Monday, July 6, 2009
I am just sitting here waiting for the other shoe to drop. I confess that I have never understood the famous New Yorker cartoon, probably because having grown up in the Midwest, I am at heart a centrist. For the uninitiated, or those too young to remember, here's the famous image from 1976.
I spent nearly the entire 1990's decade working in and around California. First I helped acquire a company and converted it into a research laboratory for the new parent. Next I helped turn around a major software company which was later sold for more than 30X ($1B+) the price that it was trading at when I went there and finally, I was CEO at a thin-film (organic polymers) display company whose technology is finally seeing the light, (literally and figuratively) with products like the Kindle.
I came to cherish California as a wonderful place to ride my motorcycle on the weekends, and I suppose that I covered more than 8,000 miles around the state from top to bottom during accumulated weekends. I have never been on serious hikes better than what you find in the Ventana Wilderness, way up above Big Sur, and at the time, my little twin boys were there with me too (in tow with an experienced friend of course.) I made lifelong friends in California, and the business environment in the 90's was electric...so many talented people and innovative companies were stationed there.
I never felt that I could permanently move to California because, back then, a young guy like me might have to shift about (which proved true) many times and I wanted my family to find its roots somewhere...and that happened to be New Jersey. But we all had a very wonderful encounter with California, and I will never forget that.
Having said all this, it is utterly bewildering to me that the most populous state in America, its third largest geographically, and the eighth largest economy in the world (in GDP) is in very serious trouble right now. The eastern press isn't giving this story much play, perhaps leading some credence to that New Yorker cover, and California is now issuing IOUs to public employees, cutting basic services and candidly, has no concrete plan to move away from this terrible thing. The problem is that you can bail out Citigroup one time and hope for the best, but when a state, which is legally required to balance its annual budget goes belly up, then you need to deal with the issue year after year.
The federal government has thus far kept hands off, and I agree with that to an extent...after all, if you help California, then why not Pennsylvania which is also having some difficulties, as are other states. But the repercussions from this are enormous...and somewhat unfathomable. If California in whatever form, fails, and you can count among other things, unemployment, basic service disruption and such in that category, the impact on the so-called economic recovery will be immense.
So now I wish that I had an answer here, but I don't. There will be no tax increases, government employee furloughs are in full swing, tax revenues are in a shambles, companies are still laying off workers, real estate values have plummeted, loans are in default and properties are in foreclosure.
Particularly painful to me is that the innovative, vibrant California that I knew from the past has been mauled by an enormous bear, largely not of its own making (stupid politicians (who are always stupid) notwithstanding.)
So I just think we have to try to cycle through this thing and take our lumps in the meantime.