Tuesday, November 16, 2010

California Will Default On Its Debt

Municipal bonds have plummeted in recent days, as investors have suddenly focused on huge state and city budget deficits that there's no easy way to fix.
Nowhere has this collapse been more visible than California, which faces a massive $25 billion shortfall and red ink for as far as the eye can see.
After years in which every looming financial crisis has been met with a government bailout, you might think that the same solution awaits California, as well as all the other states that have huge obligations that they can't afford to meet.
But this time that may not happen, says Chris Whalen, a financial industry analyst and Managing Director of Institutional Risk Analytics.
In fact, Whalen thinks that California will default on its debt--hammering all the pension funds and other investors who have loaded up on apparently safe state bonds.
The state won't immediately default, Whalen says.  It will start by issuing the same sort of IOUs that it issued to by itself time during its budget crisis last year.  But, eventually, the debts will have to be restructured, and this will result in those who own California's bonds receiving less than 100 cents on the dollar.
Why won't California just get a bailout?
Because the Republicans now control Congress, Whalen says.  And also because, if California gets bailed out, dozens of other states will immediately line up with their hands out.  The public is fed up with bailouts, Whalen says--and eventually, the country will be forced to face up to its bad debts and write them off.
More Here..


  1. Yes, with Jerry Brown as Governor and a liberal state house/senate, it will be interesting to see how they handle thing. Something tells me they will not have the discipline to say no. Even to illegal immigrants.

  2. I can't figure out who, and WHY, anyone would ever buy a cali bond

  3. It won't happen. Nothing goes bankrupt today, unless you are the little guy. Big government agencies just print more money. If California looks like it will default, I am going to dump all my money in CA bonds.

  4. if cali gets gov money..the great giveaway..not just some states will line up-all states will line up. another stimulus coupled with QE? it'll be fine as I don't eat much lolol

  5. Why don't they ask their buddies, the illegials to toss in a buck or two. Let the California liberal fools drown in their own stupidity. It's the only way they will learn.

  6. They will print; they told you they will print; all will be bailed out; there will be no nominal losses.
    My friend, debt is the very essence of fiat. As debt defaults, fiat is destroyed. This is where all these deflationist get their direction. Not seeing that hyperinflation is the process of saving debt at all costs, even buying it outright for cash. Deflation is impossible in today's dollar terms because policy will allow the printing of cash, if necessary, to cover every last bit of debt and dumping it on your front lawn! Worthless dollars, of course, but no deflation in dollar terms!

  7. i read posts
    here and see that they know . that money will be printed like crazy.
    thanks for not buying gold and silver.
    because the moon is the limit.
    i dont beleive anything thats said on tv
    thier lieing treason scum.
    so many will find out to late that they will be lft to the dogs
    as the rich politicans get spoon fed by the masses

  8. so far i havnt met anyone buying gold.
    just selling .we will be rich.
    when the monkeys realize theyve been hoodwinked

  9. 6:43 is part of the sheeple family. When the citizens run and buy GoLd, lined up at coin shops worldwide , is when you sell. You have it backwards...looks like we have a long way to go. Thanks for the update.

  10. A Foreign observer of America says:

    Will the american ruling elites bi-partisan Robo voters in the Senate and congress vote again to “ legalize” robo signers fraud to create new legal property titles out of fresh air?
    Start from bottom up at the 2:13 mark…
    2:15 P.M. -
    ONE MINUTE SPEECHES – The House proceeded with one minute speeches.
    H.R. 3808:
    to require any Federal or State court to recognize any notarization made by a notary public licensed by a State other than the State where the court is located when such notarization occurs in or affects interstate commerce
    2:14 P.M. -
    VETO MESSAGE FROM THE PRESIDENT – The Chair laid before the House the veto message from the President on H.R. 3808. The objections of the President were spread at large upon the Journal, and the veto message was ordered to be printed as a House Document No. 111-152. Pursuant to the order of the House of earlier today, further consideration of the veto message and the bill are postponed until the legislative day of Wednesday, Nov. 17, 2010, and that on that legislative day, the House shall proceed to the constitutional question of reconsideration and dispose of such question without intervening motion.

    So, Americas elected representatives will likely soon once again confirm Americas abandonment of the civilizations rule of law as befits the leading militarized barbarian country in the world today .
    Having previously unconstitutional handed power to create Americas money as government debt ‘out of fresh air” money printing the Federal politicians are now attempting to give the right of the banksters to ignore state laws and fraudently create property titles and ‘valid’ mortgage notes “out of fresh air” too.
    The mere signing of a paper of a claim to debts by a bankster in one state or federal jurisdiction is claimed as having a superior validity at law over other states law.

    This bill was already once passed by the politicians “on the voices’ a voting device for anonymously ,or secretly voting, for or against a bill without having their names recorded so that electors might not know of their criminal anti-constitutional roles.

    As this bill was presented to the president for signing into law at an inconvenient time the president exercised a pocket veto.Now that the elections are over , a two thirds vote by both the senate and congress without pass the law without right to veto.

    Federal American government was set up under laws made by its once revolutionary capitalist constitution as a union of sovereign states . This was a democrat and republican advance over arbitrary church/ feudal and monarchial law of nations .

    Protection of individual property right was a central part of those constitutional laws.

    Under cover of protecting “free trade” between the states wholesale fraud and forgery and backdating of mortgage contracts and property dead titles if practiced illegally in one state by the financial sector and banksters and the money power generally will be imposed as unquestionably valid ,superior right ,by right of fraud over state property laws.
    The new law will follow other law changes by politicians who have now been made dependent for their elections on the money power, are bribed by their controllers/ ‘lobbyists” and act on the “legal interpretations” of the constitution by their own appointees to a “Supreme Court” , that passed for example laws “ interpreting” the constitution, that Corporations are legal persons and their monetary contributions and effectively bribes for election campaigns to ensure politicians including presidents are elected by the human right of Corporations to buy the human right to free speech .
    All this is treating the constitution with contempt as if real life was a fictional novel like 1984 , where in the American corporate state .
    “Some pigs are more equal than others”

  11. This will not happen. They will get bailed out. What does it matter really how much debt, it's just a number. It could be on hundred quadzillion! It's just a figure. Things will go on as normal.

  12. where is that smart guy that used to pop up on this website a few months back claiming the website only published doom and gloom and that californian state economics had no crisis and was as good or better than the rest of "recovered" america?

  13. Oh my. 9:19, are you 18 or somewhere around there? I used to think impractically like that, it's understandable.

    6:43, gold not too long ago was 700 dollars an ounce. Now it is 1400. Those who have been buying gold throughout that time made a profit, and will make an infinitely bigger profit if they do not sell their gold at all. Another year that gold will be worth all the dollars in the world combined.

    It will even be more than one hundred quadzillion dollars! Unless of course they just print one hundred quadzillion dollars, they might be able to get rid of the debt. All it is in reality is a thing.

  14. I work for the state of Cali...We need cuts cuts cuts...Deportations and quick executions...But what we'll get is gridlock and fast money from the FED to keep this charade going.

    The bonds have been secretly bought by someone and I can only assume it's the Federal Government/ The Fed or a company who's a front for either of those douchebag institutions.

    Sooner or later the party ends then the crime begins...BUT with almost 1/7th of America in Cali we have to keep it going.

  15. deportations and ethnic cleansing eh?

    whadaya mean ?

    that the mexicans should seize back contol of california and deport the later American immigrants?
    Of course they most likely might take a more tolerant attitude to their fellow man neighbors in a new Atzlan ,than some of the johny come lately -yanqui-gringos have as most have good catholic christian family values .

    What about they get a refund of all the gold the new invaders stole during the gold rush.

    That should do nicely to set up a nice new tolerant state financialy.

    but, how would that actualy work out, besides the necessary first dismantlement of the foriegn ,insolvant failed present state now imposed on california? :)

  16. Check it out,
    The top graph above looks like a cruise ship outline .
    Sort of like the good ship Titanic but perhaps it is the QE2 bailot cruise liner for the modern rich ?

    The good ship Queen elizabeth the second.

  17. Nothing wrong with a lil ethnic cleansing every now and then...Thing of the past you say?

    Happens everyday in many parts of the world...People will clan up...White with white...Black with black...etc etc

    We're all animals in our primal stage and if you don't think we as Americans will fight for our God given right to eat Big Macs and drive low milage lifted trucks on giant tires...Then you my friend are in for a surprise.

  18. "We're all animals in our primal stage and if you don't think we as Americans will fight for our God given right to eat Big Macs and drive low milage lifted trucks on giant tires...Then you my friend are in for a surprise. '

    No, it is americans that are surprised that the old games of empire ,paper dollars and militatarism are not working so well now that america is insolvant,its big macs are becoming too expensive as the once mighty dollar value is inflated away to oblivion.
    Old fashioned vanity boosting boasting from a de-industrialised has been country sounds so old hatand empty of content.
    As with the old roman empire that depended on getting tribute from its empire to live ,as the tribute got less and to expensive to collect by more wars ,the empire "surprisingly" died as an old boastful has been.

  19. 1:30am Perhaps you've heard of sarcasm?

    Cuz that's what 12:52 was...I understand we're going down the tubes BUT either way Americans will throw a tantrum like a 3 year old when they take their toys away.


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