California's Financial Crisis

The new normal as coined in the media, is said to represent where we are going, what exactly that will look like and when will we get there. Last night as I attended an event held at the Milken Institute which focused on California’s financial crisis, the "new normal" weighed heavily on my mind. The event featured an esteemed group of panelist, including Inspector Laura Chick, Controller John Chiang and three well respected economists.

During the course of the evening we were exposed to daunting statistics: the situation is four times worse than the worst forecast, California has not been net cash flow positive since July 12, 2007, California will be in the red by July and we will need to borrow an estimated $20 billion by next March.

As has become commonplace with all commentary, the now well-known axiomatic list of reasons we are facing this dilemma was recited: expensive spending without discipline, believing the housing market was going to continuously increase, the amount of leverage (both private and public) and the ease and availability of cheap borrowed money to fill the gaps. Unique to California was a few added comments regarding terms limits, the careful crafting of the districts to protect interest and the dispute over local control of tax revenues. And of course the word “greed” had to be thrown around a few times.

So what now, I asked myself as I left the event with a heavy heart and mind. My answer, life will go on and people will find their way. Perhaps not to their preference or satisfaction but similar to the Great Depression, people will continue to live their lives, assets will be bought and lost, relationships will begin and end, babies will be born into the world with innocence hopes for a better tomorrow and people will strive for a better life.

The economist Larry Harris said it best when he noted that true wealth has not disappeared, our machines, houses, people and ideas still exist. It is the people and their ideas that create wealth and what will be the basis for the prosperity to come.

I also prescribe to this philosophy believing that innovation, invention and entrepreneurship is our foundation and will be our future. With that—I will spend the day thinking about what I can invent and hope that in the midst of all this bad news, you will too. It is our only hope.

Posted by LW and Associates at 5/22/2009 7:13 AM
Categories: From the desk of Lori Williams
Tags: milikan institute larry harris california laura chick financial crisis
 

What did you think of this article?




Trackbacks
Trackback specific URL for this post
  • No trackbacks exist for this post.
Comments
Display comments as (Linear | Threaded)

Leave a comment

 Enter the above security code (required)

 Name

 Email (will not be published)

 Website

Your comment is 0 characters limited to 3000 characters.