Tag Archives: credit markets

Past The Point of No Return

There was a report out yesterday about climate change that basically said we’ve reached a point where dramatic changes to the climate, to sea levels and to weather patterns were irreversible, that even if we dropped everything and eliminated every single carbon emission it would take perhaps thousands of years to return to equilibrium.  I feel the same way about California’s finances.  If every Yacht Party member suddenly turned into Paul Wellstone and we changed every revenue source and dysfunctional structural barrier, we’d STILL be in a world of hurt.  A couple stories today make that clear.

First, a coalition of emergency room doctors has had enough and is suing the state for additional funding to stave off a total collapse of the ER provider network.

Frustrated emergency room doctors filed a class-action lawsuit against the state Tuesday, saying that California’s overstretched emergency healthcare system — which ranks last in the country for emergency care access — is on the verge of collapse unless more funding is provided.

Across the state, scores of hospitals and emergency rooms have shut their doors in the last decade, leading to long waits, diverted ambulances and, in the most extreme cases, patient deaths.

Doctors say the situation is only getting worse. State officials, struggling to balance the budget, have proposed another $1.1 billion in Medi-Cal cuts.

“Are people truly suffering consequences? Absolutely,” said Irv Edwards, one of the doctors represented in the lawsuit and president of Emergent Medical Associates, which staffs 14 emergency rooms in California. “This could happen to you or me. We could be traveling through San Francisco or San Jose, get in a car accident, have a broken leg and end up in the ER, where it takes hours to be treated regardless of our screams. Then we get to diagnosis, and they say, ‘There’s no orthopedic on call. I’m sorry.’ “

ER doctors are required by law to treat whoever comes through the door, and rising ranks of the uninsured have stretched the system beyond repair.  Further, specialists are frustrated with the low reimbursement rates and are taking their names off of call sheets for referral in case emergencies require their services.  A physician on KPCC’s “Air Talk” today described the suit as a “canary in a coal mine,” warning that without increases in rates, not just restoration of funding but increases, there will be no emergency room network in California, period.

Then we have Standard and Poor’s downgrading the state’s credit rating for economic recovery bonds once again, meaning that investors will see a lower-than-expected return and will be far less likely to buy whatever else California sells in the future, which by the way is how we fund our state government.

Finally, you have two ignorant lawmakers, Arnold Schwarzenegger and Jerry Brown, asking the US to halt federal oversight of state prisons even though precious little has been done to manage the crisis.  Brown and Schwarzenegger are more interested in saving a few pennies than the Constitutional rights of those incarcerated.  The failure to understand this problem over 30 years have put these disgraced leaders in the position to lie to their own citizens because they can’t face up to their responsibilities.  And as the accountability for this shocking behavior is remote, there is no reason for it to stop.

State Attorney General Jerry Brown feigns to be shocked, outraged and appalled that a proposal to build prison facilities for older, chronically ill, physically impaired, feeble prisoners includes exercise rooms, TV rooms, gardens and natural light.

Taking all this away, as Brown surely knows, wouldn’t save much money – but it would make life difficult for prison workers to manage the prison population. Hey, why not take away air conditioning, too? […]

Brown whines that a federal court-imposed solution would violate “state sovereignty.” Yet he knows perfectly well that the state could avoid any court-imposed solution if it would simply take responsibility for a solution on its own.

One such solution had been proposed by the governor and was supported by legislative Democrats, a bond package for facilities. Senate Republicans killed it last May.

And nothing stops the state from working with Kelso on a negotiated settlement that would reduce the population of older, feeble, chronically ill prisoners or build facilities to house them.

But none of that is happening. Despite all the complaining about the federal courts, the governor, lawmakers and Attorney General Brown seem quite content to let the courts decide – deflecting blame to the judges and away from themselves for the choices that have to be made.

Jerry Brown doesn’t believe that prisoners are human beings and that they lost their Constitutional rights upon conviction, even if they are being held for the medical condition of drug addiction (which he ensured by opposing Prop. 5 in the most dishonest manner possible).  His attitude is retrograde and horrifying and shows a complete failure to account for his own actions.

He’s also the top candidate to be the state’s next governor.

We are past the point of no return.

CA Challengers All Over The Map On The Bailout

The Senate passed the bailout bill, with 2/5 of the DeFazio plan embedded – the raising of FDIC insurance limits, which was long overdue, and the ability for the SEC to suspend mark-to-market accounting, which is some kind of fairy tale.  It also includes all kinds of other legislation, like a tax package which is mainly focused on renewable energy tax credits, the only – I repeat, only – provision through all of this which could grow the manufacturing sector and reindustrialize the country (which is, you know, the key to America’s economic survival).  It actually RAISES taxes for oil companies as well.  I don’t think “Exempt from excise tax certain wooden arrow shafts for use by children” needed to be in there, but hey, it’s Congress!

The Senate jammed the House pretty good on this one, and I think they’ll eventually comply.

My Senators, Boxer and Feinstein, both voted for it, which shows that this cuts across ideological lines.  And yet I can’t argue with a word Russ Feingold says here:

“I will oppose the Wall Street bailout plan because though well intentioned, and certainly much improved over the administration’s original proposal, it remains deeply flawed.  It fails to offset the cost of the plan, leaving taxpayers to bear the burden of serious lapses of judgment by private financial institutions, their regulators, and the enablers in Washington who paved the way for this catastrophe by removing the safeguards that had protected consumers and the economy since the great depression.  The bailout legislation also fails to reform the flawed regulatory structure that permitted this crisis to arise in the first place.  And it doesn’t do enough to address the root cause of the credit market collapse, namely the housing crisis.  Taxpayers deserve a plan that puts their concerns ahead of those who got us into this mess.”

This is all true, and this was ultimately a bad plan, but I respect the opinion of hold your nose caucus as well.  I would have preferred a short-term fix with a vote giving a popular mandate to the solution.

Because right now the public opinion situation is very muddled.  People absolutely believe this is a crisis and they might not want to bail out Wall Street but they are adamant that something be done.  This is acute in California.  The state, with its emphasis on selling bonds and borrowing, is currently unable to pay its bills.  Bonds for highway construction, schools, housing and water projects cannot be sold.  The credit crunch has real-world effects.  This is why the Governor wrote the Congressional delegation and urged passage.  This is also why you don’t run a government based on borrowing, but there you go.

And so you have the fascinating and strange situation where Democratic challengers in Congressional races are hammering their incumbent opponents for voting yes AND voting no on the House plan.  On the side of “how could you vote for this” are Bill Durston (who rushed out an ad hitting Dan Lungren for voting yes) and Ed Chau (who slammed Gary Miller in a press release).  On the side of “I can’t believe you didn’t vote for this” are Nick Leibham, who couldn’t have been more exercised about Brian Bilbray’s no vote (calling it “totally irresponsible”) and Charlie Brown, who defended the need to do something against nutjob free market fundamentalist Tom McClintock.

And then you have Russ Warner, who cited David Dreier’s hypocrisy while saying he would have voted for the bill as well:

Warner’s campaign pointed to a conflicting statement on Dreier’s website, where the 13-term incumbent writes, “I believe we need to empower families to make sound economic choices and avoid taxpayer funded bailouts.”

While Warner says he would have voted for the bailout bill as well, his campaign attacked Dreier for changing his position.

The point is that no politician has any idea what the people want, and the decision-making process is exceedingly complex.  Those who are taking principled stands are likely to be rewarded and those taking political ones punished, but even that is unclear.  I would steer clear of making definitive statements about the public mood; chances are they don’t even know what they think.