Can You Live on $60,000 a Year in California? Yes You Can!
California is facing some troubling times. It has one of the highest unemployment rates at 9.3% and families are trying to figure out ways to stretch their dollar as far as it can go. Now I thought in the middle of all the troubling news out there, I would offer a post that examines how a family making $60,000 a year can survive in California. When I wrote an article about a family living on $46,000 a year in California some people took objection to this nitpicking the budget as if we had developed a budget for someone making $100,000. This is merely a suggestion since most mainstream articles although will highlight the challenges of our current economy, they rarely provide Americans and actual budget to implement. I will try to do that in this article.
Bank Charge-off Rate Highest Since 1992 for Commercial Banks: Credit Cards, Revolving Debt, and the Contraction of Credit.
Charge-off rates are now at a 17 year high since commercial banks are writing off real estate loans, consumer loans, leases, agricultural loans, and other construction loans. The FDIC is going to be bombarded with hundreds of bank failures in the upcoming years simply because their balance sheet does not have the ability to support such a large banking system with assets that have fallen by tremendous amounts. The most recent data tells us that banks are charging off 1.46 percent of all loans. This may seem miniscule but keep in mind with a system leveraged in some cases 30 to 1, this is all it takes to sink a company into a low capital position.
Government Employment and Bankrupt City: Federal and State Government were Last Secure Employment Sectors. Financial and Economic Contraction.
States across the country are facing unprecedented budget shortfalls. A total of 44 states face budget shortfalls, which for all practical purposes puts the entire country in a uniform crisis. The state of California is in a state of fiscal panic. Currently the state faces a $42 billion budget deficit and the State Controller has decided to hold back on income tax refunds in order to pay for other services. It would appear that furloughs are still on there way starting this Friday for tens of thousands of employees. Yet the state still idles in a weird sort of punch-drunk love.
Wealth Evaporation of $40 Trillion: 3 Areas: Global Stock Market Capitalization, U.S. Residential Real Estate, and Oil.
We have never seen so much global wealth destruction happen at once. Global equity markets are off in the 50 percent range and don’t seem to be letting up. We are seeing wealth destruction at an unprecedented rate. We can debate whether inflation will show up but until the U.S. Treasury bubble pops, we can expect to see deflation in our current forecast. I think it is hard for many to comprehend that $40 trillion has evaporated from a few niche markets.