Sunday, October 4, 2009

First Failed State?

It's been very quiet on the California economic condition. Are we getting closer?
How about a 50% vacancy rate in Sunnyvale for office space?

: Empty office buildings dot Silicon Valley

Green Shoots, anyone?

On a side-note, but related, I'm noticing California municipal bond funds rising in price. This makes no sense to me. The risk of holding these bonds seems way to high.

Hat tip to 'Coming Economic Depression', for the link to the story.

: Will California become America's first failed state?
But the state that was once held up as the epitome of the boundless opportunities of America has collapsed. From its politics to its economy to its environment and way of life, California is like a patient on life support. At the start of summer the state government was so deeply in debt that it began to issue IOUs instead of wages. Its unemployment rate has soared to more than 12%, the highest figure in 70 years. Desperate to pay off a crippling budget deficit, California is slashing spending in education and healthcare, laying off vast numbers of workers and forcing others to take unpaid leave. In a state made up of sprawling suburbs the collapse of the housing bubble has impoverished millions and kicked tens of thousands of families out of their homes. Its political system is locked in paralysis and the two-term rule of former movie star Arnold Schwarzenegger is seen as a disaster – his approval ratings having sunk to levels that would make George W Bush blush. The crisis is so deep that Professor Kenneth Starr, who has written an acclaimed history of the state, recently declared: "California is on the verge of becoming the first failed state in America."

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