Ah, summer.... As of today, we are halfway through the calendar year 2009. Already it has provided us with double the entertainment value of other years, and at half the price.
Following the news is something of a hobby of mine - not so much that I'm nosy, which I must admit I am - but more, to have something worth saying to a fiscally responsible (or at least, fiscally interested) audience, such as the one I am now addressing. Unless I miss my guess, some folks will be taken aback to learn that a certain
financial news item this week has caused me to consider the wise words of a character in a half-century old Broadway musical.
"Jack Schmidt - a fan of song and dance? Why the very idea...!" Hey, I calls 'em as I sees 'em. I am that confident.
The news item was none other than the economic anemia of the late great
State of California, and the musical was none other than the most burly of musical Mob entertainments,
"Guys and Dolls," impressed on celluloid in 1955. Though 1955 seems like a long time ago, it's amazing how much things have basically stayed the same. People still gamble, they still make sky high promises, and intrigue still abounds in pursuit of the opposite sex. If you're familiar with the show, the movie headlined the late great
Frank Sinatra along with his singing compadre
Marlon Brando in his only musical role, Sky Masterson. Her Loveliness
Jean Simmons rounded out the top billing, very Nicely Nicely, I might add.
Who's Holding the 24 BILLION Dollar Bag?
And speaking of taken aback, let's get to that California news item. I bring it up here because it has the potential to directly impact your
quality of life. That's what you keep me around for, isn't it? I'm not just your sometime comic relief, but somebody's gotta tell you which way the wind blows. So here you have it. The State of California is broker than broke, and unless something changes drastically, on July 2nd they're going to start issuing IOU's to pay their bills - social services recipients, employees, contractors, the works. The banks are projected to treat these IOUs as cash.
Yeah, seriously. That may sound a little comical, but when a government body has a
24 BILLION DOLLAR shortfall - a hole bigger than some small national economies - there's not a lot of reason to place confidence in the paper the governing body is issuing. This is where "
Guys and Dolls" comes to mind. Even though the central characters are small time thugs, there was a certain honor among them, particularly when it came to a guy's marker. The code went thus: "A marker isn't just a piece of paper that says, 'I.O.U..'. A marker is the one pledge which a guy cannot welch on, never. It's like not saluting the flag."
Now why, you may wonder, should you possibly care about what fate befalls the Golden State? What do you care about a lot of out of work waiter-actors and overworked software product management types? I mean, if the State goes bankrupt, can't they all just go live off the fruit of the vine and the fatted lamb, bathe half-naked in the balmy surf and listen to
The Beach Boys on their iPods?
(Yeah, you bet I'm jealous.) And besides, if you're not living in
California (yes, I'm talking to
you,
Nebraska), does it matter at all if their Governator gives a wooden performance in
Sacramento or at
the box office? "Hey, it worked for Ronnie, and he went all the way to the
White House. Those Californians are just bunch of crybabies." Would that it were so easy.
IOU's - They're Not Just For Breakfast Any More
Do you want to know where you come in? Okay, I'll tell you. Here's the thing.
California is big. It's not just a large land mass, which it certainly is with 403,932 square miles - one-third the size of Alaska and ranked #3 in area. It's also incredibly populous, the largest state in America with more than 36 million people living there. That's a lot of jockeying for air, water, food, and just plain elbow room.
It's like a really big Manhattan. Forget about making a decent living unless you're really good at what you do. And the thing about California, the reason to care what happens in the largest (or even the third largest) state in the country is that as goes California, so goes the country... and to a certain extent, so goes the globe. This little corner of the planet is responsible for 12% of the U.S. Government's revenue. If the banks are supposed to treat those State of California IOU's like real money, what do you suppose the banks are going to back those deposits with? The Federal Government is merely standing by with its hands in its pockets - "wait and see," they say. Uh huh. Now what do you think about those software types and grape growers? I think they're kind of important. Heaven forbid I should have to write my own code or grow my own wine.
I simply don't have the time. 7 Tools: Your Path to Financial Security
So if the State of California is insolvent, which it is, and if the State finds it necessary to (for lack of a better term) go bankrupt, which it could, then this is not such a local issue. As a nation our general fiscal malaise could actually turn into Chronic Fiscal Fatigue Syndrome... not a pretty picture.
"Jack Schmidt - first the musicals, now he's a pessimist. Why the very idea...!" Not so fast. If you take a look at some of my previous citations, you'll see that what I'm putting out there is for your own benefit. If you know the risks, you're much more likely to hedge against them.
You don't call the weatherman a pessimist if he forecasts rain, do you? Naw, you grab an umbrella. I'd be doing you a disservice if I didn't tell you that the State of California is on track to run out of cash by the end of July. So... get a helmet. This bumpy ride ain't over yet. To help you with your fitting, here are some of my previous blog posts that are particularly relevant.
As Sky Masterson, Brando delivers an immortal line early on in "Guys and Dolls." He says, "One of these days in your travels, a guy is going to show you a brand-new deck of cards on which the seal is not yet broken. Then this guy is going to offer to bet you that he can make the jack of spades jump out of this brand-new deck of cards and squirt cider in your ear. But, son, do not accept this bet, because as sure as you stand there, you're going to wind up with an ear full of cider." Thus I leave you with my clarion call to
Arnold Schwarzenegger:
Hey mister... your ear's dripping on the floor. Let's hope the
State of California has as much character as those fictitious small time thugs, with enough honor to salute its own
Bear Flag.
...Yeah, like that.
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Until next time,
Jack Schmidt
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