This column is an interesting take, with a substantial amount of truth—as one expects from Dan Walters at the Sacramento Bee—on the role of our fair state in the economic meltdown.
“Memo to Californians from everyone else in the world: You folks out there in sunshine land caused this historic global recession, and it's time for you to mend your ways.
“Farfetched? Not really.
“A very good case can be made that California's developers, mortgage lenders and house-hungry but income- deficient residents, with state and local officials as enablers, created an unsustainable housing bubble. And when that bubble burst, leaving holders of mortgage bundles – many of them overseas banks – with little more than toilet paper, it created a banking crisis that spread to virtually every other segment of the global economy.
“No, it was not confined to California. It happened in a few other high-growth states such as Florida, Arizona and Nevada. But nine of the 10 top issuers of subprime and no-documentation mortgages were headquartered in California, and the state has been ground zero for the collapse of those mortgages as adjustable interest rates "reset" upward, having recorded more than a half-million foreclosures and other symbols of distress.
“Currently, another 400,000 home loans in the state are delinquent because the economic crisis that was spawned by the banking crisis means hundreds of thousands of California families have lost their incomes – folks who were reasonably good credit risks originally – and cannot make their mortgage payments.
“Even those still employed, moreover, feel threatened and are cutting back on spending, which means a big hit on the retail segment of the economy, as demonstrated by the collapse of two department store chains and the closure of dozens of auto dealerships. New car sales this year are expected to be about half of what they were a few years ago, and sales tax revenue is crashing.
“There are a few signs that the national recession could be coming to a close, but that doesn't mean California will return to prosperity soon.”