California’s budget deficit has risen to an eye popping $16 billion. What seems to be going mostly unreported in this, is that Governor Schwarzenegger has been repeatedly wrong in his budget projections. Wasn’t that one of the major reasons we recalled his predecessor? We haven’ t heard the last of this- not by a long shot. As reported in the San Diego Union:

California’s nonpartisan fiscal watchdog on Wednesday said the state’s budget shortfall has grown to $16 billion and offered an unprecedented and competing plan to close the gap by imposing both spending cuts and tax increases.

Legislative Analyst Elizabeth Hill said Gov. Arnold Schwarzenegger’s proposal for the 2008-09 budget year is flawed because it fails to set funding priorities and correct the state’s chronic imbalance between spending and revenue. “A decline in revenue means we have a larger shortfall than the governor projected,” she said. “Our recommendations will affect all Californians in some way. However, we think that will benefit all Californians in the long run.”

Last month, Schwarzenegger pegged the shortfall at $14.5 billion through June 2009. A continuing decline in the housing market that has created ripple effects throughout the economy has contributed to a sharp drop in tax revenue. Hill criticized the across-the-board budget cuts to most state agencies that Schwarzenegger proposed. Instead, she called for targeting and eliminating nonessential state services and raising tax revenue by cutting personal and corporate tax credits for families, businesses and motorists. She also advocated a higher gasoline tax.

The recent writer’s strike cost the Los Angeles economy an estimated $2.5 billion, according to Jack Kyser, economist for the Los Angeles County Economic Development Corporation. As reported in the Hollywood Reporter:

The ricochet effect from the Hollywood writers strike might be more far-reaching and long-lasting than first thought. So says an influential Los Angeles economist in his annual “Economic Forecast Report” for Los Angeles County and its surrounding areas.

The work stoppage that started November 5 and was settled early this month already has cost the town an estimated $2.5 billion, according to Jack Kyser, the chief economist for the Los Angeles County Economic Development Corp. The figure includes lost wages from TV shows that were canceled and films that were put on hold as well as a plethora of support services, ranging from limo drivers to florists. Kyser suggested that the cancellation of the Golden Globes resulted in a $60 million shortfall for the community.

As reported in International Herold Tribune, but isn’t it possible that in some countries this situation could have occurred and no recall would have been issued in the first place?

U.S. Agriculture Secretary Ed Schafer said Friday the nation’s largest beef recall has set back negotiations to ship U.S. beef to Japan and South Korea. Those markets closed to the U.S. cattle industry in 2003 after a scare over mad cow disease. Schafer said at a convention of meat packers and processors that he is hopeful trade talks will continue, but that the Westland/Hallmark Meat Co. recall has diplomats asking why the U.S. can’t ship safe meat. The USDA recalled 143 million pounds of beef from the Chino-based slaughterhouse after the U.S. Humane Society released undercover video that showed slaughterhouse workers there kicking and shoving sick and crippled cows and forcing them to stand with electric prods, forklifts and water hoses. Downer cows, or those too sickly to stand, are banned from the food supply because they carry a higher risk of mad cow disease and other illnesses.

According to the New York Times Texas surpassed California as the top wind farm state in 2006. In January alone, new wind farms representing $700 million of investment went into operation in Texas, supplying power sufficient for 100,000 homes:

Texas, once the oil capital of North America, is rapidly turning into the capital of wind power. After breakneck growth the last three years, Texas has reached the point that more than 3 percent of its electricity, enough to supply power to one million homes, comes from wind turbines.

Texans are even turning tapped-out oil fields into wind farms, and no less an oilman than Boone Pickens is getting into alternative energy. “I have the same feelings about wind,” Mr. Pickens said in an interview, “as I had about the best oil field I ever found.” He is planning to build the biggest wind farm in the world, a $10 billion behemoth that could power a small city by itself….

Much of the boom in the United States is being driven by foreign power companies with experience developing wind projects, including Iberdrola of Spain, Energias de Portugal and Windkraft Nord of Germany. Foreign companies own two-thirds of the wind projects under construction in Texas.

Benchmark Capital, one of Silicon Valley’s leading venture firms, has just finished raising its sixth fund, totaling $500 million, according to a report in VentureBeat. Partner Steve Spurlock said the firm’s partners haven’t changed, and that its focus will remain on enterprise software, internet and security companies. The latest fund is somewhat larger than the firm’s previous 2004 fund of $425 million, in part because the firm has added two more partners, but also because it wants to invest in later stage deals. The firm hit it big in the late 1990s with eBay’s IPO, was somewhat barren during the downturn immediately after 2000, but has had a roll of profitable returns on investments lately: MySQL, Zimbra, Vontu and Tellme have all been acquired for large multi-hundred million dollar amounts. Other recent IPOs or sold companies were Infinera, Business.com, Good, Avamar, Entrisphere and Ingenio.

The company notorious for spying on its own users now won’t even let them leave. As reported in the New York Times:

Are you a member of Facebook.com? You may have a lifetime contract. Some users have discovered that it is nearly impossible to remove themselves entirely from Facebook, setting off a fresh round of concern over the popular social network’s use of personal data.

While the Web site offers users the option to deactivate their accounts, Facebook servers keep copies of the information in those accounts indefinitely. Indeed, many users who have contacted Facebook to request that their accounts be deleted have not succeeded in erasing their records from the network.

“It’s like the Hotel California,” said Nipon Das, 34, a director at a biotechnology consulting firm in Manhattan, who tried unsuccessfully to delete his account this fall. “You can check out any time you like, but you can never leave.”

It took Mr. Das about two months and several e-mail exchanges with Facebook’s customer service representatives to erase most of his information from the site, which finally occurred after he sent an e-mail threatening legal action. But even after that, a reporter was able to find Mr. Das’s empty profile on Facebook and successfully sent him an e-mail message through the network.

In response to difficulties faced by ex-Facebook members, a cottage industry of unofficial help pages devoted to escaping Facebook has sprung up online — both outside and inside the network. “I thought it was kind of strange that they save your information without telling you in a really clear way,” said Magnus Wallin, a 26-year-old patent examiner in Stockholm who founded a Facebook group, “How to permanently delete your facebook account.” The group has almost 4,300 members and is steadily growing.

European regulators raided the German office of Intel Corp. as part of antitrust investigation into possible anticompetitive practices, according to a report in Silicon Valley / San Jose Business Journal. Santa Clara-based Intel said the EU raided its offices in Munich, and said it is cooperating with the investigation. The Wall Street Journal reported that German conglomerate Metro AG confirmed that the EU also raided its computer sales businesses Media Markt and Saturn Holding GmbH. In July, the EU charged Intel with conducting illegal competition against rival Sunnyvale-based Advanced Micro Devices Inc. by offering computer hardware manufacturers rebates, discounts and cash. The Journal said AMD has a separate case against Media Markt that accuses the retailer of only selling Intel-based PCs. Intel is due to appear in Brussels for a hearing on the issue in March, and the company also faces a similar probe in New York by the State Attorney General’s office.

More evidence that the medical system in California- and for that matter the entire country, is completely broken. As reported in the Los Angeles Times:

The state’s largest for-profit health insurer is asking California physicians to look for conditions it can use to cancel their new patients’ medical coverage. Blue Cross of California is sending physicians copies of health insurance applications filled out by new patients, along with a letter advising them that the company has a right to drop members who fail to disclose “material medical history,” including “pre-existing pregnancies.”

“Any condition not listed on the application that is discovered to be pre-existing should be reported to Blue Cross immediately,” the letters say. The Times obtained a copy of a letter that was aimed at physicians in large medical groups. The letter wasn’t going down well with physicians. “We’re outraged that they are asking doctors to violate the sacred trust of patients to rat them out for medical information that patients would expect their doctors to handle with the utmost secrecy and confidentiality,” said Dr. Richard Frankenstein, president of the California Medical Assn. Patients “will stop telling their doctors anything they think might be a problem for their insurance and they don’t think matters for their current health situation,” he said. “But they didn’t go to medical school, and there are all kinds of obscure things that could be very helpful to a doctor.”

WellPoint Inc., the Indianapolis-based company that operates Blue Cross of California, said Monday that it was sending out the letters in an effort to hold down costs. “Enrolling an applicant who did not disclose their true condition (and the condition is chronic or acute), will quickly drive increased utilization of services, which drives up costs for all members,” WellPoint spokeswoman Shannon Troughton said in an e-mail.

“Blue Cross feels it is our responsibility to assure all records are accurate and up to date for HMO providers,” she said. “We send these letters to identify members early on in the process who may not have been honest in their application.” Blue Cross is one of several California insurers that have come under fire for issuing policies without checking applications and then canceling coverage after individuals incur major medical costs. The practice of canceling coverage, known in the industry as rescission, is under scrutiny by state regulators, lawmakers and the courts.

Patients in a raft of lawsuits accuse the insurers of canceling coverage over honest mistakes and minor inconsistencies on applications that they contend are purposely confusing. Victims of cancer and other serious medical problems often are unable to get new coverage once their insurance has been rescinded and they may go without treatment when they need it most. Suddenly swamped by medical debt, some people have lost homes and businesses.

More than 100 U.S. Immigration and Customs Enforcement agents raided a printer supply manufacturer in the San Fernando Valley on Thursday, taking into custody about 120 employees for being in the country illegally and arresting eight on federal criminal charges, according to a report in Associated Press. The raid at the offices of Micro Solutions Enterprises began around 3:30 p.m., said Virginia Kice, an ICE spokeswoman, who said the basis for the criminal warrant that led to the raid was under seal. The eight people were arrested for allegedly providing fraudulent information to get their jobs, Kice said. All of the 120 people taken into custody for illegal immigration status were interviewed for what Kice called “humanitarian issues.” About 40, including the elderly and those with children, were released to await a hearing before an immigration judge, Kice said.

A California appeals court on Wednesday said an anonymous Internet poster does not have to reveal his identity after being sued for making “scathing verbal attacks” against executives at a Florida company on a Yahoo message board, according to a report in ZDnet. The Sixth Appellate District in Santa Clara County reversed a trial court ruling that would have allowed a former executive at SFBC International to subpoena Yahoo for the names of her critics. The appeal was filed by a poster whose screen name includes a Spanish expletive but who is known as “Doe 6″ in the lawsuit filed by former SFBC Chairman and COO Lisa Krinsky in 2006. Krinsky accuses Doe 6 and nine other Yahoo Finance posters of libel, fraud, and other claims arising from posts they made about her while she was a company officer. The appellate court concluded that while Doe 6’s messages were “unquestionably offensive and demeaning,” they could not be counted as defamation since they could not be considered assertions of fact. Without a cause of action, Krinsky could not overcome Doe 6’s First Amendment right to speak anonymously on the Internet, the court said. The decade-old controversy over pseudonymous posting in chat rooms took a major twist last July when the U.S. regulators revealed that Whole Foods Market CEO John Mackey had been posting in Yahoo Finance under a fake name for several years. His messages boosted his own company’s strategy and denigrated those of rival supermarket chain Wild Oats, which Whole Foods later sought to acquire.

That’s according to Scott Kurashige of the Huffington Post, who noted that this may be the first time in American history where, “a candidate failed to win African Americans and whites but won overall-as Clinton did in California”. He noted, however, that “if Clinton’s multicultural strategy is unprecedented, Obama’s effort to transcend “minority” politics is historic. Casting Obama as a “colorblind” politician, the pundits and his left skeptics have largely missed the significance of what he represents. Getting “beyond race” today is not about ignoring the problem of racism or moderating ones politics to appease whites. Instead, it means thinking about America as a multiracial nation that dispels old notions of both white normativity and majority/minority identities.” The article is worth a read: The Future is Now: California’s Multiracial Challenge to America“.

Press release: HRH Prince Andrew, The Duke of York, will join BT today to announce the ground-breaking of a renewable energy initiative at BT’s office complex in Southern California. Next month, BT will begin construction of a solar photovoltaic system for its North American corporate headquarters site in the City of El Segundo (Los Angeles County). Once the system is fully operational by late summer, BT expects to reduce carbon emissions by 642,000 pounds (more than 290 metric tons) annually as well as decrease its overall power costs for the site in future years. HRH Prince Andrew, the United Kingdom’s Special Representative for International Trade and Investment, commented, “British companies continue to demonstrate their interest and investment in the United States and in solutions to help reduce the impact of climate change.” He continued, “I commend BT for its leadership in producing significant renewable energy solutions in the UK. With this solar project, BT extends its environmental consciousness to its operations in the U.S.”

Trouble in the Schwarzenegger household? This will certainly neutralize Arnold’s backing of McCain.

California first lady Maria Shriver, a member of the Kennedy clan, endorsed Democratic Sen. Barack Obama for U.S. president on Sunday, days after her husband, Republican Gov. Arnold Schwarzenegger, backed Republican John McCain.

“I thought, if Barack Obama were a state, he’d be California,” Shriver told the crowd jamming an Obama rally at the University of California at Los Angeles. “I mean think about it. Diverse. Open. Smart. Independent. Bucks tradition. Innovative. Inspiring. Dreamer. Leader.”

Obama, an Illinois senator, is running neck and neck with New York Sen. Hillary Clinton days before Super Tuesday, in which California and more than 20 other states hold primaries and caucuses to nominate Democratic and Republican candidates for the November presidential election.

On the Republican side, front-runner McCain’s closest rival is former Massachusetts Gov. Mitt Romney. Shriver was flanked at the rally by her cousin Caroline Kennedy, the daughter of former President John F. Kennedy and television talk-show star Oprah Winfrey. Caroline Kennedy and Massachusetts Sen. Edward Kennedy, the brother of the slain president, have also backed Obama.

As reported by Reuters:

California, the top U.S. food producing state, has sent its first official agricultural trade mission to communist Cuba, looking to tap a potential $180 million food market. While other U.S. states have pushed ahead in selling Cuba an average $350 million per year in agricultural products, mainly grains, California is a late arrival. Californian companies sold products worth just $735,000 to Cuba in 2006.

“Some of us might be a little late in getting here, but we are here,” California Food and Agriculture Secretary A.G. Kawamura told reporters in Havana. Kawamura is leading a delegation of companies seeking Cuban contracts for dairy products, wine, grapes, figs, nuts and other specialty fruits. So far, Cuba has bought powdered milk and rice from California, and some wine and apples.

U.S. food sales to Cuba were allowed in 2000 under an exception to the trade embargo Washington has maintained since 1962 against Fidel Castro’s government.

As reported in Los Angeles Times:

California’s jobless rate jumped to 6.1% in December, up from 4.8% a year earlier, prompting Gov. Arnold Schwarzenegger to move to expedite public works projects in an effort to stimulate the economy. The surge in unemployment, up from 5.6% in November, was the latest sign of the toll of the housing slump, the sub-prime mortgage debacle and production shutdowns during the Hollywood writers strike.

The job figures released Friday by the state Employment Development Department also suggested that the malaise had spread to the retail sector, in which employers shed 2,200 positions in December. That loss in a month when merchants typically post gains brought the total decline in retail jobs for the quarter to 12,200. Some economists said the report was another harbinger of recession; others thought the figures were likely to improve somewhat when more data were available. Most agreed that the state’s budget problems had just begun.

“We’re headed for probably a sharper slowdown than any of us expected two months ago,” said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto, adding that it could tilt into a “mild recession.” “That’s going to put a lot of pressure on state and local government budgets,” he said.

Schwarzenegger announced his response to the weakening outlook about the same time the job figures were released, saying he wanted to spur the economy and “keep more people working.” The governor held an emergency Cabinet meeting Thursday, when he told agency and department heads to work to speed the release of $29 billion in 2006 bond fund money for road and school construction and levee repairs.

“The people of California are feeling the hit of the sub-prime mortgage crisis and housing slump,” he said in a statement. “While other sectors of our economy remain strong — creating more than 15,000 new jobs last month — it’s clear that California and the rest of the nation will have to weather this disruption for a while.”

More cheery news from the real estate sector. Housing foreclosures in California are up a stunning 400 percent from the same period a year ago. As reported in the San Francisco Chronicle:

Foreclosures and default notices skyrocketed to record peaks in California and the Bay Area in the fourth quarter of 2007, according to a report released Tuesday. The information was a fresh reminder that the slumping real estate market is continuing to have a serious impact on homeowners, particularly those with risky subprime mortgages.

Lenders repossessed 31,676 residences in California in the October-November-December period, according to DataQuick Information Systems, a La Jolla research firm. That was a dramatic 421.2 percent increase from 6,078 in the year-ago quarter. In the Bay Area, foreclosures rose an equally stunning 482.5 percent to 4,573 in the fourth quarter, compared with 785 a year ago. Contra Costa County, with 1,558 foreclosures, up 533.3 percent from a year ago, had the most, followed by Alameda County with 1,026 (a 514.4 percent increase) and Solano County with 704 (up 528.6 percent).

“Foreclosure activity is closely tied to a decline in home values,” DataQuick President Marshall Prentice said in a statement. “With today’s depreciation, an increasing number of homeowners find themselves owing more on a property than its market value, setting the stage for default if there is mortgage payment shock, a job loss or the owner needs to move.” It was the most foreclosures since DataQuick began tracking them in 1988 and more than double the previous peak of 15,418 foreclosures in the third quarter of 1996. The fewest foreclosures recorded were in the second quarter of 2005, when 637 homes were repossessed.

Mortgage default notices, sent by lenders when homeowners are several months behind on payments, also hit record highs. Default notices are the first step of the foreclosure process. Statewide, lenders sent 81,550 default notices, up 114.6 percent from 37,994 in the fourth quarter of 2006. It was up 12.4 percent from 72,571 in the third quarter of 2007. It was the most defaults since DataQuick began tracking them in 1992.

Walt Disney Co. is planning on launching a new cellphone service in Japan on March 1, according to a report in Los Angeles business. Disney’s Japan unit said it will become a mobile virtual network operator using Softbank Corp.’s pricing plans and sales channels, according to Dow Jones reports. The partnership was initially reported on in November. Burbank-based Disney discontinued two similar services in the U.S. in recent years, with Disney Mobile announcing in September that it was stopping service at the end of 2007 and Mobile ESPN shutting down in September 2006.

Sun Microsystems Inc.has agreed to buy software company MySQL AB for $1 billion, a move that is expected to bolster their position with database technology and make them more competitive with Oracle Corporation: As reported in the San Francisco Chronicle:

The MySQL deal lets Sun – the third-largest maker of server computers – enter the $15 billion market for database software, challenging Oracle Corp. and adding a source of service revenue. Closely held MySQL develops databases and lets customers such as Google Inc. and the Chicago Mercantile Exchange use them for free, making money from maintenance.

Sun is bolstering its software unit to offer more programs that businesses need to build Web-based systems, Chief Executive Officer Jonathan Schwartz said. Schwartz, who became CEO in April 2006, restored Sun to profit after five years of losses by cutting jobs and adding products.

“MySQL gives Sun a flagship product, the most popular open-source database technology,” said Raven Zachary, an analyst with research firm 451 Group in Portland, Ore. The purchase “offers a model for Sun to follow as it tries to sell other open-source software products

As reported in the San Francisco Chronicle:

The California Employee Confidence Index dropped 2.5 points to 50.3 in December, the lowest level seen in the history of the survey, according to a report released Friday. The latest report, conducted by Harris Interactive on behalf of Spherion Corp., indicates that California workers are becoming increasingly less confident in the job market, economy and in their personal employment situation. Results from the California Employment Report include:

• Sixty-three percent of workers believe the economy is getting weaker, an increase of nine percentage points from November.

• Thirty-five percent of employees are likely to look for new jobs, up seven percentage points from the previous month.

• Forty-seven percent of California workers believe there to be fewer jobs available, a 10 percentage point increase since November.

The bad news in the California real estate industry- at least for sellers, has been relentless. The latest report from DataQuick- a real estate research firm, shows that the medial home price in California is now $402,000 last month, down 14.8 percent from $472,000 in the year-ago period, and home sales in the state have plummeted more than 40 percent from a year ago. As reported by AP, “The state has seen sales decline year-over-year for 27 straight months as the once-booming housing market tanked and a credit crisis forced mortgage lenders to scale back so-called jumbo mortgages that exceed $417,000. That’s helped skew the median home price downward because fewer jumbo loans have translated into fewer high-end homes being sold. The percentage of homes purchased with jumbo loans last month fell nearly 70 percent from December 2006″.