Sep 2, 2009

Turn Off the Lights?

I was on a short business trip to Denver this week - we flew in to Stapleton on Tuesday morning after a short "ground stop" at MSP because too many other people were doing exactly what I was doing that day. I was traveling with some finance/private equity guys (t's always interesting to travel with people that are different than you - whether they are in finance, law, produce, or whatever, because they have a slightly different take on the world that spices up the conversation).

After that minor mishap, we took off, had a nice flight, and landed at the Denver airport, were we were treated to a surreal, silver sky with no horizon whatsoever. There were no mountains, no downtown skyline, no rental-car-lot-on-the-horizon. No Denver. I have never seen anything like it, and because I forgot my camera, you won't either, unless you were there yesterday.

The reason for the bizarre landscape was smoke from the charred remains of California. The wildfires had blown their smoke over the Front Range, and Denver was in the Cali-smoke deposition zone yesterday.

This morning on CNN we saw Governor Schwartzeneger (sp?) assuring us that California had enough money to fight the wildfires. This triggered some breakfast discussion. "Can you imagine even having to even address the question of whether or not your state has enough money to fight a fire?' I asked, rhetorically.

At that point, I got an earful. The upshot of the discussion was that Proposition 13 capped property taxes, which forced the state to increase taxes on business, which was a drag on the economy. Unlike the U.S. government, California cannot print money, so without unlimited and perpetual growth, it was bound to fail. The recession only sped this all up.

"That sounds like a pyramid scheme", I said. The finance guys agreed with me.

Jim Kunstler had a good blog post about a recent trip he took to California. In light of the smoke from California harshing my mellow in Denver, it seems relevant, so here's a link. After reading Kunstler and reflecting on my discussion with my finance friends, I don't know what's going to happen to California, but I doubt it will continued to be the Disneyland it once was.

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