A few months ago, California Governor Arnold Schwarzenegger stumbled across a grizzly bear while visiting Montana. Luckily for him, it was hollow and made of bronze. But still, it was life-sized, and reminded him of the great grizzlies that once roamed his beloved Golden State, so he bought it and brought it home to Sacramento.
The governor installed his new bear smack dab in the middle of the Capitol hallway, right in front of his office. This was good news for the Highway Patrol officers who guard Schwarzenegger's lair, since the bronze grizzly replaced them as the focus of visiting tourists' snapshots. It also made a nice bollard, adding another level of security outside the governor's office. And it gave the reporters who cover the governor somewhere to rest their microphones during his occasional hallway news conferences on the state budget crisis.
Today (and we use that term loosely since this very long day has about ten minutes left in it) was the last day of California's latest budget stalemate. As we staked out what would prove to be the final Big Five meeting of the crisis, the governor's staffers brought out a press pool, something we refer to as a "mult box," because it has multiple microphone outputs for the media to plug into, thus sparing the bear the indignity of all those microphones duct-taped to its bronze back.
It occurred to me that the bear could be put to better use as California struggles to balance its books. Why not carve a slot along its spine, and turn it into a Piggy Bear? (Or would that be a Beary Bank?) Certainly all those tourists who line up in the hall hoping for a glimpse of the Governator would gladly drop a quarter or two into the bear's belly for the privilege of posing with it. We could charge the out-of-staters a buck, or maybe even five; after all, they're freeloaders anyway, getting a free tour of our Capitol and occupying valuable hall space without paying any rent, all on the California taxpayers' dime.
Once the great beast proved his worth, the state Treasurer could securitize the bear, as California likes to do with all its longterm assets. Why, we could sell Bear-er Bonds. Perhaps Bear Stearns could handle that for us. After all, they pioneered those securitized asset deals, didn't they?
Oh wait. That got them in trouble. They went belly up - as extinct as the California grizzly.
Governor Schwarzenegger and his pals in the legislature found some other ways to balance the books, ending my five-hour reverie about the bear (who is still unnamed, by the way) by coming out of their meeting to announce a Deal At Long Last to erase the state's $26 billion deficit. It isn't pretty; they plan to slash $6 billion from K-12 education, $3 billion more from higher ed, more than a billion from the prisons, more than a billion from medical care for the poor, etc. etc. The governor gets to close some state parks (but thankfully, just a few), resume oil drilling from a single rig off Santa Barbara, tighten up on fraud and abuse in welfare programs, and raid the treasuries of California's counties to the tune of $4.3 billion. All of this assumes the approval of two-thirds of each house of the state legislature, some of whom have been known to hold this sort of budget deal hostage until the appropriate legislative ransom is paid.
If the deal does go through, it should allow the state to resume selling bonds, which would mean an end to the IOUs that have brought California international embarrassment for the last three weeks. It doesn't really mean an end to the state's financial crisis, since tax revenues are still declining, and the budget is likely to fall further out of balance before the year is out (think about this: already this calendar year, the state has had to cut, borrow or manipulate more than 60 billion dollars out of its spending plan - which is more than half the state budget).
Which means we're likely to be back in that hallway at some point this fall, sprawled across the marble floor, charging our iPhones and laptops on the taxpayers' electric bill, resuming our vigil as our fearless leaders grapple with yet another shortfall, and squabble over how to close it.
At which point I say, let's open up the bear market. Name that grizzly, saw out a slot in his back and put the California Golden Bear to work.
Otherwise, we could be bearish on California for a long, long time.