California is Too Big To Fail; Therefore, It Will Fail

Back in December I wrote a piece http://www.newgeography.com/content/001274-what-happens-when-california-defaults where I stated that California was likely to default on its obligations. Let’s say the state’s leaders were less than pleased. California Treasurer Bill Lockyer’s office asserted that I knew “nothing about California bonds, or the risk the State will default on its payments.” My assessment, they asserted, “is nothing more than irresponsible fear-mongering with no basis in reality, only roots in ignorance. Since it issued its first bond, California has never, not once, defaulted on a bond payment.”

For good measure they labeled as "ludicrous” my comment that the Governor and Legislature may not be able to solve the budget problem next year because “debt service is subject to continuous appropriation. That means we don’t even need a budget to make debt service payments.”

by Bill Watkins

Full Story: http://www.newgeography.com/content/001542-california-too-big-to-fail-therefore-it-will-fail