More bailouts needed in California

The deluge of advertising for the California budget initiatives has already started and should reach a fever pitch in just a couple days, ahead of the May 19th vote. With the deficit growing rapidly, set to rise another $6 billion or so if, as expected, the ballot measures fail, the state is now asking the Washington for financial aid according this report in the LA Times.

California Treasurer Bill Lockyer on Wednesday formally requested federal help to backstop a wave of short-term borrowing the cash-strapped state will need to undertake this summer.

In a letter to U.S. Treasury Secretary Timothy F. Geithner, Lockyer asked the government to in effect guarantee the state's debt against default, so that investors would be willing to provide the financing at reasonable interest rates.
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California will be forced to borrow at least $13 billion, and possibly much more, beginning in July to bridge the gap between the state's current cash needs and future tax revenue.

Since recent budget projections have proved far too optimistic, deteriorating at the rate of somewhere around $4 billion every month (i.e., since the February budget bill, the deficit has increased by more then $10 billion), surely there must be a better long-term solution aside from the obvious one - euthanasia.

Voters are squarely aligned against five of the six propositions per recent polling, particularly Proposition 1C where the government wants to borrow against $5 billion in future revenues from the state lottery.

At least in Sacramento, securitization - the idea that you can borrow against anything with a stream of income - is not dead yet.

Other parts of California are in need of help from Washington too. Word came yesterday that golf courses in the Los Angeles area are feeling the pinch from the recent slowdown, going so far as to lobby Congress for help along with just about every other industry.

This LA Times report tells of the difficulties faced by the "grandest game":

In today's economy, golf is in the rough. And with a bad lie. Once-haughty country clubs are offering specials. Courses have closed or cut back on maintenance. The world's top golf ball manufacturer has seen demand for souvenir balls stamped with company logos drop off.

And so officials in the golf industry have joined the nation's bankers, auto makers and insurance companies in marching to Washington in search of understanding. They're not asking for a bailout, but they do want greater appreciation of their industry's importance.

"There are a number of congressmen who do not understand the economic impact of golf on their local community," said James B. Singerling, chief executive of the Club Managers Assn. of America. "Our message to Congress is that when you pass legislation that makes it difficult for the golf industry to stay in business, you don't hurt the wealthy. Who you hurt are the employees."

Singerling and others will be in Washington today to make sure Congress does not lump the golf industry in with massage parlors, suntan facilities and liquor stores as businesses undeserving of federal help.

The other day, I saw first hand the toll that the recession is taking on the game of golf. Apparently, the tens of thousands of sculpted bunkers that were installed on golf courses over the last ten years are a bit labor intensive to maintain.

You can take a big riding mower over top of most of the golf course, but on some golf courses those little indentations (circled in red below) must be cut with an old style push mower which tends to add up to a tiny amount of gasoline but a lot of man-hours.
As a result, you'll now see one or two foot high, thick patches of grass in these areas, a virtual ball-magnet, that will infuriate some golfers and probably cause play to decline even further. While not one of the most significant "vicious cycles" in the world today, this mowing cutback and sharp increase in lost/unplayable balls is a "vicious cycle" nonetheless.