(remember one of my 13 2009 Outlier Predictions is a large wave of auto dealerships closing, breaking the backs of many smaller towns)

Rio Vista has cut a third of its city workers (I'm curious how many of these people will be joining Mr Cramer in the "I'm ready to buy a house now that it's 4.5% interest rate!) and slashed its recreation budget to $29,000 from about $250,000. The city is looking into selling more than 100 acres of its land for revenue. Since July 2007, Rio Vista has cut $1 million from its $7 million budget but still faces an $800,000 shortfall. "The fact we are a small town makes it more difficult to handle this slide we are on," says Rio Vista Mayor Jan Vick. "We don't have that much to cut."

Now these are small towns but I'd still love to see the salaries and benefits of the higher ups. Our canaries in the state coal mine are beginning to grasp for oxygen. Another of my 2009 Outliers is the eventual backstopping (we will backstop everything) of municipal debt by the Federal Reserve....

In the bigger picture of California (let me remind you as a stand alone country it would be the 8th largest economy in the world - hence very important) is beginning to "attempt" to take some of the serious steps which are unfortunately, necessary. These steps hurt the current hedge fund thesis that 4.5% mortgage rates for all will "have us back on track for 2nd half 2009!"

• Gov. Arnold Schwarzenegger on Friday ordered a state hiring freeze and payroll cuts to conserve cash as California struggles to deal with a $42 billion budget deficit. The governor issued an executive order that requires state agencies to reduce payroll by 10 percent, which could lead to massive layoffs. He also ordered the state's 235,000 employees to take two days off a month without pay, starting Feb. 1.
• Union officials said they were considering filing a lawsuit to prevent job losses. "Our contract doesn't allow him to do this."

Now let me tell you, I think much like Obama, Schwarzenegger is in a very bad situation and much like Schwarzenegger came in with 60%+ approval ratings and hope, Obama will be faced with the same road. Hope will fade to reality soon enough. The problems are larger than the man. In a non political vein I actually like Schwarzenegger - every time I see him on a Sunday morning political show or in a news magazine he seems pragmatic, centrist and not beholden to the GOP. He says he is a public servant not a GOP servant. I like centrists who actually attempt to serve the people who employ them (as opposed to themself) even if not all the ideas are perfect. All I know is apparently he is pissing off both the GOP and Dems ... which in my book says he is doing something right. Anything that gets both sides upset must actually be doing something constructive. Unfortunately, there are no good choices - one day Americans need to be told that instead of bending to their near term whims with more debt (yes you can have anything!! tax cuts along with giving you anything to boot! just vote for me! I'll give you anything!) and more obligations on our children and grandchildren. It appears very few politicians are actually adult enough to try to tell the citizenry the truth - Ahhhhhnold appears to be one.