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California Borrows $40 Million Per Day To Pay For Unemployment Insurance

Tyler Durden's picture


Fitting in perfectly with the previous article by Ron Paul suggesting the dissolution of the US welfare state, we now read that insolvent California is borrowing $40 million each day from the Federal government to pay for unemployment insurance. And while we won't comment on the ethics of all of America paying for one insolvent state's unemployment problems, what does need to be highlighted is that California, which already owes $8.6 billion to the government will have to cut a check for $362-million to Washington by the end of next September. As California, as pointed out earlier, is insolvent, it will never make this payment. Which means that we now have a timeline of when the Fed will start bailing out bankrupt states, and that QE3 will next focus monetizing on municipal debt.

From SFGate:

With one in every eight workers unemployed and empty state coffers, California is borrowing billions of dollars from the federal government to pay unemployment insurance.

The Los Angeles Times reports that the state owes $8.6 billion already, and will have to come up with a $362-million payment to Washington by the end of next September.

The continued borrowing means federal unemployment insurance taxes are going to increase, upping the annual payroll costs $21 a year per worker.

California tops the list of 32 states that have borrowed a total of $41 billion to pay claims.

The state took out its first loan from the federal government early last year, to deal with rising payment of benefits and number of claims.

Conveniently, S&P today has released an update of their municipal view, with an emphasis on California. Not even S&P can be cheery when discussing the world's allegedly 7th largest economy. The text follows:

California (A-/Negative)

Since 1978, when Golden State voters amended their constitution to effectively shift the financing of portions of local government services and education from the state's property tax base to the more volatile income and sales tax base, California has run deficits in 58% of years, compared with deficits in 38% of years in the three decades leading up to the change. Clearly, economic factors also drive the state's fiscal performance. The dot-com implosion of the early 2000s had an outsize effect on jobs, personal incomes, and capital gains. As the decade progressed, the state's labor market mirrored the housing boom and bust, given California's large real estate finance and construction sectors.

We believe that the state's progressive personal income tax structure also exacerbates revenue volatility. Personal income taxes make up slightly more than half of budget proposal revenues for fiscal 2011, and the top 1% of earners pay 48% of personal income taxes – or 25% of general fund revenues. When total personal income declined 2.2%, to $1.57 trillion last year, general fund revenue fell almost 14%, to $84.2 billion in fiscal 2009.

California's struggles through the recent recession have drawn much media coverage – no surprise, we think, given that the state has run deficits in recent years that are larger than many peers' total budgets. When a state that represents 13% of the U.S. gross domestic product faces shortfalls of a combined more than $100 billion over the past three budget cycles, we believe that a certain amount of attention is a given. And we don't expect these long-term fiscal pressures to abate any time soon. Although the state's total debt burden is in our view moderate, it is increasing. Debt service supported by general funds represents 7.4% of the adopted budget for fiscal 2011 and we think could exceed 10% by 2015. Pension and OPEB funding for fiscal 2011 is $5.73 billion, of which $4.11 billion is a direct general fund expense. Taken together, debt service and funding for retirement benefits, not at actuarially recommended levels, represent an estimated 12.2% of general fund spending in fiscal 2011.

Unlike in many other states, California's constitution requires a two-thirds vote of the legislature to increase taxes. Until the Nov. 2, 2010 election budget adoption also required a supermajority vote of the legislature. Negotiation stalemates over both have led some observers to question whether a political standoff could bring about a default. Considering California's senior payments, and using audited 2009 data, we estimate that a 45% revenue loss (annualized) would place material pressure on the state's ability to fund its debt service. This level of revenue deterioration would be approximately 2.5 times the average among states during the Great Depression.

This stress scenario is useful as an analytic exercise, but we recognize that this is an abstraction designed to measure the state's ultimate fiscal capacity. Moreover, although the state has some payment obligations that hold a constitutional priority over those for debt service, they aren't true fixed costs. In recessionary conditions, and as it did for the fiscal 2011 budget, the legislature may suspend a major spending mandate for education. In doing so the state is able to reduce payments for education in sympathy with falling general fund revenues. We believe such legislative adjustment could increase the state's fiscal capacity to fund its debt service. We also observe that for its fiscal 2010 budget, the state implemented $31 billion in spending reductions versus its previous spending trajectory. This illustrates the state's capability to make budget adjustments when faced with extreme conditions.

This track record notwithstanding, we believe budget politics present a meaningful risk to the state's credit due to the cash flow implications they introduce. Whenever the state is without an adopted budget, it is precluded from borrowing in the public debt markets for intra-year cash flow purposes, which helps to smooth the state's cash position during low tax collection months. And yet, even when budget adoption is unusually late, the state controller has cash management tools at his disposal, including payment deferrals and IOUs. Other options include higher interest cross-year cash flow warrants. We believe these extraordinary cash management measures protect the state's bondholders, even if at the expense of vendors and other entities receiving delayed payments.

In our view, an inability to adopt a timely budget has made the state's credit profile dependent on the state's administration and cash management procedures. Although these factors have thus somewhat preserved the state's credit strength during cash crises – and reduced the likelihood of critical liquidity deficiencies – we don't see them as a panacea in the longer term.

Overall, we believe California has less fiscal cushion to absorb additional shortfalls than other states. However, through a combination of the cushion it does retain and the various cash management options it can employ, we believe the state is capable of withstanding further economic weakness while still meeting its debt payments in a timely fashion.

S&P points out the obvious: that without governmente assistance, most states will be toast sooner or later. But yes, aside from that, everything in the economy is peachy.

Government Response Is Key

The recent recession revealed the common challenges faced by many state and municipal governments, and we believe such governments will be facing the lagging effects for at least the next couple of years. This may delay or reduce their ability to address long-term challenges associated with an aging workforce and the benefits they are owed. At the same time, all of the aforementioned governments have statutory or other provisions that strengthen bondholders' claims. In addition, these governments have strong powers of adjustment, which in our view means they have an ability to withstand what we consider to be extreme stress scenarios that could lead to default. Some of the aforementioned borrowers suffer some of these conditions, but we see only Littlefield as having a reasonable risk of default, assuming the status quo continues. While Detroit might need to rely further on state oversight to weather another recession of similar magnitude to the recent one, we think that other governments appear well-positioned to do so.

How governments react to fiscal imbalances in coming years may change our view. Deferring payments in lieu of making structural adjustments – in the hopes of better future revenues – in our view further limits governments' ability to address rising costs. Ignoring OPEB costs could lead to a spike in pay-as-you-go requirements as Baby Boomers retire, unless governments are willing to change benefits. Although we don't expect government actions (or the lack thereof) in any one year to change the default scenarios, the compounding effect of incremental delays and deferrals could become meaningful. In our view, this is why governments' credit quality suffers less often when fiscal stresses appear and more often when officials postpone or overlook issues of structural balance.

The table below, in addition to providing other data, illustrates our assessment of the amount of financial cushion that remained in fiscal 2009 after each government funded its required priority payments (if any) and its debt service. For each case, we relied on information from fiscal 2009 audited financial statements, the most recent available. We recognize that analyzing audited and inherently historic data ignores budgetary and intra-year spending adjustments that would be available to financial managers and policy makers. This analytic exercise uses a consistent source of information and applies a conceptually similar stress test to show what we believe is the degree of fiscal capacity a government would retain if it reduced its expenditures in response to a severe deterioration in revenue.

Because tax-supported debt structures vary by government, we allowed the source of revenue for debt repayment to guide the scope of funds we considered in each case. Where a government pays its tax-supported debt service from a variety of special funds, we considered total governmental funds. Alternatively, we focused on the general fund where it serves as a government's primary source of repayment for tax-supported debts.

Just one thing to note on the chart above: in California all senior status payment + debt service payment are more than half (55%) of all revenues. In other words, California can withstand a 45% drop in revenue before these payments are jeopardized. It can't happen you say? In 2009 it dropped by 14%. This year will be worse. This is a perfect harbinger of what will happen to the US government itself in a few years.

h/t Ernst


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Mon, 11/08/2010 - 15:38 | 709110 bpj
bpj's picture

It's OK, we have to hit rock fucking bottom before anything will ever change here.

Mon, 11/08/2010 - 15:43 | 709134 Clapham Junction
Clapham Junction's picture

Agree, may happen before dickface2 comes back from India.

Mon, 11/08/2010 - 16:32 | 709351 dlmaniac
dlmaniac's picture

... borrow to cover the unemployment benefits and WELFARE CHECKS FOR ILLEGAL IMMIGRANTS.

Mon, 11/08/2010 - 15:51 | 709178 A Nanny Moose
A Nanny Moose's picture

It's all good. We just voted to make it easier to pass the budget, and to raise our  own taxes to "save" our parks. All is well again.

Mon, 11/08/2010 - 16:08 | 709255 whatsinaname
whatsinaname's picture

Wonder what would happen to the dollar if the govt ended its UE generous programs ? Would it decline even further quicker or rebound in the hope that govt may get a better handle on its finances ? opinions ?

Mon, 11/08/2010 - 16:42 | 709387 Max Hunter
Max Hunter's picture

It would decline but that's nothing because social unrest would be the biggest concern.

Tue, 11/09/2010 - 01:00 | 710598 goldfish1
goldfish1's picture

Correct my math...isn't this $14.6 B per year?

Mon, 11/08/2010 - 15:38 | 709115 SheepDog-One
SheepDog-One's picture

Delusion, bitchezez.

Mon, 11/08/2010 - 15:43 | 709120 99er
Mon, 11/08/2010 - 15:40 | 709122 Sudden Debt
Sudden Debt's picture

And that's why they call it THE CITY OF ANGELS

Give Give Give... Arnold will go to heaven for that. I'm sure he will. BUT!!! HE'LL BE BACK!!

Mon, 11/08/2010 - 15:40 | 709125 OnTheWaterfront
OnTheWaterfront's picture

IOU's Bitchez!!!

Mon, 11/08/2010 - 16:01 | 709213 Problem Is
Problem Is's picture

Maybe IOUs...
But Calif still has more big chested tanned blondes (Real, fake or otherwise) per capita than any other state...

You Neeeed Us...
Without big chested tanned blondes....

Amerika can't function bitchez...

Mon, 11/08/2010 - 16:10 | 709268 VegasBD
VegasBD's picture

Its all real skin.

Mon, 11/08/2010 - 16:56 | 709461 goldsaver
goldsaver's picture

You Neeeed Us...
Without big chested tanned blondes....

Amerika can't function bitchez..

Not really, we will just import them cheaper from Russia. Outsourcing Bitchez!!


Mon, 11/08/2010 - 17:36 | 709617 Problem Is
Problem Is's picture


Yeah those Ukrainian blondes are skinny little bitchez...

Mon, 11/08/2010 - 15:42 | 709132 ZackAttack
ZackAttack's picture

I guarantee, nothing happens at all until the day the checks can't go out.

Mon, 11/08/2010 - 15:44 | 709135 TheMonetaryRed
TheMonetaryRed's picture

Yes, Tyler, there will be trillions in monetization.

What's your suggestion?

Trillions in defaults?

They can monetize all they want as far as I'm concerned. What do I care?

Mon, 11/08/2010 - 15:45 | 709144 H. Perowne
H. Perowne's picture

My suggestion is to read up on Einstein's definition of insanity. And Santayana's advice on history. 

Mon, 11/08/2010 - 15:47 | 709156 TheMonetaryRed
TheMonetaryRed's picture

History predicts massive monetization. What's the problem?

People need to grow up. There's gonna be a haircut one way or another and monetization is the better haircut.

Mon, 11/08/2010 - 15:53 | 709190 A Nanny Moose
A Nanny Moose's picture

Haircuts! I think not.

You go a license to wield those scissors?

Mon, 11/08/2010 - 16:01 | 709221 TheMonetaryRed
TheMonetaryRed's picture

In a massive default, to whom do people turn?

That's right, the lender of last resort. Does the lender of last resort become more or less powerful when the entire world turns to them for a bailout?

Think for Pete's sake.

Mon, 11/08/2010 - 16:45 | 709405 MachoMan
MachoMan's picture

You presume that the FED lives in perpetuity and may be the lender of last resort for eternity.  The lender of last resort to which you refer is going to be an altogether different party, most likely with interests dire and contrary to our own (yes, we have similar interests to the fed, as we're all accomplices to its printing regime).  The FED is merely a temporary top to the lending totem pole.  The next guy is going to carry a whip and give you a "white" name...  toby.

Sure, we can print with reckless abandon now, but we'll just hasten the FED's demise and the rise of the whip.  Your choice.

Mon, 11/08/2010 - 16:46 | 709416 packman
packman's picture

TMR's right.

I'm not really sure if we're ready to be ruled by China though.    I just don't think so.


Tue, 11/09/2010 - 00:55 | 710595 RockyRacoon
RockyRacoon's picture

Those of us who want a reset of the economy/country/politics/etc must accept a default.  I've pretty much stopped the expectation that changes will be made to "save" this situation.  So, rooting for the demise of the current regime is a natural state.

Mon, 11/08/2010 - 16:03 | 709230 Eternal Student
Eternal Student's picture

Um, yeah. That just worked out spectacularly well for Japan these past twenty years.

The difference with defaults is that you get it over with quickly. Had Obama not been a Wall Street puppet, we'd be coming out of this Depression by now, instead of looking forward to more years of it.

Mon, 11/08/2010 - 16:47 | 709418 MachoMan
MachoMan's picture

If by coming out of the depression you mean in total realization that the world has hit a significant growth wall, government spending is unsustainable and its traditional powers should be supplanted by private actors, and a couple billion people need to be liquidated, then yes, maybe...

Mon, 11/08/2010 - 17:07 | 709510 traderjoe
traderjoe's picture

I agreed with everything you said (even though said in sarcasm) until you got the people liquidation part. I don't believe that is necessary if the transition was planned and well-crafted. However, kicking the can further down the road only ensures, IMHO, that any inevitable transition will be chaotic and just might feature that 2 billion person liquidation, i.e. wars, famines, etc. 

Mon, 11/08/2010 - 17:16 | 709546 SheepDog-One
SheepDog-One's picture

'Haircut' the stylist couldnt reach your hair with your head so firmly parked up your keester!

Mon, 11/08/2010 - 15:47 | 709152 Jean Valjean
Jean Valjean's picture

I would guess that tyler and ron paul would both answer, YES, trillions in defaults.

Mon, 11/08/2010 - 15:49 | 709162 Ragnarok
Ragnarok's picture

Punish the guilty and reward the savers. Justice.

Mon, 11/08/2010 - 15:51 | 709176 TheMonetaryRed
TheMonetaryRed's picture

No, default = destroying the savers.

What do you think default is?

Mon, 11/08/2010 - 15:53 | 709187 Ragnarok
Ragnarok's picture

No, default = destroying the bondholders.


Na na... na na... boo boo...

Mon, 11/08/2010 - 15:57 | 709197 TheMonetaryRed
TheMonetaryRed's picture

I see, so a bondholder isn't a saver? Is that it?

Who's a "saver" then, some jerk with cans of beans, boxes of .223 and shiny rocks buried in his back yard?

I've got compost buried in my back yard, am I a "saver" too?

Besides, if you monetize you destroy bondholders anyway. Make some sense.

Mon, 11/08/2010 - 16:02 | 709223 Ragnarok
Ragnarok's picture

No a bondholder is an investor who agreed to take a risk, a saver simply wishes to accumulate excess production in a risk-free vehicle for consumption at a later date.

Mon, 11/08/2010 - 16:08 | 709259 TheMonetaryRed
TheMonetaryRed's picture

There's no such thing as a "risk-free vehicle" and no reason anyone should expect one to exist.

Mon, 11/08/2010 - 16:17 | 709292 Ragnarok
Ragnarok's picture

Relatively.  And this leads exactly to the point that the money changers leave very few and convenient ways to opt out of the system.  One must be forced to always have his wealth at risk.

Mon, 11/08/2010 - 16:22 | 709311 TheMonetaryRed
TheMonetaryRed's picture

And inflation is a risk to all wealth - so what's the problem?

Mon, 11/08/2010 - 16:50 | 709433 MachoMan
MachoMan's picture

the problem you fucking twonk is that the mechanism for inflation is unjustifiably and unreasonably controlled, outside the consent of the populace and completely to our detriment.

Mon, 11/08/2010 - 17:12 | 709525 traderjoe
traderjoe's picture

Rag & Macho - yes. 

I believe a system of a stable currency WOULD allow for workers to store the value of their labor over time. Without having to deal with the parasitic money changers. Without living in the fear of inflation and destruction of their savings (by a privately-held banking cabal acting in the own self-interests). 

Mon, 11/08/2010 - 16:35 | 709360 Ricky Bobby
Ricky Bobby's picture

Ragnarok, You pretty much kicked his ass. I think the difference is you argue from an ethical point of view.

Mon, 11/08/2010 - 16:46 | 709407 Max Hunter
Max Hunter's picture

One must be forced to always have his wealth at risk.

Always been this way, always will..

Mon, 11/08/2010 - 15:47 | 709154 Tyler Durden
Tyler Durden's picture

Why does nobody understand the very simple fact that a balance sheet restructuring does not imply liquidation, and that a business can continue operating even as its liabilities are adjusted (and those who took on risk and failed, are actually not rewarded).

Mon, 11/08/2010 - 15:54 | 709169 TheMonetaryRed
TheMonetaryRed's picture

"Balance sheet restructuring"? Please.

Answer the question: trillions in bad debt = trillions in monetization or trillions in default. 

Which do you choose?

It's clear to me that sovereign default is idiocy. Monetization is the rational method to get even the Rothbardian debt repudiation.

Mon, 11/08/2010 - 15:56 | 709198 TheGreatPonzi
TheGreatPonzi's picture

If that was so simple, we wouldn't need to work in order to feed ourselves. Money printing does not produce wealth (goods, services, value added, you know). So the result is exactly the same in the end, except that monetization rewards motherfuckers and punishes rational hard-working people.

Mon, 11/08/2010 - 15:59 | 709210 TheMonetaryRed
TheMonetaryRed's picture

Massive monetization rewards nobody. What it saves in default pain it makes up for in inflation pain.

There's no free lunch here, just more and less rational ways of dealing with the same problem. The idea that we should completely undermine the entire structure of every financial institution in the world because of some farcical notion of "justice" is ridiculous.

Mon, 11/08/2010 - 16:06 | 709246 TheGreatPonzi
TheGreatPonzi's picture

The entire structure of every financial institution will go undermined anyway. Hyperinflation is far worse than hyperdeflation. In Weimar germany, 10000 businesses were failing per day.

Mon, 11/08/2010 - 16:30 | 709343 TheMonetaryRed
TheMonetaryRed's picture

That's one of the reasons we don't use a gold standard anymore.

When debt was settled in gold, but commerce was in fiat currency fiat currencies could become absolutely (rather than relatively) vulnerable.

Mon, 11/08/2010 - 16:36 | 709362 TheGreatPonzi
TheGreatPonzi's picture

You're a dumb douchebag. Debts have never been settled in gold. They were settled in paper linked to gold, just like commerce was.

So what do you suggest, exactly? Who are you? What do you want?

A banker from GS disguised into an inoffensive Internet troll?

According to you, default and hyperinflation are equal, fiat money is better than the gold standard, savers and investors are the same, and the people who took risks should be bailed-out by taxpayers money.

Mon, 11/08/2010 - 16:46 | 709411 TheMonetaryRed
TheMonetaryRed's picture

Well, German war reparations were settled in gold marks, so either they did represent gold - in which case the gold standard was destabilizing - or they didn't - in which case gold can be re-hypothecated like any other asset, rendering the entire Austrian thesis moot.

Mon, 11/08/2010 - 17:16 | 709548 traderjoe
traderjoe's picture

Cause and effect? Are you blaming the destruction of the currency on the gold standard or the war reparations or both? The war reparations had nothing to do with the gold standard. It created an un-payable debt...

Mon, 11/08/2010 - 17:14 | 709539 EscapeKey
EscapeKey's picture

Er, no. It rewards those at the top of the pyramid, with access to the freshly created bank notes before anyone else.

Mon, 11/08/2010 - 17:22 | 709570 traderjoe
traderjoe's picture

Exactly, especially in the manner the monetization is currently being doled out. 

The system of fractionally-reserved privately created debt-money is fundamentally flawed. It will have to be reset at some point. Defaults, IMHO will benefit far more people then hyper-inflation/monetization. In the latter, the rich, the insiders, and the prepared can defeat the hyper-inflation but the middle and lower classes get f*cked. In defaults, a debt jubilee will benefit millions of average citizens (net debtors), and allow for a reset of the system to more sound money creation. 

Mon, 11/08/2010 - 16:00 | 709215 G. Marx
G. Marx's picture


Please, get over yourself. Monetization is default by another name. 

Mon, 11/08/2010 - 16:02 | 709226 TheMonetaryRed
TheMonetaryRed's picture

Yeah, that's what I'm saying, dopey.

What's the difference?

Monetization is an orderly default. That's all.

Mon, 11/08/2010 - 16:08 | 709254 centerline
centerline's picture

An orderly defaul wherein risk takers get to pass the cost of default to others.  Not so orderly though when it doesn't work.  And there are no guarantees that it will work when the stakes are this high.  Just saying... be careful what you wish for.



Mon, 11/08/2010 - 16:23 | 709315 TheMonetaryRed
TheMonetaryRed's picture

So what's the cost of a U.S. sovereign default?

You think that will be isolated among those who made bad credit decisions?


Mon, 11/08/2010 - 16:50 | 709432 packman
packman's picture

Monetization is an orderly default.

Um... yeah. 

Methinks some history lessons are in order.


Mon, 11/08/2010 - 17:20 | 709556 EscapeKey
EscapeKey's picture

Jeez, no it isn't.

Monetizing the deficit leads to hyperinflation.

Hyperinflation means breakdown of trade routes, lack of access to debt markets, and complete social destruction.

What the fuck is orderly about that?



Mon, 11/08/2010 - 16:06 | 709247 tmosley
tmosley's picture

Right, because the only ways to pay down debt are to default or write hot checks.  No-one can ever earn anything.  Only lying or stealing can exist.

Monetization is the "rational" method to steal all of the savings of your citizens.  

Mon, 11/08/2010 - 16:13 | 709279 Tortfeasor
Tortfeasor's picture

Please cite the examples where debt monetization worked for a nation long term.  Extra credit for showing how it benefited the poor and middle class.  Only historical examples from real world count.  That one round of Sim City you played in 2004 won't fly.

Mon, 11/08/2010 - 16:28 | 709333 TheMonetaryRed
TheMonetaryRed's picture

Okay, then start with the handling of the Monte Vecchio in the Republic of Genoa.

Mon, 11/08/2010 - 17:39 | 709628 packman
packman's picture

(I'm guessing your info is from MacDonald?  I haven't read his book, but need to.)

Question - did Genoa have public debt levels at 90+% of GDP, and private debt levels of 350% of GDP, and deficits of 12% of GDP?

I could be wrong, but I'm guessing they didn't.

Sometimes it's not a matter of principle, but of scale.

Noting additionally the scale relative to the overall world economy, of which the U.S. (about 23%) is certainly much larger than Genoa was.

Mon, 11/08/2010 - 15:54 | 709188 unum mountaineer
unum mountaineer's picture

but liquidation..its like that nike lebron james know BOOM!

im on my 20th cup of coffee for the day btw..i'm stopping at 3 pm.

Mon, 11/08/2010 - 16:10 | 709265 Translational Lift
Translational Lift's picture

No wonder the Cali's voted Boxer and Pelosi back in.....their ticket to the gravy-train.......

Mon, 11/08/2010 - 16:57 | 709471 goldsaver
goldsaver's picture

They can monetize all they want as far as I'm concerned. What do I care?

...cause it makes your money worthless...

Mon, 11/08/2010 - 15:45 | 709145 Bill Lumbergh
Bill Lumbergh's picture

I am glad that we can supposedly provide $100B to the IMF yet no money is available for the states.

Mon, 11/08/2010 - 15:45 | 709146 thefatasswilly
thefatasswilly's picture

Unemployed pieces of shit.

Too many humans. Not enough resources. Solution is obvious.

Mon, 11/08/2010 - 15:50 | 709175 lead salad
lead salad's picture

soylent green.....

Mon, 11/08/2010 - 15:52 | 709185 TheMonetaryRed
TheMonetaryRed's picture

No, I think we start with the assholes who think they're better than other people.

Mon, 11/08/2010 - 15:55 | 709196 thefatasswilly
thefatasswilly's picture

So, you're arguing that there are enough resources on this planet to continue our current rate of population growth and Eurasian industrialization?

Are you fucking serious?

Mon, 11/08/2010 - 15:57 | 709203 TheGreatPonzi
TheGreatPonzi's picture

TheMonetaryRed is a fucking troll, just ignore him.

Mon, 11/08/2010 - 16:01 | 709220 thefatasswilly
thefatasswilly's picture

I actually think he might be serious and really, really stupid. It's pretty funny.

Mon, 11/08/2010 - 16:04 | 709234 TheMonetaryRed
TheMonetaryRed's picture

No, I'm arguing that there are not enough resources to support assholes like YOU.

Mon, 11/08/2010 - 16:09 | 709260 thefatasswilly
thefatasswilly's picture

LOL, you can't even perform 5th grade mathematics in your head.

Assholes like me are few, very few. There are more than enough resources to support pricks like me.

The hordes of dumbfucks I'm better than are the problem. Have you ever met a Chinese peasant? Have you ever met a Russian serf? Have you ever met a farmer from the American dirty south? Obviously not.

Mon, 11/08/2010 - 16:20 | 709305 TheMonetaryRed
TheMonetaryRed's picture

Actually, the math is even simpler. Assholes like you always basically believe that there is one person in the world who matters at all - themselves. You find the same attitude among all the most deviant criminals, murderers, sex offenders, molesters, and genocidal freaks.

The condition is called "pathological narcissism".

Mon, 11/08/2010 - 16:28 | 709335 thefatasswilly
thefatasswilly's picture

Ok? Calling me names doesn't change any of my arguments, and your lack thereof.

Sure, I'm a pathological narcissist. Sure, I suffer from psychosis.

Does it matter? No. I'm still better and smarter than you and 99% of humanity, and this in combination with my force of will, will result in a massive amount of power collecting in my hands due to the current worldwide economic, and soon military chaos.

You, nor your idiotic brethren, can never get rid of men like me, because you are unable to achieve said power.

But oh no, you called me a name! I'm going to tell the teacher on you! :'(

Mon, 11/08/2010 - 16:33 | 709354 TheMonetaryRed
TheMonetaryRed's picture

All I'm saying is that if we really do need to throw people out of the lifeboat, you are logically one of the first to go.

Rather than try to judge people, I let them judge themselves. Those who judge themselves the most worthy are universally the worst. It's a very reliable system.

Mon, 11/08/2010 - 16:39 | 709363 thefatasswilly
thefatasswilly's picture

You're an idealist, thus, an idiot.

I don't really give a shit about what we "need" to do. I think about what can and will happen.

Will society overthrow men like me? No. You suck the dicks of men like me, especially during times like these. You lose.

Oh, and I'm not worthy in your eyes! Oh no! Self involved idiot.

Mon, 11/08/2010 - 16:42 | 709390 TheMonetaryRed
TheMonetaryRed's picture

No, ideally we get rid of nobody. But if, realistically, we have to, then we start with the violent, pathologically-narcissistic, closeted homosexuals.

Mon, 11/08/2010 - 16:46 | 709408 thefatasswilly
thefatasswilly's picture

Ok, you're repeating the same lame ass bullshit over and over again.

I understand your viewpoint, moron. Say something new.

Here is a hint: attempt to counter what I am saying. Society does NOT get rid of men like me, it embraces us.

Mon, 11/08/2010 - 16:56 | 709463 TheMonetaryRed
TheMonetaryRed's picture

I AM countering what you're saying, but your pathological narcissism doesn't allow you to see that.

The majority of people don't cause much trouble. So how do you find the ones that do? Simple system: ask people to create a pyramid showing their value, worth, importance, merit, whatever relative to everyone else. Those who put themselves at the top of the pyramid identify themselves as the ones who need to go.

Why? Because those people naturally feel entitled to fuck with other people, so they will. Nobody needs that, so asta la vista.

Couldn't be more logical.

Mon, 11/08/2010 - 17:03 | 709499 thefatasswilly
thefatasswilly's picture

. . . . . .

Yes, I cause most of the problems in this world. You've stated this multiple times and I have not bothered to deny it, because it's probably true. You are STILL repeating the same lame ass bullshit, and it seems you don't realize it.

Thus, you haven't countered shit.

Your pathological stupidity is hilarious. Counter my statement that despite the fact that men like Ghenghis cause enormous problems for the rest of humanity, society still embraces them with open arms.

THAT's the point, you dimwit.

Mon, 11/08/2010 - 18:16 | 709758 DollarMenu
DollarMenu's picture

Maybe, but you Mr FatAss are no world conquerer,

just a soulless troll with computer access.

And, I would imagine it's been a very long time since anyone embraced you.

Your worldview offers nothing of value.

Mon, 11/08/2010 - 22:57 | 710167 thefatasswilly
thefatasswilly's picture

Your comment is truly hilarious; it proves that the lesson Hitler taught the world was not learned. He spelled out, in no uncertain terms, what he was going to do and why he was going to do it.

Historians wrote volumes about him after his death.

He was born in 1889. I was born in 1987. WWI started in 1913. WWIII will start in either 2013 or 2017. Don't you see that opportunity is as ripe for me, as it was for him? Of course not. You are a moron.

People in general are fucking morons. They have still not learned the lesson. This is why intelligent strongmen will always rule. A mere glance at history proves that democracy was but a fluke; barely three centuries, versus millennia of kingdom / dictatorship. This is why I've become an asshole. This is why I will own this planet long after you are dead.

Tue, 11/09/2010 - 01:09 | 710616 RockyRacoon
RockyRacoon's picture


Ah, the cockroach argument.  Something valid about that.

Tue, 11/09/2010 - 01:18 | 710639 thefatasswilly
thefatasswilly's picture

Yes, and also the fact that my peers are all self involved dimwits who spend their weekdays on facebook commenting on pictures they took while they were wasted over the weekend.

That simple fact, in addition to the fact that these college educated Americans are supposedly the leaders of tomorrow's world community, point to one simple fact: only I can lead the world when your generation is dead and gone.

Not many people my age possess my self confidence, historic vision, ambition, intellect, moral flexibility, and various other attributes essential to conquest. Most of them don't even understand what the Federal Reserve is, or that they should probably buy guns with their part time job money instead of blowing it every other weekend in Vegas.

Mon, 11/08/2010 - 18:21 | 709773 Rodent Freikorps
Rodent Freikorps's picture

So you are saying he is Obama?

Mon, 11/08/2010 - 17:46 | 709654 thegreatsatan
thegreatsatan's picture

Nail meet head.

Some people will never get it, but yes, some people are better than others, we are not all special. 80% of China could die tomorrow and it would only help them.

Mon, 11/08/2010 - 16:08 | 709257 tmosley
tmosley's picture

Considering we didn't starve to death in the 70's--we'll probably be just fine.

Mon, 11/08/2010 - 16:10 | 709267 thefatasswilly
thefatasswilly's picture

. . .

So you are saying that our exponential population growth and rapid industrialization in India and China is sustainable with the resources we currently possess.

I thought you were smart, man.

Mon, 11/08/2010 - 16:00 | 709216 thefatasswilly
thefatasswilly's picture

Also, the assholes who think they're better than others are usually the ones who end up with the power to slaughter millions.

You're a communist dumbfuck; I'm sure you've heard of a couple of my heroes such as Stalin and Mao.

Mon, 11/08/2010 - 16:04 | 709242 TheMonetaryRed
TheMonetaryRed's picture

That's why assholes who think they're better than everyone else - and clearly you have placed yourself squarely in that category - are the ones to get rid of first.

Mon, 11/08/2010 - 16:07 | 709250 thefatasswilly
thefatasswilly's picture

Yes, because everyone is clearly equal.

Environmental and genetic factors do not influence the superiority and / or inferiority of an individual, right?

Some organisms, including humans,are better than others. It's how the world works, it's the reason there is something called natural selection in nature, it's the reason progress is possible.

Mon, 11/08/2010 - 16:10 | 709264 TheMonetaryRed
TheMonetaryRed's picture

Right, and I am saying that people like you - people with your beliefs specifically - are like a social disease that has either to be cured or amputated.

You are the problem.

Mon, 11/08/2010 - 16:12 | 709275 thefatasswilly
thefatasswilly's picture

People like me have been responsible for great empires such as the Mongol, Chinese, Russian, American, and Persian hegemonies.

We push progress forward, we are the reason that man isn't just another fucking primate, beating each other with bones.

Instead, we shoot each other with assault rifles. Much more efficient.

Mon, 11/08/2010 - 16:15 | 709287 TheMonetaryRed
TheMonetaryRed's picture

Exactly: people like you create ALL the problems, and always have.

Mao, Stalin, Hitler, Pol Pot, Napoleon - that's why society periodically arranges for assholes like you go all get together and kill each other. Good riddance.

Mon, 11/08/2010 - 16:25 | 709298 thefatasswilly
thefatasswilly's picture

"That's why society periodically arranges for assholes like you go all get together and kill each other."

The only thing that fails more than your English is your grasp of history.

Whether or not I create all the problems means little, because society bows down to men like me, especially during times like these. Idiot. Read a book, you half illiterate piece of shit.

Oh, and you really think that man would have less problems if we were still stuck in the caveman era? LOL, ok, you have to be a troll, because no one is that fucking stupid.

Mon, 11/08/2010 - 16:35 | 709361 TheMonetaryRed
TheMonetaryRed's picture

Like I said, I don't judge people, I let them judge themselves.

Those who think themselves the most worthy are invariably the worst.

It's an extremely reliable system that has certainly never failed me.

Mon, 11/08/2010 - 17:51 | 709675 EscapeKey
EscapeKey's picture

I think it has. You just haven't noticed, because you were in awe of your clever system.

What you post is absolute horse shite. The worst kind of people would clearly see through your little test, place themselves where they'd THINK you would prefer them to place themselves.


Mon, 11/08/2010 - 17:58 | 709698 thegreatsatan
thegreatsatan's picture

in the battle of intellects you just had with yourself, both sides lost.


Mon, 11/08/2010 - 16:23 | 709309 thefatasswilly
thefatasswilly's picture

Also, only men (note: never women) like me possess the power to perform such curing and amputating.

Even if I'm the problem, does it matter? No. The power will end up in my hands, because all of you dumbfucks that I'm better and smarter than will follow me, because of my force of will and intellect.

Sure, we may "need" to be cleansed, but will it happen? No. You and your inferior brethren lack the balls and brains to achieve the power necessary for said amputation. Get your head back to reality, son.

Mon, 11/08/2010 - 16:40 | 709372 TheMonetaryRed
TheMonetaryRed's picture

Again, you prove my point. In biology, when you're doing a population survey of a species, you only count the females. So we can get rid of males, starting with the ones most likely to consume the most resources by creating useless combat.

Sound like anyone you know?

Mon, 11/08/2010 - 16:42 | 709388 thefatasswilly
thefatasswilly's picture

I got your point, moron.

My point is that you will never achieve your goal, for reasons I have already laid out in no uncertain terms, but I will.

Bringing up biology and narcissism doesn't change anything. You fail on multiple levels. It's hilarious.

Mon, 11/08/2010 - 17:01 | 709490 TheMonetaryRed
TheMonetaryRed's picture

I don't judge. I give you a chance to judge yourself - and you have.

My system is simple, consistent, logical and supported by history. You are talking a lot of crap in an attempt to inflate your importance in the world - which, I assure you, is very, very little.

Mon, 11/08/2010 - 17:05 | 709505 thefatasswilly
thefatasswilly's picture

Stop glorifying your grand "system," Jesus fuck. I understood it the first time you spewed that bullshit. I don't give a shit about it.

Mon, 11/08/2010 - 17:44 | 709641 GhershomsRevenge
GhershomsRevenge's picture

This time will be different

Mon, 11/08/2010 - 21:43 | 710259 The_Dude
The_Dude's picture

Did the 'All Clear' on the Hitler Youth sound yet?

Mon, 11/08/2010 - 15:55 | 709186 plocequ1
plocequ1's picture

Now, Now. Behave yourself. We will have none of that in this classroom. The T1000 may aquire you.

Mon, 11/08/2010 - 15:46 | 709148 jtmo3
jtmo3's picture

Borrowing from the federal .gov...ya right. And what happens when Kali tells the feds, I ain't gonna pay this back? Why would Kali pay this back? Why would anyone? Where does this end?

Mon, 11/08/2010 - 15:46 | 709153 plocequ1
plocequ1's picture

T1000 Bitchez

Mon, 11/08/2010 - 15:47 | 709155 unum mountaineer
unum mountaineer's picture

just in time for the holidays..the gift that keeps on giving

Mon, 11/08/2010 - 15:48 | 709159 Clark_Griswold ...
Clark_Griswold Hedge Mnger's picture

Can we just sell California to Mexico already and be done with it; its just paperwork for gods sake and I am sure B of A will do all the necessary deed paperwork on it.

Just make sure we are paid in Pesos or Euros....

Mon, 11/08/2010 - 16:03 | 709231 Dagny Taggart
Dagny Taggart's picture

Hi Clark. Is that your SLW or are you just happy to see me? That's been one happy chart.

Mon, 11/08/2010 - 17:06 | 709492 Clark_Griswold ...
Clark_Griswold Hedge Mnger's picture

Howdy, oh I'm really, REALLY happy! lol.

God what a ride that ones been.

Just sold 60 Jan Contracts for 125% return in 4 days.

Sold 50 contracts of GDX for 38% & 45% return in 4 days.


Viagra ain't got nothing on this!  Prema Woodie Syndrom

Hoping for a modest little pull back, while uncle Bennie figures out his pomo scheduling, and back in we go......

Mon, 11/08/2010 - 21:23 | 710192 thefatasswilly
thefatasswilly's picture

Does it matter? New York's economy is fucked, too. Cali + NY = East + West coast, essentially. Gulf Coast is super fucked. Between the coasts? LOL

Mon, 11/08/2010 - 15:50 | 709173 TheGreatPonzi
TheGreatPonzi's picture

If the FED can print 600 billion out of nowhere to fund speculation, she surely can print 10 billion for California.

Move along, nothing to see here.

Mon, 11/08/2010 - 15:51 | 709177 RobotTrader
RobotTrader's picture

Amazingly, bonds are totally undisturbed by this news.

As it remains the "Go To" asset class for the sheep, who are scared to death of stocks.

Mon, 11/08/2010 - 17:35 | 709614 homersimpson
homersimpson's picture

Funny - stocks seem to be the asset class of those who are foolish enough to think they have more upside than gold.

Mon, 11/08/2010 - 17:53 | 709679 EscapeKey
EscapeKey's picture

I'm sorry, that just doesn't make any fucking sense, considering AMBAC, does it?

Oh, I forgot; it's "priced in already".

Mon, 11/08/2010 - 15:51 | 709180 Problem Is
Problem Is's picture

<Attention: Sarcasm Alert>

I Say We in the Home of Calif...
Stop paying the mortgage and just squat here until we are foreclosed on and evicted...

BTW: Who owns our Note?

Speaking of Alerts... Favorite Calif Bumper Sticker:

"Be Alert! We need more Lerts"

Mon, 11/08/2010 - 16:07 | 709251 Eternal Student
Eternal Student's picture

My favorite bumper sticker is:

"Will work for lower taxes"

Mon, 11/08/2010 - 16:13 | 709278 Problem Is
Problem Is's picture

Ha! Why the Black Market attracts entrepreneurs...

How about from the early 80s:

"More Nukes! Less Kooks!"

Mon, 11/08/2010 - 16:15 | 709284 ZakuKommander
ZakuKommander's picture

How about:

"Jesus is coming. Look busy."

Mon, 11/08/2010 - 16:18 | 709302 Cleanclog
Cleanclog's picture

Mine is  "Maybe the hokey pokey IS what it's all about"

Mon, 11/08/2010 - 15:52 | 709184 Wags
Wags's picture

Worse is the unfunded pension liabilities for retired state and local employees cannot be paid. California is essentially insolvent. The real unemployment rate of U-6 is over 20%. The business environment is reeling under the "Green" mandates. Energy prices are some of the highest in the nation. We have 30% of nation's welfare payemnts.

I see no solution but an utter collaspe as the leechers and the looters have ruined the Golden State.

Mon, 11/08/2010 - 16:05 | 709245 Problem Is
Problem Is's picture

Oh, you mean SoCal... ;>)

Mon, 11/08/2010 - 16:58 | 709470 MachoMan
MachoMan's picture

This is universal among the states...  obviously some are relatively better off, but universally they are all fucked.  Maybe I can create some interesting precedent in bringing how this comes about into the limelight, but needless to say, the people don't stand as one and demand for impossibly large shortfalls...  this is another machination of our broken political system.

Mon, 11/08/2010 - 20:50 | 710113 Minion
Minion's picture

Maybe this is the "big default" that Tyler was alluding to...... Bernanke knows that most states are about to go belly up.  Monetize in advance?

Tue, 11/09/2010 - 11:02 | 711631 MachoMan
MachoMan's picture

I suppose this becomes a lesson in semantics.  I have been long arguing that there will never be another "large" QE announcement, the same as QE 1 or, as most here like to think, exponentially greater.  Simply put, this will spook the herd and will be counter productive.

What will happen is what has been happening.  Essentially, the bailouts are not really announced...  there will be some large bailouts, e.g. GSEs, that will be announced, but by and large, they will not.  Rather, the wellfare state will be running on all cylinders.  States, just like the unemployed, or worse, refuse to/have no intention of being employed so long as the government aid keeps coming, will continue to collect life support.  As a result, states will capitulate on any issues that require them to butt heads with the federal government.  Can't bite the hand that feeds.

The biggest question at this juncture is what will the cumulative total of the "stealth" bailouts be?  I surmise it will be gradually less as the cock of austerity is crammed down our throats.  However, I always second guess used car salesmen, people with rolexes that smile all the time, and people with pedo beards...  just a general rule of thumb.

Mon, 11/08/2010 - 15:54 | 709192 lizzy36
lizzy36's picture

So one fully expects that Pimpco is backing up the truck on muni bonds.

Mon, 11/08/2010 - 15:55 | 709195 OnTheWaterfront
OnTheWaterfront's picture

Leagelize the Ganja!!!

Mon, 11/08/2010 - 16:02 | 709227 Joe Davola
Joe Davola's picture

How many electoral votes they have?


Oh, yeah - politicians gonna fall all over themselves to bail out cali.

Mon, 11/08/2010 - 16:02 | 709228 TheGreatPonzi
TheGreatPonzi's picture

Why does everyone look at the wrong direction?

Fuck defaults, bankruptcies, underfunding, and co.

You know the central banks will do everything to avoid natural resolution of the crisis. So the only thing that matters is inflation.

And while you were talking about unemployment, oil went to $87.05, soybean $1275, wheat $734.50, coffee $207.90, cotton $146.21, sugar $31.91, not to mention the rest.

I propose that ZeroHedge boycotts for an unlimited duration the real economy, and talks only about which matters: the coming hyperinflation.

Mon, 11/08/2010 - 16:05 | 709244 sezwhom
sezwhom's picture

Proposition to add $18 to CA DMV Regsitration to help State Parks failed.  We're now being told to send saved bank to the FED so they can give it back to us next September.  Good times!

Mon, 11/08/2010 - 16:10 | 709263 bugs_
bugs_'s picture

California, super uncool to the taxpayer and the creditor.

Mon, 11/08/2010 - 16:53 | 709448 thefatasswilly
thefatasswilly's picture


Mon, 11/08/2010 - 16:14 | 709283 EscapeKey
EscapeKey's picture

About the so-called deflation.

I just cut and pasted 16 commodities from Marketwatch into a single chart. With the exception of Natural Gas, we see increases all around.

Mon, 11/08/2010 - 16:30 | 709345 TheGreatPonzi
TheGreatPonzi's picture

There is no deflation and there will never be any deflation.

Rosenberg and Roubini are trolls or agents sent by the very people who caused the crisis to lure investors into the bad solution (cash) instead of PMs.

Mon, 11/08/2010 - 16:43 | 709396 nonclaim
nonclaim's picture

There's an increase in price but not in value if you discount the artificial debasement of the dollar. If you chart them in gold (or some stable currency; any left?) they are likely flat to lower as there is no *real* demand.

"So what", would you ask. Ben is making your poorer is all I have to say.

Mon, 11/08/2010 - 17:53 | 709684 EscapeKey
EscapeKey's picture

The majority is up. The US Dollar has decreased by 16% over the same period.

Mon, 11/08/2010 - 16:20 | 709303 bankonzhongguo
bankonzhongguo's picture

Most CA folks consider the pain is over. 

Many of the state furloughs have subsided. 

The Unions just got Gov. Moonbeam re-elected.

Jerry Brown will appoint his wife as chief of staff and a new round of property taxes will be discussed in order to "balance the budget."

There is a 4.3 billion dollar federal gravy (high speed ) train headed for the Central Valley.

Its all unicorns and rainbows sunshine.

40 million a day?  Might as well be 40 ga-jillion a second.

I say when state union employees and others start getting dinged for Obamacare premiums on their monthly payroll, plus PERS has to start writing checks to all those baby boomers, well there won't be much to take home to feed the family.

Mon, 11/08/2010 - 16:20 | 709306 NumberNone
NumberNone's picture

Since 1978, when Golden State voters amended their constitution to effectively shift the financing of portions of local government services and education from the state's property tax base to the more volatile income and sales tax base, California has run deficits in 58% of years, compared with deficits in 38% of years in the three decades leading up to the change

You dumbass voters in California...if only you hadn't voted against property taxes!!  A property tax would have stopped rampant and fraudulent government spending since 1978 and you wouldn't be in this situation.  Dumbasses!!  

Mon, 11/08/2010 - 16:30 | 709341 dark pools of soros
dark pools of soros's picture

how's the surf in Laguna today??

Mon, 11/08/2010 - 16:42 | 709381 tahoebumsmith
tahoebumsmith's picture

I'm here, a small business owner in the Golden State and I can tell you we are seriously Fucked!!! Just look at the budget they just passed...10 billion in loans to Wall St. to close the 19.5 Billion dollar gap. Perfect example of what will happen to America. If you want a crystal ball to look into, just look at California...The eighth largest economy in the world and all their woes seem to always get swept under the rug. Everytime John Chiang starts to throw a hissy fit he always seems to get silenced. I'm probably going to leave the State next spring after the school year because California dreamin has turned into the California nightmare.


Mon, 11/08/2010 - 16:46 | 709412's picture

What unemployment?  just keep taxing.  

Mon, 11/08/2010 - 16:59 | 709480 gumstick2003@ya...'s picture

True, a risk is exactly what the term coins - a risk. Guess that's why it's expensive. 

Mon, 11/08/2010 - 17:00 | 709486 godzila
godzila's picture

Sorry but what would be the problem for California to repay 362 mn to the Federal State by September 2011 ? I guess a lot can happen until then...

Mon, 11/08/2010 - 17:01 | 709488 gumstick2003@ya...'s picture

True. a risk is exactly what the term coins - a risk. why it's so expensive.

Mon, 11/08/2010 - 17:46 | 709597 Thoreau
Thoreau's picture

California can't be alone. Anyone have per/day estimates for the entire 50?

Mon, 11/08/2010 - 17:37 | 709625 unununium
unununium's picture

Never fear.  All teachers and policemen will be fired before bondholders get back less than 100%. 

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