Chart shows warning on economy, CA budget

Chart shows warning on economy, CA budget

Since the 9/11 attack almost 13 years ago, the Federal Reserve Board has been inflating the dollar. Everybody has noticed the increases in food, gas and other prices. That’s why the supposed “records” set by the stock market are suspect.

Instead, look at this chart of the DJIA pegged against gold.

Chart of the day, DJIA, gold

It shows that the DJIA still has not recovered where it was before 9/11, although it has done better recently. That means the national and California economic recoveries are hollow. They’re built on inflation.

Yet Gov. Jerry Brown and the Legislature have built their budgets on the assumption that the economy is in recovery, and will continue recovering. As Brown keeps insisting, “California is back.”

But if they’re wrong, when the next recession hits, we could again have deficits in the $20 billion to $40 billion range.

Friends of mine in the real estate industry tell me that the whole thing is softening now; that the recent gains in prices are over. Something similar happened in 2006 before the big real estate crash, followed by the national economic crash.

I’m not making any predictions. I’m only warning that it makes sense to be prepared. And California is not prepared.

Proposition 2, the Rainy Day Budget Fund Stabilization Act, is on the November ballot. But it hasn’t been passed yet. And it only would establish a modest fund.

13 comments

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  1. SkippingDog
    SkippingDog 21 August, 2014, 15:36

    That’s nice, John. Two clear predictions followed by a claim of “not making any predictions.”

    I am curious as to exactly we should be preparing for. The complete economic meltdown of our society? Deficits in the $20-$40 billion range would not be at all comfortable for anyone, so there would undoubtedly be both reductions in service and higher taxes imposed to cover the costs. Those measures would be far preferable to most sane and reasonable people when compared to the alternatives of anarchy and revolution some here hope for.

    Assuming a worst-case of California’s economy shrinking by half, our state GDP would remain well north of $1 TRILLION annually. Even a $40 billion deficit represents only 4% of the remaining state GPD under such a calamity. Not good times, but clearly well within the bounds of our economic capabilities.

    Reply this comment
    • Donkey
      Donkey 21 August, 2014, 22:21

      My gawd Skdog, you are as dumb as a rock!!! California is already over a trillion dollars in debt. What are you snorting? 🙂

      Reply this comment
      • SkippingDog
        SkippingDog 22 August, 2014, 10:20

        You’re one of the people who are always telling us that “math doesn’t lie.” I just used the same numbers Seiler cited and applied them to our state GDP numbers. I’d love to see any real support you have for your claim that the state is “already over a trillion dollars in debt.” If you’re referring to something like the accrued “unfunded liability” of all pension systems together, or adding in all of the existing bond debt, you’re still far short of such a claim.

        Show us some real numbers, Donk. You know, the kind GASB would recognize.

        Reply this comment
      • SkippingDog
        SkippingDog 22 August, 2014, 10:33

        Here you go, Donkster. Even Joe Nation and his merry band don’t make the goofy claims you’re apparently committed to.

        http://www.mercurynews.com/california/ci_24998205/californias-wall-debt-is-only-slice-its-liability

        Reply this comment
        • Donkey
          Donkey 22 August, 2014, 17:48

          Denigrate the Donk all you like Skdog, you are still as dumb as a rock. Lets assume the Stanford numbers are right at around $600 billion and we add in California’s 12% of the national debt of 17 trillion, that’s more than two trillion dollars alone my solecistic puppy.

          You really are beyond stupid. 🙂

          Reply this comment
        • Donkey
          Donkey 22 August, 2014, 17:54

          Skdog you are such a clown, do you really believe you RAGWUS feeders live in a vacuum impervious to the nations debt. 🙂

          Reply this comment
  2. bob
    bob 21 August, 2014, 18:49

    What about the DOW in inflation adjusted terms? It’s far above it’s record in those terms.

    But when the state splits, the new state of Seilerville is formed and then secedes from the USSA things will be different.

    For the will be now Feral Reserve central bank in the country of Seilerville. It will have sound money backed by gold.

    Reply this comment
  3. Donkey
    Donkey 21 August, 2014, 22:18

    Obamacare is going to take a big bite out of the consumers pockets and the RAGWUS stealing is going unchecked, the perfect storm is close at hand!! 🙂

    Reply this comment
  4. SkippingDog
    SkippingDog 22 August, 2014, 10:22

    You really do need to get yourself a sandwich board sign and march up and down Beach Blvd. with the same message. Maybe you’ll become known as the “Golden West Greeter” and somebody will make a cheap stoneware statue of you.

    Reply this comment
  5. Queeg
    Queeg 22 August, 2014, 13:41

    Skippie……..ha ha ha ha……Perfect…..throw in a bright yellow sunflower burst costume or maybe Pluto……ah…this CWD is great……top post Skippie.

    Reply this comment

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California budgetDJIAJohn SeilerChart of the Day

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