Foreclosure Crisis Continues To Worsen In California
December 8th, 2008
The foreclosure crisis continues to worsen in California. Surprise is in store for those who think that budget struggles and economic blues have peaked in the state, for even worse days are ahead as this year draws to a close and a new one dawns. Right now it is $1 billion times worse than what it was before the November elections.
It is not about $1 billion in extra spending or $1billion revenue loss but $1 billion California will have to pay in 2009 and every following year for full thirty years. It is the money voters had borrowed even when they were not ignorant of the fact from various news reports that there was shortage of cash for repayment.
It means if the deficit this year is $11 billion it will increase to $12 billion by July 2009 – that is if spending does not increase and revenue does not decrease. If however the state’s income from various taxes (income, capital gains, sales etc) drops the deficit will become worse. It poses the question that why should those who vote burden themselves with this and leave these debts to generations to come?
The reason is that most of the residents of California agree with the flippant remark of their Governor Schwarzenegger that “bonds are a gift from the future.”
Is it really a gift? If so – a strange one! Since the assumption of office by Schwarzenegger California has acquired $45 billion more as bonded debts. The interest rate calculates to the principal repaid to the bondholders. It calculates to $90 billion covering the next 30 years – roughly $3billion each year added to the obligations of the state. Schwarzenegger presumes that the revenue will grow in all bonds with each passing year and repayment from increasing funds will be easy.
But the last few years have shown that this is not the reality. Thus making the governor make a turnaround and go back on his promises of “no new taxes”. It was this cliché phrase that got him the governor’s seat. His first step upon acquiring office was to do away with an increase in vehicle tax that his predecessor had imposed He now agrees that new taxes have to be levied to meet governmental obligations. He argues that the fiscal troubles of California are not because of over spending but due to decreased revenue collection. The latter is a fallout from the increasing number of foreclosures, shutting down of businesses and lowering of capital gains taxes reflecting the gloom in stock markets.
- Bouncing Cheques Issued by Title Companies Lead to Foreclosures
- Increase in Foreclosures Prompting Class Action Legal Suits
- Avoiding Foreclosures by Walking Away From Loans are not Without Problems
- Foreclosure Assistance Being Taken on Tour by Housing Advocate
- Washington Mutual, the Symbol of the Foreclosure Crisis, Continues to be in Trouble
- The Consequences of not Paying Mortgages Can be Grim
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