A review of the Californian Economy Nov: 08

The current economic climate is bleak; in fact, for most, it is down right terrifying. While I celebrated (and continue to) the victory of Obama I have not fooled myself into believing that this will immediately solve any of our economic crisis'. America's current unemployment rate is at 6.5% and California's is at a whopping 8.2% making it the 3rd highest in the country. Since most analyst seem to think this is only the beginning things are going to get worse and not just on the job front (if you look at the previous article, they are estimating unemployment rates at at least 9.9% in 2010).

This is going to put a huge burden on the already draining unemployment insurance funds. According to the associated press, California's Unemployment Fund is “expected to have a deficit of $1.6 billion at the end of 2009” now, if we link that to what we saw above something terrible and terrifying comes out. Unemployment Insurance is paid for by from taxes taken out of people's paychecks. The fewer people out there with jobs, the less is paid into the fund. If, at the same time we have record highs of people who are applying for these funds, California will have to consistently borrow from the federal government. This is in addition to the record high deficit expected for the State of California. It is estimated that in 2010 there will be a deficit of $28 Billion dollars.

This deficit comes in the face of demands for social services, higher education funding and the aforementioned job loss rates.

All signs point to 2010 being a horrible horrible year for California if solutions aren't generated.

California's Leadership has already started to take actions to try and curb the oncoming crisis. Senate Pro-Tem Elect Darrel Steinberg, Assembly Speaker Karen Bass and former Pro-Tem Don Perata wrote a joint letter to Governor Schwarzenegger in October requesting that the Governor work with Congress in trying to bolster the economy of California and Karen Bass has been rather vocal in her requests.

It is estimated that the stimulus package will mainly fall to infrastructure; the creation and repairing of roads and rails. Many municipalities need such help seeing as many roads are being left unpaved because of increasing prices of materials. This was as a result of oil prices and demand from China. This stimulus package will create jobs and give a little bolt to the economy but it is still a band aid on a broken bone.

Until some form of a real solution is found, I am still going to be nervous, as I assume most others will be as well. Until then.

-Andrew Kornblatt

Sorry about the absense.

I have been working on so many other projects I haven't been able to comment over the ridiculousness of this campaign.

I wanted to talk about, when it happened, the insanity i have seen coming from the right and how, as a Jew, it reminds me so much of what I have heard of 1930's Germany.



I wanted to talk about the economy and how we are NOT a free econonomy and have NEVER been a laze-fair economy. How we have, since the great depression, had regulations on the market and have "spread the wealth around" though welfare, rebates and work programs for almost 100 years.

I am a little disappointed in both sides but I am furious at the right. I am insulted, and have been since 9/11, when they accused me of being unpatriotic because I had the gaul to look at what we did to create that event, what actions we took to create that much anger. I am insulted to be called a not "real american."



I wanted to comment on these events and a lot more but I have been incredibly busy with my own work and *gasp* other blogs.

I wanted everyone out there to be aware of a few sites;

I have been following electoral vote.com and
fivethirtyeight.com. I like 538 because it is a little more in depth, a little more accurate and much more conservative. The fact that they currently have 259 for Obama and 118 McCain makes me a bit optimistic.

But if you want to follow a specific proposition or local election in California, a great place to watch the returns is the Secretary of State's site

I am following Prop 4 rather closely.

I wait with baited breath.

Really? Really?

“I'd like to share a few [facts] with you tonight”

I am busy working on a few campaigns trying CHANGE things. But I wanted to say something about the RNC and the media.

Ignoring the inflammatory lie that schools are better off with this administration and ignoring the fact that these Judges she is so proud of could take away some basic rights and the faith based initiatives give , or taking credit for the AIDS relief bill that he introduced at a moderate 15 billion that the SENATE raised to 50 billion that only got through the Republican controlled Congress with a trailer bill with a “provision that one-third of prevention spending be used on abstinence-only education.”

What really ticks me off is the following sentence; “In Afghanistan and Iraq, 50 million people are now living in freedom.” I swear to gawd that these people live in a different universe.

Their grip on reality is frightening.

But this man, this man is amazing.

Obama V. McCain Who does the Military Love?

I want you to contemplate something. First, remember that one of the major arguments against the Obama campaign is lack of experience and the only other real advantage the McCain campaign has in it's warchest is McCain's military experience and pull as being a war-hero.

Now, imagine that a Decorated Retired General, who was also a former National Security Advisor and a former Chairman of the Joint Chiefs of Staff endorses the young Obama?

If you haven't figured it out, I am talking about Colin Powell.

Now, this has been speculated before (1)(2) and there are even current almost (but not outright) denials of an endorsement leaning. But I feel that it hasn't been examined enough. With Willie Brown's most recent publication and a few others coming out with similar findings, I feel this is a serious win for the Obama Camp.

Imagine the moderate-republicans and military personnel who respect Powell's opinion and will move with him? What type of hit can you give someone on foreign affairs who has already wooed much of europe and the middle east with his public speaking, or on military experience when you also add the endorsement of this pivotal figure.

Just think about it.

Are we really that pessimistic?

Barack Obama is probably going to be the next President of the United States. I know because international gambling sites have told me so. I think he would be an amazing and inspiring president. I am invigorated and my apathy subsides when I hear some of his speeches and I am pleased to know that, as a professor of constitutional law that he would actually know what the role of the president is. But there are some concerns about this election that have been keeping me up at night.

It all surrounds the ever-present fear of an assassination of this amazing man.

I have seen some scary things in the media recently. It seems that many in the media are almost trying to push people to this. Whether it is making accusations that Obama is a Muslim or a terrorist or even the “accidental” association between Obama and America's #1 hated man alive today; 1, 2, 3, 4, 5.

All of these factors make me wary, but none so much as the “Obama-Osama” bit. This association is all over the media, and it can ring true with certain groups. The hatred that many Americans have with Osama Bin Laden is so extreme that it can easily be transferred if the situation is right. The fact that the concept that Obama was raised in a Muslim setting or is in fact Muslim strengthens that association and solidifies the transferred hate; invigorating certain still-established and burgeoning hate groups.

I am not the only one who has these fears however. There are Nobel laureates that share my fear, there are even those who have attempted to hypothesize what would happen as a result of such an event and the fact that there are so many people out there that have this concern proves to me that the rumbling before the storm is happening.

Some have been outraged over the new coverage and treatment of this issue, such as famous rapper/star/neo-pundit Nas and some have dismissed it as childish.

By the way, my favorite part of this article was;

"I wanted to see [Obama] before he gets assassinated," commented one Emo-looking youth, in town for the summer – a comment that prompted a chorus of boos from the other young Americans in his vicinity. This issue, at least, seemed worth pressing: who would assassinate Obama, exactly? "The military-industrial complex that runs America," he replied flatly. But, if they're already running America, why would they care? He shrugged and said no more.

It has gotten to the point where the news seems to be perpetuating the situation and there was even a HUGE Hilary gaff that has gotten little coverage and some jokes over Obama assassination such as the one shown above (more on that here) and a callous little joke to the NRA by Mike Huckabee.

The concerns over an Obama assassination have become such a normality in the mainstay that it has developed to the point where it has entered into popular art, in fact this controversial Art Exhibit about it was actually shut down.

I am unsure how this situation should be dealt with, I just know that it frightens me and many don't seem to actually be talking about it or taking it serious. Four presidents in the history of our nation have been assassinated for various reasons; Lincoln, Garfield, McKinley, and Kennedy. I am not sure this nation could survive another one over the race card.

For me this is a serious situation. Obama is, at least for me, a symbol. He is this hope for a new America, a new opportunity for an oppressed underclass, and will completely change the international presence of the United States. I am very afraid of some bigoted idiot picking up a gun and ruining that for everyone. I could see certain actions taking place after such an incident that would not only lead to riots and looting and general disarray, but extended to the breakdown of the Union. I could see the assassination of Obama, be it before or after being sworn in, as the catalyst for another civil war. I may be completely paranoid, but I know that it would at least show the world that the United States does not have their proverbial “shit” together, and I would have to say that the American experiment failed.

Food Prices and Eating Mud

When buying some groceries the other day, I looked around and felt overwhelmed by the prices. 4.75 for a loaf of bread. Now keep in mind this was whole wheat bread but still, not too long ago that was half the price. The price of this staple of society has become so inflated that I cannot imagine how some people survive. I commented on this to the cashier; “can’t believe the price of bread these days.”

He agreed, “It’s not just bread,” he said, “but milk, eggs, everything. It all has to do with the price of gas. Makes me want to live the hippy lifestyle of growing my own food.”
This got me thinking. In politics and psycho-therapy it is called “behavior modification” basically, in legislation, creating laws or influencing economic trends that will change the practices of the citizenry. In Ireland, for example, they placed a fee (about 50 cents in US currency) per plastic bag. In a few years there was a 90% reduction in use. If I was more of an Orwellian- conspiracy theorist thinker I would say that there was some green and hippy friendly person out there manipulating prices, but it is much more than that.

In just this past year that have been significant changes. Everything has been increasing in price and here, in America, we will still be able to be fed well, a larger portion of us, and in the immediate this is not so much a disaster, but more of a concern. But what about other countries? There has been limitless discussion on this issue, it is happening worldwide , there are nations rioting over food, and where they can’t find proper food, they improvise. In Haiti they are even eating mud.

The clerk hit the nail on the head; part of the reason for the soaring food prices is the rising cost of oil and gas. Everything needs to be transported, so as gas rises, so does the cost to ship food, which causes an increase in the overall costs, but it is not just that.

Other causes include, crop loss, increase cost of water, increased cost of fertilizers, and increase food consumption in developing countries. Some even say that financialization, or investment, has been a major cause of the price increase since “prices are no longer set by supply, demand and climate.” When investment enters into the situation, the price determinants are varied by speculation and fear, fear that crops will fail, fear that products will not be used, it is a fear and speculation based system, like gambling. With any market that is dependent on factors ranging from weather to water to transportation and marketing there are always gambles, but it just seems that the system is strange. The majority of prices of food are post-farm prices; transportation, processing, marketing, transportation again and farmers, by law can’t set their own prices. An interesting historical tid-bit, the Russian Communist regime fell because of bread. Bread was the main staple in Russia (as it has become in most westernized countries). The USSR would buy wheat from farmers at market price; the government would pay for transportation to the granaries and mills to grind the wheat into flour. The government would then pay for transportation of the wheat to bakers, pay the bakers market cost to bake the bread and then sell it to the citizenry at about a 10th of market cost. So let’s say that the total cost for the USSR, per loaf of bread, was about 2 rubles total, and they were selling it at a price of .20 rubles. That is a net loss of 1.80 ruble per loaf. Now multiply that by about 293 million people per year buying bread and that is a huge loss. Economic subsidies for food may not work very well, and yes, I know that is an extreme example but it is still an example of a Nation going bankrupt trying to feed its populous. But it seems strange that Farmer’s keep getting more and more funding at a time of record profit for the Farm industry.

There is one big word that affects both food and oil and that is Ethanol. For those that don’t know, Ethanol is a fuel that is usually, in the United States at least, derived from corn. There are huge government subsidies for American farmers who grow corn for this product (keep in mind that corn used to make ethanol cannot be used as foodstuffs after the process) even though it is by far not the most effective when it comes to energy production. This is found from a comparison of the energy used to make ethanol compared to the energy that ethanol can produce. Other sources for ethanol are much more efficient such as tobacco (20 percent more efficient than corn ethanol) and soy which is more efficient and can be used instead to make biofuels from the oils and still leave the soy starches and proteins for consumption – not impacting the food markets in a negative way. But there is still a large push for Corn Based Ethanol that is not for this article but for some much later on. The major point here is that there have been studies that show that increased Ethanol production could cause huge problems with the local watershed and that those crops could be put to better use to feed the population or for more efficient bio-fuel crops. So there have been some efforts to offset the cost of oil with ethanol (which can be used in cars, but those efforts have been going on since the 70s and new improvements have been made.

Subsidies have always been a hotbutton issue, in fact US farm subsidies, not just in ethanol but other areas affect global food prices and there could be a "looming food shortage" if we don't make a change.

Some say that the increased concentration upon Bio-fuels for crops has increased the price of foodstuffs. The logic there is that when you take away a portion of the supply, the price will go up. This may be true, but the fact of the matter is that there is not enough of a concentration to really negatively impact the food market. I have looked for studies on this and I have yet to find anything substantial, if you find something, please let me know.

What are the solutions to these problems? How can we fix global food prices? There are a few. Some say that this is a natural spike in the food market; that as a result of economic trends in the world that cyclical and repeating that “this too shall pass.” As a Keynesian I tend to agree to a point; there are peaks and troughs in prices and economies but the general trend is that prices are going to rise and the dollar will become worth less and less unless we change the system, the system will perpetuate itself towards insanity.

One big problem that has no easy solution is oil. The world, for many reasons, need to get off the oil standard. I have said it before and I will say it again; oil is the black blood of the world, it has it’s slick fingers in everything and until we get a better method of doing things, including transportation and heating, we will continue to face rising costs, dependency on foreign markets (that can change at a moment’s whim being decided upon by OPEC ) and increased foreign conflicts. Anyone looking at the world today can see that there is a huge push towards green-tech. We are trying to get off of oil, but it is going to take a long time and we will be rung for every penny we can. We need to redirect oil subsidies to food and renewable energy, that is the simple truth, why are we investing in a flailing system that destroys our economy with its rising costs, destroys our environment and takes money away from more worth-while issues?

Preemptive measures need to be taken, not just on oil and food prices but on water. The price of water, something every living thing in the world needs to survive is dramatically increasing. While there are new technologies that are allowing for cheaper potable water production (thank you Colbert Report) it is still a looming problem in many countries. In fact there are even speculations that future wars will be fought over water, remember Tank Girl? That Malcolm McDowel movie may not be that far off. This is really just something to think about. I once argued with a representative of the Israeli conflict that a huge answer for peace in that region would be to have a Palestinian owned and operated Desalinization plant right on the Mediterranean; it would cause jobs, increased cash flow, water independence and a sense of pride for that area. Water is life and future wars may be fought over it, they have in the past and probably will in the future.

Communization. When I say commune, I don’t necessarily mean communistic or socialistic societies. I mean more of local communities depending more on themselves and providing more for themselves; local farms, family gardens, community gardens. My ideal world is made up of communities of about 200 people working with each other and interacting with other micro-communities. Eventually I will write a thesis on this but that will take a while. And it is always nice to see other people, like this Mr. Barner person, agreeing with me even if there are many detractors. It comes down to, are we really living in a free trade environment? Is free trade the answer?

One thing that we must remember, as Americans, is that we are different. We are a land of plenty compared to other countries, if we need food, there will always be some available, unless a natural or economic disaster occurs. So buck up, it may be pricey, but at least it isn’t mud.