http://www.businessweek.com/news/20...t-to-aa3-by-moody-s-on-3-2-billion-bonds.html California as a whole is now priced more risky than Kazakhstan - "Borat bonds" as the FT call them. http://www.ft.com/cms/s/0/f0ae5948-3e4f-11df-a706-00144feabdc0.html How long are people going to overlook this situation, it's America's Greece and not going away...
California is bankrupt. The current unfunded pension liability for public employees is over one half TRILLION dollars. http://www.latimes.com/news/opinion/commentary/la-oe-crane6-2010apr06,0,1985775.story
This has been repeated on ET before, but for those of you who haven't seen it, a state can't legally file bankruptcy because they can collect taxes. So, one of three things will happen: California will slash spending, and/or Ca. will raise taxes, and/or the federal gov't will start bailing out states.
This needs to be repeated. The 8th largest economy in the world in a 1st world nation needs to be the biggest story in the news. If the mainstream media isnt going to talk about it, at least we should talk about that way we can prepare, hedge and make money off it. Cutting education would solve all the problems. Double up the size of the classrooms and sell half the k-12 schools and you save 48.5 billion per year. That gets us out of debt and lowers our taxes, not to mention encourages investment in our state if we have low taxes which will lead to more jobs. Only problem is that its in CA's constitution that they cant cut education. Some jack off politian that was trying to make himself look good did that. In my opinion we dont need to spend 100 billion per year to basically tell a kid that he has to read a book and do his homework. Yeah some kids will fall though the cracks if we double up classroom sizes, but at least then we will be able give low paying jobs to actual americans that got bad grade in school rather than export jobs or give jobs to illegal mexicans.
May I state that many of these countries that you seem to be ridiculing like Kazakhstan have come a long way in the last 10 years. They are working and saving and not consuming continuously. Having said that, this will be very bad for silicon valley if Taxes sky rocket. People do not want to work in places that cost too much to live in even if they get good jobs.
Slash spending eh maybe... Raise taxes they could do that but being that its one of the highest unemployed states that wont work to well, it will also drive many out of the state. Federal bailout NOW that is the answer, they have the printing presses already printing worthless monopoly money, whats the difference if they start to hand it out to states that are bankrupt, should work out well. Before you know every state will get the bailout it needs, don't worry about anything, a couple of bailouts here a few bailouts there and everything is fine.
My guess is neither of the three will happon. California will simply continue to get more and more into debt for eternity. Our best bet is to initiate Max Million's plan to sink the whole state. We can just blame it on global warming.