Thursday, February 10, 2011 – 11:00 a.m.

Let’s face it.

Politicians overseeing California’s state and local governments have their collective heads up their rear-ends.

Yes, both parties are to blame.

Politicians throughout the state continue to fleece taxpayers and could care less if they get caught.

The state legislature, local boards of supervisors and city councils continue to dole out tax dollars from everything from staff raises to new cars, while fighting over budget cuts and taxes.

Deficits at all levels continue to swell, while overall tax revenue continues to decline.

This week the state and its various local governments once again have their hands out to the federal government wanting more free dough.

Handouts that won’t happen with a republican-controlled House of Representatives. If you haven’t heard, the federal government is also broke.

The level of denial of California politicians as to the state’s fiscal disaster is indeed worsening, and it appears newly-reelected Governor Jerry Brown, a democrat, is facing headwinds even from members of his own party.

What is the democrats problem? What else, they don’t want to cut spending on social programs and want to raise taxes to pay for it!

One has to wonder what goes through the minds of these men and women elected to represent us.

A developing symptom of California’s woes?

Who would have thought municipal bond holders would ever be at risk, but they are.

For example, late last year the City of San Bernardino Redevelopment Agency was forced to issue bonds at an amazingly high coupon of 7.125%.

A state and federal tax-free municipal bond with a rate this high indicates significant risk.

A year ago the coupon rate on the same bond would have been slightly above 4%.

Another sign of trouble? The 7.125% coupon bond was actually rated BBB. Another not-so-great sign.

In the corporate world a bond rated this low is considered junk.

California needs to stop spending and cut its obligations. There is no other way out. California taxes are already among the highest in the country an raising them further will only make the state’s economy sink even more.

The only other choice is burn investors.

Trying telling this to a democratically-controlled state government dominated by government employee unions.

But in their eyes it’s other peoples money.

Good luck…..