California

California goes broke, halts $3.5 billion in payments

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I said many, many times that the U.S. is broke.

Things are much, much worse than you have been told.

This will be the ‘Greatest Depression’.

California, the eighth largest economy in the world, is broke.

“People are going to be hurt starting today,” said Hallye Jordan, speaking on behalf of the state Controller. “There’s no money.”

Since state legislators failed to meet an end of January deadline on an agreement to make up for California’s $40 billion budget gap, residents won’t be getting their state tax rebates, scholarships to Cal Grant college will go unpaid, vendors invoices will remain uncollected and county social services will cease.

At least, temporarily. Services and payments will resume once state legislators come to an agreement on the budget.

“This time, there are real-world consequences,” said H.D. Palmer, spokesman for the California Department of Finance, in a report by KCRA in Sacramento. “Because we have not been able to get to a budget agreement, payments aren’t going to be made.”

“This is an issue of fairness,” said Assemblyman Ted Gaines, R-Roseville, in the KCRA report. “It hurts hardworking families the most. Refunds, in fact, will stimulate the economy, and taxpayers need their money.”

“Included are $515 million in payments to the state’s vendors and $280 million to help people with developmental disabilities. Other public assistance agencies will be left waiting for hundreds of millions of dollars,” reports CNN. “Other public assistance agencies will be left waiting for hundreds of millions of dollars.”

“I see the will during the negotiations even though these are very, very tough things that we talk about, where we go into areas that we have never, ever dreamt of going into and trying to solve,” said Governor Arnold Schwarzenegger. “So you will be very surprised when the whole thing is done. We’re still not there yet. There is still a lot of work that needs to be done but we are moving slowly forward with this process.”

“If there is no deal by Friday, state government workers will take their first furlough day,” reports the San Diego Union Tribune. “Schwarzenegger has ordered state employees to take two days off a month without pay through June 2010 to save about $1.4 billion.”

Read moreCalifornia goes broke, halts $3.5 billion in payments

Is It Time to Bail Out of the US?

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Paul Craig Roberts [email him] was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University.

By Paul Craig Roberts

California State Controller John Chiang announced on January 26 that California’s bills exceed its tax revenues and credit line and that the state is going to print its own money known as IOUs. The template is already designed.

Instead of receiving their state tax refunds in dollars, California residents will receive IOUs. Student aid and payments to disabled and needy will also come in the form of IOUs. California is negotiating with banks to get them to accept the IOUs as deposits.

Don’t miss:
– Paul Craig Roberts: Another real estate crisis is about to hit
– Paul Craig Roberts: Our Collapsing Economy
– Paul Craig Roberts On The U.S. Leadership: “They Are Criminals” – The Potential Here Is Far Worse Than The Great Depression
– Paul Craig Roberts: The American Puppet State

California is often identified as the world’s eighth largest economy, and it is broke.

A person might think that California’s plight would introduce some realism into Washington, DC, but it has not. President Obama is taking steps to intensify the war in Afghanistan and, perhaps, to expand it to Pakistan.

Obama has retained the Republican warmongers in the Pentagon, and the US continues to illegally bomb Pakistan and to murder its civilians. At the World Economic Forum at Davos this week, Pakistan’s prime minister, Y. R. Gilani, said that the American attacks on Pakistan are counterproductive and done without Pakistan’s permission. In an interview with CNN, Gilani said: “I want to put on record that we do not have any agreement between the government of the United States and the government of Pakistan.”

How long before Washington will be printing money?

Read moreIs It Time to Bail Out of the US?

California will run out of cash within days – Schwarzenegger

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Source: San Jose Mercury News

Posted: 01/26/2009 08:00:00 PM PST

Deadline is real: 5 days to fix California’s budget

Five days are left to cut a deal on the state budget. If not, on Sunday, California, the world’s eighth-largest economy, will become the world’s biggest deadbeat.

Related article: California prepares to stop paying bills (WorldNetDaily)

Having raided every state fund and borrowed the max, the state will start issuing IOUs. College students won’t get Cal Grants. Counties will borrow from reserves to cover social services. State contractors won’t get paid, and taxpayers won’t get refunds. The state already has shut down billions of dollars worth of construction projects. By April, as bills mount up, California, for all practical purposes, will stop functioning as a state.

It’s shameful that things have come this far, but there’s still time to stop things from getting worse – if enough Republicans, at least three in the Assembly and three in the Senate, agree to balance severe cuts to state services with new or higher taxes. Doing so, however, will risk retribution from the rabid right of their party.

All is not totally bleak. House Democrats’ version of President Barack Obama’s $825 billion stimulus includes $10 billion in immediate relief to California, in Medicaid payments for the poor and education aid. That would lop off a quarter of California’s $40 billion deficit. It pays to have friends, like House Speaker Nancy Pelosi, in high places.

But $10 billion won’t necessarily translate into fewer cuts or taxes. Gov. Arnold Schwarzenegger’s proposed budget included $10 billion in phantom solutions: an improbable $5 billion in borrowing against future lottery proceeds and $5 billion in money shifting that’s probably unconstitutional.

So $30 billion in hard choices remains regardless – and less than a week to make them.

Source: Bloomberg

Schwarzenegger Says Deal Is Close as Cash Runs Short


Governor Arnold Schwarzenegger of California attends the inauguration ceremony of U.S. President Barack Obama at the Capitol in Washington on Jan. 20, 2009. Photographer: Ken Cedeno/Bloomberg News

Jan. 26 (Bloomberg) — California Governor Arnold Schwarzenegger said legislative leaders are closing in on an agreement to eliminate the $42 billion budget shortfall threatening to leave the state out of cash as soon as next week.

“We are getting closer and closer,” he said during a press conference. “We’re getting there, but it will still take a few more days to get there.”

Schwarzenegger, a Republican, told reporters in Sacramento the state won’t have enough money to pay for all of its bills “within the next week or 10 days.” With that in mind, Schwarzenegger said he and lawmakers were working.

Read moreCalifornia will run out of cash within days – Schwarzenegger

Lindsey Williams: America will see a financial collapse (1-22-09)

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Don’t miss:
– Lindsey Williams: The Dollar And The US Will Collapse; Saudi Arabia And Dubai Will Fall; US Will Be Third World Country; The Greatest Depression Is Coming
– Ron Paul on Glenn Beck: Destruction of the dollar
– Jim Rogers: I Would Sell All Government Bonds
– Jim Rogers: US creditor nations to shun Treasuries
– Time to Sell Treasuries, Biggest Korean Fund Says
– U.S. Treasuries bubble about to blow: Societe Generale
– The Bond Bubble – Marc Faber, Peter Schiff, Max Keiser
– Peter Schiff: We are the United States of Madoff
– Peter Schiff: The World Won’t Buy Unlimited U.S. Debt
– China’s US bond appetite to slow: economists
– Willem Buiter warns of massive dollar collapse

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Source: YouTube

Read moreLindsey Williams: America will see a financial collapse (1-22-09)

Global Economic Crisis Accelerating

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U.S. President-elect Barack Obama waves after speaking during the “We Are One: The Obama Inaugural Celebration at the Lincoln Memorial” event in Washington on Jan. 18, 2009. Photographer: Andrew Harrer/Bloomberg News

– Obama Issues Call to Service to Help Repair Nation (Bloomberg):
Obama is using the latest state of the art manipulating techniques. Don’t fall for this puppet of the elite, rather listen to some of the few people – like Ron Paul, Peter Schiff, Marc Faber and Jim Rogers – that are telling you the truth:
Paul Craig Roberts On The U.S. Leadership: “They Are Criminals” – The Potential Here Is Far Worse Than The Great Depression or Peter Schiff: We are the United States of Madoff

More change: Obama Reaches Out for McCain’s Counsel (New York Times)

– California Finds Public-Works Spending No Unemployment Cure-All (Bloomberg):
“What infrastructure spending can do is bolster employment in a group of industries, like construction, with workers who are ready to go,” said Brad Kemp, director of regional research at Beacon Economics in Los Angeles. “What it can’t do is stop the unemployment rate from rising currently because there are a lot of forces coming at consumers, who are holding back on spending.” California is totally broke: Here

– ! Bonds tumble as Government admits no cap on taxpayer risk (Telegraph)

– Brazil Cut Record 654946 Registered Jobs in December (Bloomberg)

– Brussels sees Eurozone economy shrink 1.9% (Financial Times)

– Taxpayers are spending over $1 billion to send refined fuel to the Israeli military — at a time when Israel doesn’t need it and America does (Salon)

– Spain Downgraded by S&P as Slump Swells Budget Gap (Bloomberg):
Jan. 19 (Bloomberg) — Spain had its AAA sovereign credit rating removed by Standard & Poor’s in the second downgrade of a euro-region government in five days, as the country’s first recession in 15 years swelled the budget deficit.

– China GDP Growth May Cool to Slowest Pace in 7 Years (Bloomberg)

– Ruble Drops to Pre-1998 Crisis Low on 6th Devaluation This Year (Bloomberg):
Jan. 19 (Bloomberg) — The ruble fell below the weakest level seen in the 1998 Russian crisis after the central bank devalued for the sixth time in seven days to protect reserves.

– Fifty jobseekers chasing every vacancy in some parts of the country (Telegraph)

– Treasury Yields Flattened as Fed Fights to Cut Mortgage Rates (Bloomberg):
Fed Chairman Ben S. Bernanke helped spark a rally by reiterating Jan. 13 at the London School of Economics that he’s considering buying long-term Treasuries to reduce borrowing rates as the recession deepens.
(Bernanke helped to create the ultimate Bond Bubble: Here, here and here.)

– Bonds no safer than houses (The Financial Standard)

– Denmark agrees on 13.4-bln-euro line of credit to banks: govt (AFP)

– How the Treasury Bubble Will Burst and Why (Seeking Alpha)

– Investor puts pressure on HSBC to let US sub-prime unit go bankrupt (Times)

– Tory chief’s firm cost councils £470m (Independent)

– RBS on the brink as shares plummet by 69% and City is warned: ‘You’re about to become
Iceland-on-Thames’ (Mail Online)

– RBS ready to write off £1bn loan to Russian oligarch (Scotsman)

– RBS Plummets Amid Concern Bank May Be Nationalized (Bloomberg)

– RBS shares dive 70% on mounting debt fears (Times Online)

– Tax rise for rich won’t make society fair, says Mandelson (Guardian)

– More Americans Joining Military as Jobs Dwindle (New York Times)

– Circuit City to close remaining 567 stores in US (Los Angeles Times):
The failure of the No. 2 electronics retailer means the loss of 34,000 jobs.

– BASF warns of possible job and production cuts (Houston Chronicle)

California controller to suspend tax refunds, welfare checks, student grants

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“The suspension of payments is the latest radical move by officials to help keep the state from running out of cash as Gov. Arnold Schwarzenegger and the Legislature battle over how to avoid insolvency.”

John Chiang announces that his office will suspend $3.7 billion in payments owed to Californians starting Feb. 1, because with no budget in place the state lacks sufficient cash to pay its bills.

Reporting from Sacramento — The state will suspend tax refunds, welfare checks, student grants and other payments owed to Californians starting Feb. 1, Controller John Chiang announced Friday.

Chiang said he had no choice but to stop making some $3.7 billion in payments in the absence of action by the governor and lawmakers to close the state’s nearly $42-billion budget deficit. More than half of those payments are tax refunds.

The controller said the suspended payments could be rolled into IOUs if California still lacks sufficient cash to pay its bills come March or April.

“It pains me to pull this trigger,” Chiang said at a news conference in his office. “But it is an action that is critically necessary.”

The payments to be frozen include nearly $2 billion in tax refunds; $300 million in cash grants for needy families and the elderly, blind and disabled; and $13 million in grants for college students.

Even if a budget agreement is reached by the end of this month, tax refunds and other payments could remain temporarily frozen. Chiang said a budget deal may not generate cash quickly enough to resume them immediately.

Read moreCalifornia controller to suspend tax refunds, welfare checks, student grants

Global Economic Crisis Accelerating

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– UK jobless rise of 40000 in a week just ‘tip of the iceberg’ (Telegraph)

– Schwarzenegger Says Deficit has ‘Incapacitated’ State (Bloomberg):
Jan. 15 (Bloomberg) — Governor Arnold Schwarzenegger said California has been so “incapacitated” by a fiscal crisis that threatens to leave it unable to pay bills within weeks that the only issue he and lawmakers must consider is how to fix it.

– Charter misses $74 mln in debt interest payments (Reuters):
NEW YORK, Jan 15 (Reuters) – Charter Communications, the fourth largest U.S. cable operator, said on Thursday it missed interest payments of $73.7 million as it continues to negotiate a debt restructuring with bondholders.
The company said it has until Feb. 15 to make the payment and avoid default, which could push it into bankruptcy.

– ECB cuts rates by 50 points to 2% (Financial Times):
Eurozone interest rates fell by half a percentage point to their lowest in more than three years on Thursday as the European Central Bank said that it expected the recession to deepen and signalled that borrowing costs could fall further.
Jean-Claude Trichet, ECB president, warned that growth forecasts published only last month would have to be revised downwards in a sign of the ferocity of the downturn.

– Pfizer May Fire 2,400, One-Third of U.S. Sales Force (Bloomberg):
Jan. 15 (Bloomberg) — Pfizer Inc., the world’s biggest drugmaker, may fire almost a third of its U.S. sales force, or as many as 2,400 workers, in a plan under consideration by senior management, people familiar with the discussions said.h the discussions said.

– JPMorgan chief says 2009 will be bleak (Financial Times):
The US financial and economic crisis will worsen this year as hard-hit consumers default on credit cards and other loans, Jamie Dimon, chief executive of JPMorgan Chase, has predicted in an interview with the Financial Times.

– JPMorgan Profit Drops 76 Percent on Asset Writedowns (Bloomberg)

– Yet another blow to the US newspaper industry (Guardian)

– Aircraft industry shocked by view from ground (Financial Times)

– Airbus forecasts ‘very challenging’ year (Financial Times):
Airbus on Thursday said its new commercial aircraft orders had fallen sharply last year, as the European aerospace group forecast “a very challenging year” for the industry in 2009. Net new orders fell by 42 per cent last year to 777, from a record 1,341 won in 2007.

– Irish government fears IMF intervention (Guardian)

– Ireland plans drastic cuts to prevent debt crisis (Telegraph):
Ireland is to demand pay cuts for civil servants and public employees to prevent the budget deficit soaring to 12pc of gross domestic product by next year – becoming the first country in the eurozone to resort to 1930s-style wage deflation to claw back competitiveness.

– If anyone doubted scale of crisis, work even halts in Dubai on world’s tallest tower (Scotsman)

– Hedge funds ‘encourage bankruptcies’ for profit (Guardian)

– Spain’s Debt Costs Rise at Bond Sale After S&P Alert (Bloomberg)

– Banks gird for commercial property collapse (FinancialWeek):
Some of the biggest financial institutions have huge, potentially troublesome commercial real estate stakes, Standard & Poors data shows. Based on information in their most recent financial reports, Citigroup and Barclays each had more than $20 billion worth of commercial mortgage-related investments. Merrill Lynch, acquired by Bank of America last year, had some $19.7 billion in such investments, according to S&P.

California will run out of money in February

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The State of California will run out of money within two months, forcing Governor Arnold Schwarzenegger to start settling bills and paying employees by issuing “IOU” notes, his chief financial officer has revealed.

John Chiang, the state controller, admitted on Monday that a spiralling budget crisis, which has left California spending billions of dollars more each month than it can raise in taxes, will see his coffers run dry some time in mid-February.

Read moreCalifornia will run out of money in February

Official says California could be broke in 2 months

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SACRAMENTO, Calif. (AP) – California’s chief financial officer warned Monday that the state would run out of money in about two months as hopes of a Christmas budget compromise melted into political finger-pointing by the end of the day.

Republican Gov. Arnold Schwarzenegger began the day on a cheerful note, suggesting that negotiations with Democratic leaders could lead to a budget deal as early as this week to help close the $42 billion shortfall that is projected through June 2010.

“Yesterday we sat there for hours and we worked through it step by step and we made some great progress,” the governor said during a morning news conference in Los Angeles. “So we feel like if we do that two more times like that, I think we can get there … before Christmas Eve or Christmas Day.”

The thaw didn’t last long, as legislative leaders later in the day criticized Schwarzenegger and indicated their work was done until the start of the new year.

The governor faulted lawmakers for “failing to take real action” in addressing the state’s budget deficit but said he will continue working with them on a solution that includes spending cuts, new revenue and an economic stimulus plan.

Assembly Speaker Karen Bass responded by suggesting the governor should sign an $18 billion package Democrats sent to him last week containing both cuts and tax increases.

“The single biggest roadblock to having construction on the 405 (freeway) move forward is Arnold Schwarzenegger,” said Bass, a Los Angeles Democrat.

Read moreOfficial says California could be broke in 2 months

Schwarzenegger Orders Unpaid Leave for State Workers

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Dec. 19 (Bloomberg) — California Governor Arnold Schwarzenegger today ordered all state workers to take two days of unpaid leave each month to conserve money amid a record budget deficit and a legislative impasse over how to fix it.

The furloughs will begin in February and will last through June 2010, Schwarzenegger said in an executive order. He also ordered all departments to cut 10 percent of their workforce costs, through firings if necessary.

“Every California family and business has been forced to cut back during these difficult economic times, and state government cannot be exempt from similar belt tightening,” Schwarzenegger said in a letter to state workers.

Read moreSchwarzenegger Orders Unpaid Leave for State Workers

Frigid Storm Closes California Freeways, Drops Snow in Malibu

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Dec. 17: An ambulance rolls over and crashes in the snow in El Mirage, Calif. AP/The Sun

LOS ANGELES –  Snow snarled major mountain highways and even dusted Malibu on Wednesday as a cold storm hit parts of California. One person was killed by a wind-related helicopter crash, and an overflowing river on the U.S.-Mexico border led to the evacuation of nearly two dozen people, rescues of about 50 horses and the deaths of four others.

Styming thousands of commuters and travelers, snow shut Interstate 15 over 4,190-foot Cajon Pass east of Los Angeles and roads through the San Gabriel Mountains connecting metropolitan Los Angeles to the commuter suburbs of Palmdale and Lancaster in the high desert to the north.

Interstate 5, a major trucking and travel route connecting Southern California with the Central Valley and Northern California, stayed open over 4,144-foot Tejon Pass most of the day, with on-and-off Highway Patrol escorts, then finally was shut down in the afternoon as conditions deteriorated. Massive backups developed below all the passes.

Read moreFrigid Storm Closes California Freeways, Drops Snow in Malibu

Interview with Peter Schiff (12/13/08)

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Source: YouTube

Read moreInterview with Peter Schiff (12/13/08)

Schwarzenegger: California faces financial Armageddon unless lawmakers take decisive action

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California’s budget deficit this year has ballooned to nearly $15 billion, Gov. Arnold Schwarzenegger said Wednesday, warning that the state faces “financial Armageddon” unless lawmakers take decisive action.

The projection of a $14.8 billion gap at the end of the fiscal year in June surfaced just a month after the governor announced an $11.2 billion shortfall, and the deteriorating economy is likely to make the problem even worse next year, Schwarzenegger said.

Without action this year, the state could be staring at a deficit as great as $40 billion by June 2010, an administration official said. Schwarzenegger is expected to share the bad news with legislative leaders in a budget negotiating meeting today.

“If we don’t put aside our ideological differences and negotiate to solve this problem, we’ll be heading toward our financial Armageddon,” Schwarzenegger said at a hastily called news conference at the state Capitol.

Read moreSchwarzenegger: California faces financial Armageddon unless lawmakers take decisive action

Schwarzenegger Calls Fiscal Emergency in California

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The US are broke. The Dow Jones lost 7.7% today. This is going to get much worse.
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Arnold Schwarzenegger, governor of California, speaks during a news conference in Sacramento, California, on Nov. 6, 2008. Photographer: Ken James/Bloomberg News
Dec. 1 (Bloomberg) — California Governor Arnold Schwarzenegger, saying his state is going broke, declared a fiscal emergency and ordered the incoming class of lawmakers into a special session to fix a widening $11 billion deficit.

Schwarzenegger, a 61-year-old Republican, wants lawmakers to raise taxes and cut spending to narrow the gap that is projected to swell to $28 billion over the next 18 months. He invoked powers granted him in 2004 to declare a fiscal emergency, which gives the Legislature 45 days to plug the shortfall. If they fail to find a solution in that time, they are barred from doing any other legislative work until they do.

“Without immediate action, our state is heading for fiscal disaster,” Schwarzenegger told reporters today in Los Angeles. “I’ve had to make tough choices that I wish I didn’t have to make, and I know this is a terrible time to raise taxes, but it’s also a terrible time to make cuts to very important programs. But in an emergency like this, we have to take quick action to avoid even worse problems, even if they include decisions that we don’t like.”

Read moreSchwarzenegger Calls Fiscal Emergency in California

Three wildfires ring Los Angeles

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California wildfires wreak havoc


Aerial footage of fires across northern Los Angeles

Three separate wildfires in southern California have destroyed hundreds of homes and forced thousands of people to flee the fast-moving flames.

The fires, to the north, north-west and south of Los Angeles have burnt through dry brush and forest in the suburban canyonlands around the city.

California’s governor has declared states of emergency in Orange, Los Angeles and Santa Barbara counties.

A drop in the wind force has given some relief to the hard-pressed fire crews.

The largest of the fires is in the northern Los Angeles suburb of Sylmar, up against the canyons of the Angeles National Forest.

See map of the California fires

Ten-thousand people were ordered to evacuate their homes as the flames raced through the Oakridge Mobile Home Park late on Friday, destroying about 500 of the structures.

Firefighters were braving 50ft flame lengths as they swept across the mobile homes
Los Angeles Fire Captain Steve Ruda
In pictures: Los Angeles wildfire

“We have never lost in recent times anything close to this number [of homes],” said Los Angeles Mayor Antonio Villaraigosa.

He blamed the spread of the fire on “absolutely atrocious” winds of up to 80 mph (130 km/h) that pushed the fire out of the forests and into the suburbs, jumping wide highways in the process.

“It was an absolute firestorm,” said Los Angeles Fire Department Captain Steve Ruda of the Oakridge blaze.

“Firefighters were braving 50ft flame lengths as they swept across the mobile homes,” he told the Reuters news agency, adding that heat from the flames had melted his firefighters’ hoses to the road.

The Sylmar fire has burnt through 8,000 acres (3,200 hectares) since it broke out late on Friday. Fire officials said it was 20% contained as of late Saturday.

About 2,000 firefighters are using aircraft, helicopters and bulldozers to beat the flames back from populated areas.

Pillars of smoke

Meanwhile, more than 12,000 people were ordered to leave their homes in Orange County, in the south of the Los Angeles urban sprawl, as another fire flared up early on Saturday in the communities of Yorba Linda and Corona.

That fire has so far scorched 2,000 acres (800 hectares) and damaged or destroyed about 100 homes or other buildings.

Read moreThree wildfires ring Los Angeles

Goldman urged bets against bonds it sold: paper

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The flags of the U.S. and China hang outside of 85 Broad Street, headquarters for the investment bank Goldman Sachs in New York, October 23, 2008.

(Reuters) – Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz), which acted for the state of California in selling bonds, has urged some of its big clients to place investment bets against some of those bonds this year, the Los Angeles Times reported.

Read moreGoldman urged bets against bonds it sold: paper

California to cut water deliveries to cities, farms

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SACRAMENTO, Calif. – California said Thursday that it plans to cut water deliveries to their second-lowest level ever next year, raising the prospect of rationing for cities and less planting by farmers.

The Department of Water Resources projects that it will deliver just 15 percent of the amount that local water agencies throughout California request every year.

Since the first State Water Project deliveries were made in 1962, the only time less water was promised was in 1993, but heavy precipitation that year ultimately allowed agencies to receive their full requests.

The reservoirs that are most crucial to the state’s water delivery system are at their lowest levels since 1977, after two years of dry weather and court-ordered restrictions on water pumping out of the Sacramento-San Joaquin Delta. This year, water agencies received just 35 percent of the water they requested.

Farmers in the Central Valley say they’ll be forced to fallow fields, while cities from the San Francisco Bay area to San Diego might have to require residents to ration water.

Read moreCalifornia to cut water deliveries to cities, farms

Fed May See Companies, States as Next Crisis Fronts

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Oct. 6 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke may find the next fronts of the financial crisis to be just as chilling as last month’s downfall of Wall Street titans: its spread to corporate America and state and local governments.

Companies from Goodyear Tire & Rubber Co. and Duke Energy Corp. to Gannett Co. and Caterpillar Inc. are being forced to tap emergency credit lines or pay more to borrow as investors flee even firms with few links to the subprime-mortgage debacle. California Governor Arnold Schwarzenegger says his and other states may need emergency federal loans as funding dries up.

A cash crunch on Main Street would endanger companies’ basic functions — paying suppliers, making payrolls and rolling over debt. The widening of the crisis suggests that Bernanke and Treasury Secretary Henry Paulson may have further fires to put out even as the Treasury sets up the $700 billion financial- industry rescue plan approved last week.

Read moreFed May See Companies, States as Next Crisis Fronts

California: Parents do not have a constitutional right to homeschool their children

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Homeschooling Banned in California as State Turns Parents Into Criminals for Teaching Their Own Children

(NaturalNews) A California appeals court has ruled that homeschooling of children is illegal unless their parents have teaching credentials from the state.

“California is now on the path to being the only state to deny the vast majority of homeschooling parents their fundamental right to teach their own children at home,” said Michael Smith, president of the Home School Legal Defense Association.

The court overturned a lower court’s finding that homeschooling did not constitute a violation of child welfare laws.

“California courts have held that … parents do not have a constitutional right to homeschool their children,” Justice H. Walter Croskey said.

Read moreCalifornia: Parents do not have a constitutional right to homeschool their children

US foreclosure filings surge 55 percent

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WASHINGTON (AP) – The number of homeowners stung by the dramatic decline in the U.S. housing market jumped last month as foreclosure filings grew by more than 50 percent compared with the same month a year ago, according to data released Thursday.

Nationwide, more than 272,000 homes received at least one foreclosure-related notice in July, up 55 percent from about 175,000 in the same month last year and up 8 percent from June, RealtyTrac Inc. said. That means one in every 464 U.S. households received a foreclosure filing last month.

Read moreUS foreclosure filings surge 55 percent

More than 29 states face total budget shortfall

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At least 29 states plus the District of Columbia, including several of the nation’s largest states, faced an estimated $48 billion in combined shortfalls in their budgets for fiscal year 2009 (which began July 1, 2008 in most states.) At least three other states expect budget problems in fiscal year 2010.

Read moreMore than 29 states face total budget shortfall

Governor plans to slash state workers’ pay to the federal minimum

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Gov. Arnold Schwarzenegger plans next week to slash the pay of more than 200,000 state workers to the federal minimum of $6.55 per hour to help ease the state’s budget crisis, according to a draft executive order obtained by The Chronicle on Wednesday.

The governor also will order an end to overtime pay for all but critical services, a freeze on state hiring and the immediate layoff of nearly 22,000 temporary, seasonal and student workers.

“As a result of the late state budget, there is a real and substantial risk that the state will have insufficient cash to pay for state expenditures,” the executive order states.

Read moreGovernor plans to slash state workers’ pay to the federal minimum

California Wildfire Destroys Homes, Thousands Evacuated

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BIG SUR, Calif. – Thousands of residents north of Sacramento have been told to flee after erratic winds blew embers across wildfire containment lines, the latest setback for already strained fire crews.

Authorities ordered residents of 3,200 homes in Paradise to evacuate their homes Tuesday after fire destroyed 40 houses in the nearby rural community of Concow. Evacuation orders also remained in place for 800 to 1,000 residents from Concow and Yankee Hill, about 85 miles north of Sacramento.

“Right now we’re battling the weather and the erratic winds,” said Todd Simmons, a California Department of Forestry and Fire Protection spokesman. “Whatever the winds are doing, that’s pretty much what the fire’s going to do.”

Firefighters also were struggling against a sudden drop in humidity and a spike in temperature as a heat wave forecast to linger until the weekend grips much of the state.About 30 lightning-sparked wildfires in Butte County, where Paradise and Concow are located, have charred 47,000 acres in recent weeks and was about 40 percent contained, officials said.

Fire crews across the state have been trying to cover hundreds of active California wildfires, many of which were ignited by a lightning storm more than two weeks ago. Some 1,450 fires had been contained late Tuesday, but more than 320 were still active, authorities said.

Related article: – California: The War On Wildfires

Read moreCalifornia Wildfire Destroys Homes, Thousands Evacuated

Officials suspend California aerial spraying program

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Related article:
– Should Government Aircraft Spray Chemicals on Residential Areas?

Officials on Thursday abruptly canceled a state program to spray chemicals to combat crop-eating moth in urban areas after months of public uproar over its unclear effects on the environment and human health.

A.G. Kawamura, state secretary of food and agriculture, announced that California had abandoned plans to send up pesticide-spraying planes to fight the light brown apple moth in cities. That includes the densely populated San Francisco Bay area, which had been scheduled for treatment this fall.

“I know there’s concern out there, and we want to be able to address that,” Kawamura told reporters. “Our focus is to use the technology that has moved progressively forward.”

Read moreOfficials suspend California aerial spraying program