All the books are red

California is heading for a record almond harvest this fall. A combination of nearly perfect weather and millions of healthy, robust honeybees is expected to yield 2.1 billion pounds of nuts, the biggest crop in history. The harvest starts in late August in the southern San Joaquin Valley and continues through October in the Sacramento Valley. The U.S. Department of Agriculture pegs it as 5% above a May forecast and 3% above 2011's previous record of 2 billion pounds (over 900 million kg). But here's another issue brewing in the same state: San Bernardino’s City Council voted to become the third California city this year to file for bankruptcy, as it struggles with declining tax revenue, growing employee costs, and accounting discrepancies in its ledgers. The council voted 4 to 2, with one abstention, last night to authorize a filing under Chapter 9 of U.S. bankruptcy law. The city of 209,000, about 65 miles (105 kilometers) east of Los Angeles, is apparently so broke it can’t make its August 15 payroll. What's needed over the next five weeks is aggressive collection of back taxes, and if there's still a massive deficit by the time the almond harvest starts making money, maybe some of the profits could go to helping San Bernadino and others out of their financial quagmires. Also heading into the financial black hole is Portugal, whose international creditors may soon have to ease terms of the country’s bailout to prevent the plan from derailing as the government faces setbacks in attaining its deficit goals. Prime Minister Pedro Passos Coelho’s struggle to meet deficit pledges were further hampered last week when about 2 billion euros ($2.5 billion) of planned cuts to pensions and civil servants’ holiday pay were ruled unconstitutional. With Portugal’s 10-year bond yield above 10 percent, returning to the markets next year may be untenable, requiring more international aid despite the premier’s insistence he won’t seek concessions.