California Dreamin'

California! Land of opportunity and fabulous wealth. According to the US Department of Commerce, California was the world's eighth-largest economy again in 2008 (also 2007, 2006,...) with a GDP (gross domestic product) slightly more than $1.8 trillion.

In terms of size, the California economy ranked just behind Italy and ahead of Brazil and Russia. The next five largest economies were Spain ($1.6 trillion), Canada ($1.6 trillion), India ($1.2 trillion), Mexico ($1.1 trillion) and Australia ($1.0 trillion).

The wealth in every area of California is vast - greater than the wealth of entire nations. Consider these comparisons:

And yet in many senses of the word now, California is bankrupt.

California, according to Joel Kotkin, writing in New Geography in July 2009, is unable to pay its bills. "The state is issuing IOUs; its once strong credit rating has collapsed," he says. "The state that once boasted the seventh-largest gross domestic product in the world is looking less like a celebrated global innovator and more like a fiscal basket case along the lines of Argentina or Latvia."

How did this happen? Commentators have advanced various reasons from Arnold Schwarzenegger to Proposition 13 (which limited property taxes), to Raving Green Loonies. But the crucial factors that can't be denied are the huge growth in the size of government (between 2003 and 2007, spending on government grew 31%, compared with a 5% population increase), the subsequent ballooning of government pension commitments to State workers (added to an already ageing demographic in the State), and the subsequent increase in taxes as the beleaguered state government desperately searches for ways to pay its bills.

One nasty effect is that, burdened by taxes and ever-growing regulation, the state was rated by America's top CEOs as "the worst place in which to do business" for the fourth straight year (3/2009).

Some results of this regulatory regime can seem bizarre. Consider the case of APL. This year the huge shipping container firm is moving 300 miles from the Californian coast to inland desert state Arizona. Our own government should take note: major companies will move out of an unfriendly economic environment.

Unfortunately the California Disease -- bloated government, increasingly heavy demands on pensions, and business-bashing tax and regulations -- spreads easily in any country where politicians are weak and interest groups are strong. We're suffering a full-blown case in the UK. Here, just as in California, the disease carries huge implications for pensions, long-term well-being and comfort.

There is a risk that a weak and fearful government will try to make good on its economic deficit by increasing taxes and regulations. If that happens, pension provisions and standards of living will continue to deteriorate as costs increase and more wealth and production moves off-shore.

If ever there was a time to take charge of your own destiny, this is it. You can't rely on the government to make adequate provision for your old age. At Giroma our drive to create a solution for at least a few people has led to setting up the Lite version of the Financial Freedom Programme. The aim is simple: to find self-sustaining assets that will provide an on-going, predictable income, protect against the ravages of inflation and taxes, that are insulated against boom and bust cycles, that can remain in your control for as long as you want and that will appreciate over time.

FFP Lite goes a long way to satisfying those aims. FFP Lite gives you ownership of a property asset, pays a fixed monthly return benchmarked at 7% per annum, with a longer-term combined return benchmarked at 20% pa or better. You own a possessory share of bricks and mortar and land, and benefit from their income and appreciation. The asset is fully managed by the company that holds a majority share in the property. It's a virtuous circle where all concerned are motivated to ensure the programme succeeds.

It's affordable too, with buy-in shares available from just £2,000.

For details of the FFP Lite click here.