Last spring, my horoscope read "The remarkable thing is you are still in the game". <g> Hey, mistakes aren't bad unless you fail to learn from them. And keep them small enough that you can survive them.
Think PCG and EIX will pull out of this without filing for Bankruptcy? I'd put on a small position in PCG near $13, then sold it for a nice loss near $9 after concluding the politicians wanted to drive the companies into the ground out of spite.
Now it looks like they might be willing to extend the umbrella of the state's respectable credit rating to ease the shorter term financing costs for the utes, while demanding the utes give up their hydro facilities.
On the surface, it looks like a 50% bailout- help on recovering 10-12 billion in costs at the cost of 5 billion in assets. Deeper down, there still is the underlying problem of the consumer rates being half production costs.
Assumign consumer rates coming up to production costs, and production costs declining over the next few years, I don't see how CA can avoid a cost induced recession, and lower housing prices over the next few years.
I've had to upgrade the probability assigned to the depression scenario as a result of the handling of this situation. Do you think policy makers can act quickly enough to avoid a hard landing? I'm assuming that fiscal policy, in the form of tax relief will be required.
Should we be stocking up on food, guns, ammo and gold? <g> |
