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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: The Reaper who wrote (200977)5/7/2009 3:39:38 PM
From: ChanceIsRead Replies (2) of 306849
 
RE: California

Has any state of the Union - e.g. California - ever become illiquid. Illiquid as in can't pay their bills. Don't let confuse that with insolvent where your liabilities exceed your assets. California ... and the US government ... have been in that mode for a decade. I don't think that a state has ever been illiquid. At least not since the Civil War. I don't even think in the Depression.

What will happen? The states are required to have a balanced budget. They can't print money. Well I suppose that they can, but they have to secede from the Union first, and when it comes to California, I wish they would. Diane Feinstein wants that cap and trade on carbon - not because of global warming - but because in will result in huge cash flows into California.

If ever there was a trigger to enter full scale on the dark side it would be an illiquidity event from California. Just think of all the bond covenants that will be violated!!! All of the bond insurance contracts which will be presented to the AIGs and MBIAs...at once. In the trillions no doubt. We are talking Lehman squared!!!!!

Why are people talking green shoots when the specter of California setting in the sunset is even infinitesimally on the horizon.
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