble that will stagger everyone's concept of what a bubble is.  Until then, all that remains is for the final chess pieces to be played out before the world experiences a financial nuclear holocaust...

I'll be out Friday on s back-country snow-cat skip adventure in order to take full advantage of the 2 1/2 feet of fresh, untracked powder that awaits on Berthoud Pass!

Have a great weekend all - Avere una fantastica fine settimane a tutti


  1. a couple of other issues: First, it would appear that the University Krannart Center loses a benefactor. Why are govt officials/entities so critical of high net worth folks. Kind of biting the hand that feeds them

    I also know that U of I Chicago Campus has been looking for a benefactor of the $5 Mil for more than a few years. Enter stage left a young fast food company owner (and the kids on Campus really do like JJ's).

    He does get some tax savings at the federal level for his contributions (not at state level). So what happens when or if we go to the fair tax where a guy like this does not get deductions--will good civic spirit alone allow someone to contribute 5 mil, vs. 3 Mil after tax?

    Does anybody at either the state or Federal level "get it" or are they all dysfunctional? do any think out the end game or are they all bought and paid for.

    Bueller, anybody?

  2. If some rich "benefactor" gives millions to charity and gets some "tax savings" from the government then all of us taxpayers gave that money to charity. why should we? How about we let these rich benefactors pay all their taxes and if they want to give their after tax money to charity I don't care.

  3. Dave,
    The framework is the EU at least. I'm sure you're familiar with his work by now but FOFOA does a great job describing this framework and his latest post is a must read IMO.

    It is not a Gold Standard. It is more along the lines of what Zoelick described by using gold as a reference point

  4. Buon fine settimana a te !