This page has been archived and commenting is disabled.

California One Step Closer To Insolvency After State Cancels $2 Billion General Obligation Bond Sale

Tyler Durden's picture


Five days ago a great white hope appeared for the great bankrupt Golden State (Baa1/A-), in the form of $2 billion in GO bonds, which were supposed to be promptly syndicated via underwriters JPMorgan and Morgan Stanley. This would have been the first bond sale for California since November: a critical milestone as the state creeps ever closer to a full-on default. Unfortunately, the creeping just turned into a casual jog after Jane Wells (@janewells) just tweeted that California has cancelled its bond sale "after legislature fails to approve cash management flexibility bill [the] Treasurer said he needed to attract investors."And seriously, did California think it would succeed where so many other high yield issuers have recently failed?

Below is the official bond sale calendar from Lockyer's website.

So as Lockyer contemplates how to best approach DC about a bailout, here are recent California CDS levels. Pick your entry point.

Chart via Lehman Live

h/t Credit Trader


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 02/24/2010 - 22:05 | 244327 makeyoumiss
makeyoumiss's picture

Gee, who woulda thunk it.

Thu, 02/25/2010 - 08:33 | 244690 B9K9
B9K9's picture

I 'thunk' it until I looked into the situation a little deeper. As a born & bred, life-long native, trust me when I say it's obvious the state has changed for the worse. So, donning my bean-counter cap, I dove head first into the 1,000 page budget.

As it turns out, California is nowhere close to being insolvent or on the brink of bankruptcy. Compared to the US, the proposed budget is only 6% of state GDP vs 25% for the USA. The projected deficit is only 1% of state GDP vs 9% for the USA. Total indebtedness is only 6% of state GDP vs 89% for the USA. (Not counting all the various unfunded federal liabilities like SS & Medicare which push the total national debt towards $100 trillion or 700% of GDP.)

Clearly, if the state had access to the printing press, it would be considered in much, much better shape than the country as a whole. Which hints at where the state (and perhaps others) will be heading when we finally enter the national crisis stage.

What is going to happen in California, and what so many people miss (which is the point of my little note here @ good 'ole ZH), are the available cost reduction alternatives that are going to be implemented. Looking closely at the 'small-print' way back in the rear of the governor's proposed budget (which is where the "good" stuff is always located), one comes across various trigger actions resulting in massive cutbacks & layoffs. Add them up, and the state instantly goes into black.

Some of the public policy advocacy groups have gotten wind and are starting to sniff out the details with the predictable screeching & crying. But when push comes to shove, there is going to be no other alternative. The real biggie is when the Legislature will be forced (by a 2/3 vote) to suspend Prop 98 which provides a locked-in guaranteed portion of the budget for school funding.

When that happens, everything is placed on the table. At that point, we're looking at a 10% payroll cut across the board, a 5-10% boost in retirement contributions, and a 5-10% reduction in headcount. In addition, massive cut-backs will be initiated in various social services programs, including Medi-Cal and other gold-plated give-aways for illegals.

In my various conversations with the kind folks at the DoF, I had mentioned that if this were a private turn-around situation (which is where I cut my teeth), this would be imminently 'do-able'. The only problem, of course, is the political situation involving a public entity.

But if you step away and look at the big picture, the 'political situation' is merely a cover for those who still have "options". Once the options are no longer available (eg getting bailed out by or issuing yet more GO bonds), and the harsh light of day is burning brightly (read: Controller's office is reporting no more cash in the till), it's really all over for the public sector leech-fucks except for the crying.

Thu, 02/25/2010 - 08:53 | 244696 Anonymous
Anonymous's picture

Hey B9K9
How is it that a California resident is a different person than a US resident? On a quick ballpark, California approximately represents 12-13% of the US population and GDP. So take 12-13% of the US debt and budget deficit and throw it back into California taxpayers lap. That instantly gives California over $1trn of debt and $200bn of budget deficit. Now go re-run your US vs Cal numbers. And Cal vs Greece while you are at it. Keep 'thunking' my friend.

Thu, 02/25/2010 - 09:43 | 244720 B9K9
B9K9's picture

Ah, the good 'ole 14th Amendment argument. Sorry, I'm a state's rights advocate. Review a little history, and you may discover how the US of A was originally formed. Hint: it's a federation of sovereign states (hence the electoral college). When this sucker goes down, ain't gonna be nobody payin' off Uncle Sam's debts, simply because there's no value-add in the proposition. However, OTOH, a true representative entity that delivers actual benefits will strive to maintain a sound credit basis.

We can see the same mentality being played out everyday on an individual basis. Take someone who has credit-card debt at 5-6% of their income (Calif) vs being underwater on their mortgage to the tune of 200%+ of their gross income (USA). What do they do? Why, they pay the c/c bill religiously since in many cases it's their last remaining life-line. Meanwhile, the mortgage hasn't been paid in over a year, while the 'home-owner' still gets to live there rent free.

IMHO, the USA is toast - the center cannot hold. After the default/repudiation of the nat'l debt, we'll see a devolution to regional alliances and/or super-states + satellites.


Thu, 02/25/2010 - 10:19 | 244752 Anonymous
Anonymous's picture

ins Schwarze treffen,

Thu, 02/25/2010 - 13:07 | 245051 Anonymous
Anonymous's picture

you stupid mother f 's take a look cali's CAFR's to see the trillions in assets held

Thu, 02/25/2010 - 09:01 | 244698 Anonymous
Anonymous's picture

"Add them up, and the state instantly goes into black."

Where are you looking? TIA

Thu, 02/25/2010 - 10:14 | 244746 Anonymous
Anonymous's picture

Where do you see the trigger actions?

Thu, 02/25/2010 - 11:20 | 244828 B9K9
B9K9's picture

You gotta read through it page by page. Note that this is a political document, so after very long preambles lavished on all the claimed improvements, they slip in a few lines that include things like "A savings of $1.8 billion as a result of ..."

It only takes a handful of these to all of a sudden come up with $20 billion in cost cuts. As I mentioned in another post, if you don't want to snoop through the details, simply check out any public advocacy group. They've got it all laid out starting with "Women, minorities & children hit hardest". LOL

This thing really is a comedy show. The cancelled GO auction was a result of the Legislature accomplishing nothing of substance at Monday's 'historic' special session called to deal with the budget crisis.

Next up: the Controller telling them there's no money to pay the bills, which will force Arnie to shut-down the entire state government apparatus. After that, Prop 98 gets suspended and away we go with the "triggered" 10-20% cuts across the board - including schools.

Thu, 02/25/2010 - 09:23 | 244709 Jeff Lebowski
Jeff Lebowski's picture

I won't dispute you, but two questions from the CA controller's page - if you would, please share your comments.


1.  General Cash Outflow

2.  Income tax receivables (only April available) and consequences of lower tax revenue decreases dwarfing the cost reduction alternatives


Everyone is entitled to their opinion, but I believe the combination (nationwide) of lower tax receivables, unemployment, social security, and baby-boomers retiring and moving from equities into annuities is the perfect storm and too obvious to be a black swan.


Thu, 02/25/2010 - 10:05 | 244715 B9K9
B9K9's picture

The Controller's web page tells the story of the precipitating event(s) which are going to trigger various emergency measures. However, it provides no clues as to the various budgetary alternatives. For that, you have to look at the detailed budget - see the link above.

Edit: I've found out over my career that sometimes it's easier to let an opponent reveal where opportunities are hidden, by tipping off what they're trying to protect, rather than engage in a strictly top-down analysis. If anyone is curious as to where the looming massive cuts in the California budget are coming from, one need look no further than the screeching pigs crying the loudest:

Thu, 02/25/2010 - 09:38 | 244717 Anonymous
Anonymous's picture

Now please tell us what happens to the rest of us, nationally. Hyperinflation, muddle through, worst Depression ever? (Seriously, please tell us. All I can find for way of predictions is Gold Bitches, long lead and canned goods.)

Thu, 02/25/2010 - 11:35 | 244847 B9K9
B9K9's picture

California is simply a precursor to what is going to occur at the Federal level when Ben is finally forced to quit printing benjamins. The harsh reality is that the $USD is linked to a very hard oil peg. We **think** we can print, but in actual fact, we're no different than Greece.

So what happens when has to implement the exact same set of cost reduction measures that are occurring in California and the other states? Deflation, baby, deflation.

Right now, the only thing propping this sucker up is QE. Once Mr Market forces Ben's hand, it's all downhill from there.

With no/limited UI benefits, reduced welfare/food support, high unemployment, and a pissed-off & armed public angered at the $trillions lavished on the banker/politico mafia, it's gonna be an epic SHTF moment.

They'll be teaching this shit as critical history 200 years from now in all elementary schools.

Thu, 02/25/2010 - 09:47 | 244723 spanish inquisition
spanish inquisition's picture

Interesting..I will posit a strategic cancellation. If the FED has enough to back door/ back stop Greece bonds, they sure as well have enough to help out CA. Charity begins at home, I suspect they are working out the details.

It's going to be based on the Greece model. FED structures it so Greece gets cheap money and looks like they are meeting obligations (and the FED looks like it is not involved)

I think the smaller world sovereigns are catching on. Either go to sovereign debtors prison for 30 years or say FU. The FED will run in with money and support.

So, in conclusion, This can go on indefinitely and will work if we all , everyone pull out a dollar, look at it and say "It's really worth a dollar, it's really worth a dollar" and we will be fine!

Thu, 02/25/2010 - 11:51 | 244880 geopol
geopol's picture

Controller's office is reporting no more cash in the till), it's really all over for the public sector leech-fucks except for the crying.


Yes, Fuck them after all...No private sector to run to bunch of arrogant little bureaucrat pricks..

Sounds a little harsh...yes?



Thu, 02/25/2010 - 12:04 | 244904 Anonymous
Anonymous's picture

I think you're dreaming if you think CA state government will make those cuts "automatically". The state government is the public sector unions... and the unions are the government.

Consider this from Bloomberg:

"Exhibit One is Los Angeles, where Mayor Antonio Villaraigosa asked the City Council to fire 1,000 of its 35,000- plus workers.

The council and labor unions balked, and on Feb. 17 Moody’s Investors Service revised its outlook on the city’s bonds to negative. The rating company said the plan to eliminate those jobs could generate $65 million in savings.

“Predictably, this proposal has met with opposition,” Moody’s said. “It is, unfortunately, one of the plan’s few immediate, tangible cost-saving elements, and delaying its implementation will, while preserving jobs, potentially weaken the city’s long-term credit quality.”

It is rare for rating companies to comment on such things as proposed layoffs. With this salvo, Moody’s said: It’s time to resort to the ax.

As the national numbers show, politicians have been talking about firing employees for years.

They haven’t done it. "

They'll send kids out into the rain before they cut teachers' pensions, IMO.

Thu, 02/25/2010 - 13:12 | 245062 Anonymous
Anonymous's picture

another clueless bean counter look at all of cal CAFR'S to see the real surplus of assets are all zero writers and readers that stupid,or paid in federal reserve notes to they are smarter than that,they demand payment in coin

Wed, 02/24/2010 - 22:06 | 244329 FLETCH
FLETCH's picture

just a nip here, tuck there and a boob job should fix CA right up!

Wed, 02/24/2010 - 22:38 | 244369 Dark Helmet
Dark Helmet's picture

Like ohmygod like California is like soooo totally bankrupt like oh my god!

Wed, 02/24/2010 - 22:50 | 244386 Cognitive Dissonance
Cognitive Dissonance's picture

We passed the minor surgery decision point decades ago. Time to cut off the head, freeze it and grow a new body. You know what to do next, right?

Wed, 02/24/2010 - 23:13 | 244413 Anonymous
Anonymous's picture

Get Neveldine & Taylor to write the script? I'm thinking "Crank: Short Circuit" as a working title...

Thu, 02/25/2010 - 00:37 | 244524 madRazor
madRazor's picture

Just hitch the head atop the bio-engineered super-body of Spiro Agnew and take over the world!

Thu, 02/25/2010 - 03:26 | 244615 malusDiaz
malusDiaz's picture

You DID find the Head of Vecna!


This Time its real for sure! Now go ahead, you know what you need to do next...

Thu, 02/25/2010 - 06:09 | 244657 Problem Is
Problem Is's picture

"just a nip here, tuck there and a boob job should fix CA right up!"

Broke Ass Arnold's $12 Billion Cee-ment Ditch Project

...Known as the "Peripheral Canal"... is a giant California Tit Job.

This is what steroids does to your brain. This is Arnold's brain on drugs.

"I govern a broke ass state fast on its way to bankruptcy so my cure is to issue ANOTHER $12 Billion in bonds to dig a ditch no one needs."

Hey Asshole Arnold... make like a Palin McMILF tree and leave... early.

Wed, 02/24/2010 - 22:12 | 244337 mnevins2
mnevins2's picture

My personal "entry point" is N-E-V-E-R.

Coincidentally, since I'm not a super-genuis/quant, I have the same "entry point" with equities. Who'd have thunk it?

I guess that Lockyer better get on the phone with Uncle Ben ASAP!

Wed, 02/24/2010 - 22:14 | 244344 ShankyS
ShankyS's picture

Why can't people accept that the whole global financial system will eventually implode? I mean really. Let's get on with it so a real recovery can happen.

Wed, 02/24/2010 - 22:23 | 244354 merehuman
merehuman's picture

Read your Blog a few times.

We are all waiting, knowing it has to, knowing it will....But when??? Should have fallen apart already!

We should be thankful for the extra time we have to prepare and warn others.

Each one of us must take SOME responsibility and advise family, friends and neighbors.

This is not an exercise! This is not a drill !

Wed, 02/24/2010 - 22:39 | 244370 Dark Helmet
Dark Helmet's picture

"The ability of the market to defy gravity and deny reality exceeds your ability to bet against it."

Wed, 02/24/2010 - 22:44 | 244376 jdrose1985
jdrose1985's picture


Thu, 02/25/2010 - 10:35 | 244781 Anonymous
Anonymous's picture

Andrew Gavin Marshall has written IMHO a compendious article
on the world financial crisis. That is if a 26,000 word article is compendious. no link but it is recent.

Wed, 02/24/2010 - 22:48 | 244383 jdrose1985
jdrose1985's picture

LOL Shanky Re: falling apart. +1


Each one of us must take SOME responsibility and advise family, friends and neighbors.

It's sad, because I've tried to be responsible and let people know what's going on..(MM freeze, credit contraction, dow-gold, etc) I've made charts, put things in historical context and laid it out simply as can be.

I'm pretty bummed. To this point, I've been totally ignored except by my lifelong best friend and his brother who both cashed out their IRA's and paid down debt about 2 weeks ago. I mean, i'm not alarmist about it nor am I pushy in any way. I've gone about it in a way of trying to break it down in layman's terms. It's not rocket science.

I just feel like people don't even give a shit about what's going on. Been struggling with this for weeks, it's got me down and out I guess. I never worry about things, but this has me kinda shook up.

I'm not sure what to do. I bid my time, waited til the point where the DX started rallying and stocks stalled, being patient.

I guess people just see the monthly statements getting higher and higher and think i'm crazy or something.

I can only save myself.

Wed, 02/24/2010 - 23:14 | 244415 Anonymous
Anonymous's picture

What, in your mind, is the strongest, most compelling argument for cashing out one's IRA?

Thu, 02/25/2010 - 06:48 | 244667 35Pete
35Pete's picture

Betting, based on several years of informationa and events, that the equities market is going to crash more than the combined penalties and taxes of earlier liquidation.

I'd do it too with my 401K but I'm stuck.

Plus, there's chatter on the Hill about "saving Americans" by offering to convert retirement accounts to gubbmint annuities guaranteed to pay an income stream for life.

Shockingly, and this really surprised me [/sarcasm], the gubmint would convert your IRA to treasury bonds.

And promptly spend it of course.


Thu, 02/25/2010 - 08:39 | 244692 Anonymous
Anonymous's picture

If you think the stock market will crash, just liquidate the equities in your IRA and keep it in cash, in the IRA account. Why cash out the IRA and pay the penalties?

Thu, 02/25/2010 - 19:03 | 245824 Anonymous
Anonymous's picture

Because - if you keep your money in a registered account under government control, they can change the rules and either a) force you to what they want you to do - such as forced buying of T-bills; OR b) the cash will become worthless as they print the dollar to death (already happening at an accelerating pace).

Get the money out, and put it into something that will either maintain its purchasing power or increase its purchasing power as our nation implodes. Maybe even get some out of the country :D

Better question is this: why would you leave your money in an IRA? Tax bennies? They are coming for everything we have, and if it is in an account they can access or control you will lose big-time. Read about what Argentina has done and is doing. Coming soon to a U.S. theater near you.

Wed, 02/24/2010 - 23:44 | 244467 Anonymous
Anonymous's picture

You can only ever save yourself man - but thats enough

Thu, 02/25/2010 - 01:27 | 244567 JohnG
JohnG's picture

Avg Joe is a complacent Kool-aid drone.  I've been trying the same thing.  Just people don't get it.

I hope they don't come looking for help from me because I will turn them away.

I'm not so cruel as to say "I told you so," but I will say go away.

Thu, 02/25/2010 - 06:50 | 244669 35Pete
35Pete's picture

I'm gonna tell them that they're an active participant in Darwinian Selection and who am I to interfere with mother nature.

Sorry. I'm so fed up with sheeple that I care no more about THEIR fate.

It's the folks that know whats up and are screwed anyways that I care about.

Thu, 02/25/2010 - 01:29 | 244568 macfly
macfly's picture

ditto that, everyone I know thinks I've fallen down a rabbit hole, and their eyes glaze over when I try to tell them what is going on. I guess I should also mention that I live and work in LA too!!


I feel so alone!! ;-)


So happy to see all the other insomniac worries here, I kind of view this as my own 12 step program.


Hello, my name is Fred, and I'm worried about the entire collapse of the global economy. I haven't had a drink in weeks, but I have some very nice '82 Cheval Blanc waiting on stand by.

Thu, 02/25/2010 - 01:48 | 244581 Anonymous
Anonymous's picture

To quote Jeffrey Saut who quoted someone else, "If you tell 100 people that something bad is going to happen, 50 people will hate you immediately. If you are right the other 50 people will hate you later." This is now my sig.

There really isn't much more you can do. Once they get it, it will be too late. Just don't brag about it or gloat. I expect the worse it gets the more I am going to have to lie about how I made out or how well protected my assets were.

But, hey, maybe we are all morons and the economy is fine and we aren't already bankrupt. Stranger things have happened, like alien abductions, and the magic bullet theory. What? Those aren't true either???

Livin' la vida SoCal!

Thu, 02/25/2010 - 03:30 | 244617 malusDiaz
malusDiaz's picture

If you know whats happening... wtf are you doing in LA?

Wed, 02/24/2010 - 23:14 | 244414 Get_to_the_choppa
Get_to_the_choppa's picture



And I live in CA for cripes sake.  Not that I want to see riots in the streets when the checks stop coming to all those state workers and social dependents, but if it comes to that, so be it.  Let's just get on with it already. 

Thu, 02/25/2010 - 07:23 | 244677 35Pete
35Pete's picture

There's a de facto rule here in the hinterland called the Kali Kook Rule.

It basically states that if you admit that you're from Kaliforinika then you have to prove to the vast majority of normal people that you're not wierd.

I think the problem that the Kalifornians here have is that they are not wierd (and you're in conformance with the rule too as demonstrated by your thoughtful and deliberate communications in this site) Which is wierd for your run of the mill Kalikook neighbors. They have a serious issue with reality.

Now there are a lot of delusional folks here in flyover country, true dat. But you'll have more success talking with us then you will with the psychological aberrations you call your neighbors.

Might I suggest that you emigrate? Why the hell would you want to live there anyways?

Come to flyover country. It's the Israel, the promised land for rationale, non-kooky salt of the earth folks.

We have one rule though. NO Cadillac Escalades.

Wed, 02/24/2010 - 22:20 | 244349 deadhead
deadhead's picture

Thanks for posting this, the hits just keep on coming.

Thank goodness we New Yorkers don't have to worry about this stuff because we are in such good financial shape after many years of low taxes, strict financial discipline, and keeping NY budgets very, very low.   Phew.....


Wed, 02/24/2010 - 22:55 | 244394 john_connor
john_connor's picture

We would really be in the crapper if states like Illinois and Arizona were in trouble.  Thankfully those two are on solid footing.

Wed, 02/24/2010 - 23:19 | 244423 deadhead
deadhead's picture

ya know, from what I read, i'm wondering if Illinois is really the number 2 contender to Cali....i don't follow Illinois locally so to speak, but I often catch nasty articles about them.  anyways, it's amazing just how many states as well as some municipalities are so close to the edge.

Wed, 02/24/2010 - 23:36 | 244449 seadragonconquerer
seadragonconquerer's picture

Yes...trillions in debt at the national level, billions at the state level, millions at county and city level, and individual consumers in so far over their head - or unemployed - that many here - in formerly wealthy Santa Barbara - have pretty much stopped buying anything but absolute necessities, thus wiping out small business and sales tax revenues. Doesn't matter much whether Calif. floats more bonds or not; the water is now coming in faster than gov't can bail.   

Thu, 02/25/2010 - 05:56 | 244652 carbonmutant
carbonmutant's picture

Yea them and New Jersey...

Wed, 02/24/2010 - 22:23 | 244355 dark pools of soros
dark pools of soros's picture

but houses in San Jose are still a Million!!!!  no problems in sight!!!

Wed, 02/24/2010 - 22:47 | 244381 Cognitive Dissonance
Cognitive Dissonance's picture

"but houses in San Jose are still a Million!!!!"

Which just goes to prove there's a sucker born every minute.

Me, me, me. Pick me.

Thu, 07/14/2011 - 08:29 | 1455490 pams
pams's picture

it is a huge amount... I am sure that you can use the money in other domain. Here seems to be useless. Geneva transfers

Wed, 02/24/2010 - 22:41 | 244373 Going Down
Going Down's picture


But Wait...Here's A Black Turkey


Feb. 25 (Bloomberg) -- Investors are betting political turmoil will weaken Turkey’s lira more than any other currency as the arrest of more than 40 army officers over an alleged coup plot raises tension between the government and the military.

One-month put options that grant the right to sell the lira against the dollar have surged to a 3.4 percentage-point premium over equivalent call options to buy the currency. The gap, known as the risk-reversal rate, widened from 2.25 percentage points a week ago and is the highest of 48 currencies on Bloomberg.


Thu, 02/25/2010 - 00:49 | 244533 faustian bargain
faustian bargain's picture

oooh...coup plot in Turkey! Nigeria is a trendsetter.

This world is getting scarier by the minute. I hear and read the news stories these days and I think back to history class learning about the starts of the World Wars. I'm starting to feel like the world has become a tinderbox.

Or maybe I'm just paying more attention than I used to...? Is it just me? Or are things really getting that much worse?

Thu, 02/25/2010 - 01:39 | 244576 Quantum Nucleonics
Quantum Nucleonics's picture

Don't read anything into coup chatter in Turkey.  There has always been a delicate balance between Turkey's military which sees itself as a defender of a secular governmental structure and civilian political elements that want to incorporate more Islamic religious elements into Turkey's governmental institutions.  This looks like a win for both sides - the government looks stronger for having taken down some military coup plotters and the military gets rid of some too radical ex-military types that are trying to form a power base outside the military org chart.

Wed, 02/24/2010 - 22:43 | 244375 johnnyBoy
johnnyBoy's picture

But California has the weather (I know, a little El Nino going on right now but that will pass).  Calif needs to file BK because of dysfunctial legislature and civil service union contracts that need to be busted.  I hope after the BK that they also secede.  Might as well go all the way and become one hell of a great nation!

Wed, 02/24/2010 - 22:49 | 244384 Cognitive Dissonance
Cognitive Dissonance's picture

Who would've thought it wouldn't be an earthquake but Californians themselves that pushed the carcass into the sea.

Wed, 02/24/2010 - 23:34 | 244418 Tethys
Tethys's picture

Common misconception.  As most Californians know, when the big one hits it will be the rest of the continental US that slides off into the ocean.  

Why do you think real estate prices are so high along the Cali / Nevada border? Soon-to-be-beachfront, baby :)

Of course, most Californians also 'know' that (a) the US is the 'wealthiest nation in the world', and (b) the US is hopelessly and catastrophically in debt, so therefore (c) debt=wealth and thus (d) California needs much, much more debt.  


Thu, 02/25/2010 - 01:43 | 244578 Quantum Nucleonics
Quantum Nucleonics's picture

I think CA's treasurer actually looked into bankruptcy (not allowed - there's no legal basis in bankruptcy law for a state to file under) or secede and default, then rejoin the Union (which was considered too radical - that may change).

Thu, 02/25/2010 - 06:20 | 244659 Problem Is
Problem Is's picture

"Calif needs to file BK because of dysfunctial legislature..."

California IS the Citibank of States TBTF.

The management is corrupt and incompetent, the structure is too dysfunctional to manage and the entire enterprise is insolvent.The only Citi thing missing from Cali is an idiot like Rubin standing around...

The Legislature thinks they are a junior Congress and pay themselves like it. Every one of them needs to be voted out. I vote against my incumbents every election.

Break it up

Fire the management, bust it up into two states... flip a coin... winner gets Issa... loser gets Pelosi...

Thu, 02/25/2010 - 12:54 | 245020 Anonymous
Anonymous's picture

Never happen because of water issues. The second norcal separates from lowcal, the LA basin will be at the mercy of the north. Lowcal can't afford to have a breakup of Kommifornia into 2 or more sovereign states... there just ain't enough water in the Colorado river to feed the LA basin, let alone arizonia, nevada, mexico, etc.

Wed, 02/24/2010 - 22:59 | 244396 Anonymous
Anonymous's picture

Is this rally material? 100 pts on the Dow?

Wed, 02/24/2010 - 23:02 | 244398 Anonymous
Anonymous's picture

"Accept the best, and settle for nothing less." Isn't that the mentality in California? Just have fun, party, and let someone else clean up the mess. Looks like after years of self-indulgence the piper is looking to be paid.

Wed, 02/24/2010 - 23:02 | 244401 Marley
Marley's picture

California dreaming, on such a winter's daaaay....

Wed, 02/24/2010 - 23:10 | 244408 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Yeah, yeah, yeah.  These coastal states are nutty.  When *Iowa* goes down, then I back up the truck at the Hormel plant in Austin, MN, and load up on SPAM.  Til then, I choose to remain in da Nile.

Fri, 07/15/2011 - 04:31 | 1458605 pams
pams's picture

I will try to follow your tips... I am sure that I will have excellent results Educational games

Wed, 02/24/2010 - 23:19 | 244424 Anonymous
Anonymous's picture

of all of the states this could happen to california is my number 1 pick maybe after massachusetts...not sure which state is more loathesome....

california is the land where the government never sets - freebies for everyone but where are the left wing hollywood elite when their state needs their billions....i sure don't see any of them stepping forward to offer their wealth to support the socialist utopia when karl marx needs them most....

a bureaucrat's shangri-la; a Lollapalooza of spending orgies; a state led by peewee herman's uncle....

Thu, 02/25/2010 - 06:33 | 244662 colorfulbliss
colorfulbliss's picture

Let's see...hmmm... "left wing", "hollywood elite", "socialist", "utopia", "karl marx"....all these words used within a few short sentences. Leads me to believe you have drank a bit too much of the neo-con kool-aid.


Wake up before it's too late and add the other half of the evil into your rant....

Thu, 02/25/2010 - 09:02 | 244699 IBelieveInMagic
IBelieveInMagic's picture


Wed, 02/24/2010 - 23:22 | 244430 Anonymous
Anonymous's picture

The Federal Government should turn its back on California, then you will see how fast those scumbags in the legislature pass the "cash management flexibility bill". The Fed enables bad behavior among the States because there is no moral hazard. It is disgusting for people in other parts of the country to bail out an out of control legislature in CA. Let then suffer the consequences of their behavior, let then FAIL. Let every irresponsible State FAIL, people will then suffer and vote in responsible legislators. This is the only way to change behavior. Short term pain is the solution.

Wed, 02/24/2010 - 23:27 | 244435 Anonymous
Anonymous's picture

no wonder arnold is kissing so much ass in DC.

Wed, 02/24/2010 - 23:33 | 244444 monopoly
monopoly's picture

You guys are really funny. Correct me if I am wrong but I think part of the problem is you pay a good cop 100,000 to protect then when he retires at 50 you pay him 70,000 as his pension + health. Then you hire a new guy, say at 35,000. Now you are paying twice for the same cop. Am I the only one who sees the geometrical equation here. And just take any other state worker. They have great contracts, legal and all but....the state cannot afford them. My gosh, this is all going to end so badly. Got my cave ready here in Northern Nevada.

Thu, 02/25/2010 - 01:51 | 244584 macfly
macfly's picture

The cops deserve a good wage, they have a hard job here in CA with guns, crack, angel dust, and meth addled madmen and zombies on the loose.


The real problem is in Sacramento. They are up to all sorts of bad mischief there, fleecing the system in so many ways. One cute little scam they have going is banking huge bucks on student loan defaults. The Edu Dept has a whole office of scamsters on $400+k a year giving out loans to folks with no hope of ever paying them back, even their imaginary friends, then defaulting them.  They then collect big on insurance from the Feds who underwrite the loans. Talk about rinse, wash, repeat! The stench of rotting in Sacramento is bad.


We need a real clean sweep and a fully transparent, honest state government we can trust. Fingers crossed that maybe enough of the dirt will come out in the default to give us an honest, competent state government.

Thu, 02/25/2010 - 04:22 | 244631 jeff montanye
jeff montanye's picture

sounds like your (our) real problem is criminalizing recreational drugs.

Wed, 02/24/2010 - 23:37 | 244453 Anonymous
Anonymous's picture

ca is not bk we are faking out illeagals in to moving elsewhere

Thu, 02/25/2010 - 00:13 | 244497 Al Gorerhythm
Al Gorerhythm's picture


Thu, 02/25/2010 - 00:14 | 244500 dumpster
dumpster's picture

  yep the economy is on the cusp of a new beginning , dollar strong , beernike is in control , the fed has saved the world from falling off a cliff.. with nountains of new debt ,,,

Thu, 02/25/2010 - 00:15 | 244503 TJW
TJW's picture

With a little help from my ouija board, my crystal ball, and my cat helping me type out my ideas, I've figured out the solution to all this, for the US at least. And here's the beautiful part of it -- we get the geniuses on Wall Street to implement it for us (yeah, they're corrupt, probably sociopaths, but they know how to get money out of other people and screw up economies).

NB: My cat tells me this is immoral, but what does she know?

We need to, behind the scenes, undermine the economies of other countries; foment internal unrest. We also need to increase tensions between countries. Greece, with the EU on its side, and Turkey, with control of the Bosporus and Dardanelles, come to mind. When the governments decide to go to war, to pull together the citizens, who are on the verge of overthrowing the politicians, we pump up our munitions manufacturing sector BIG TIME. Then we sell weapons to both sides. If it ends up Russia and Turkey on one side, and the EU on the other, we'll make a fortune!

We have to be sure that we don't get involved in battle; that's not only messy, it's expensive. Just stand morally (?!) above it as other major nations get sucked in. And we need to get paid for our munitions up front in something of value -- gold, silver, whatever. That way, when one side "wins," it won't refuse to pay for the debts of the defeated. We'll already be paid.

If we can stand aside, when it's all over it will be like after WWII: The US will be the only large, developed country standing.

We just have to be careful about a repeat of the Marshall Plan. Don't want to rebuild competitors too soon.

Thu, 02/25/2010 - 00:27 | 244515 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Are you Dick Cheney?

Thu, 02/25/2010 - 00:36 | 244523 TJW
TJW's picture

My cuddle bunny.

Where the hell's that puking emoticon?

Thu, 02/25/2010 - 01:05 | 244546 Hephasteus
Hephasteus's picture

This is the plan we've been doing since world war II. It's not working

Thu, 02/25/2010 - 03:59 | 244626 merehuman
merehuman's picture

perhaps thats the plan in motion and

...WE are the patsy? China thinks long term and we dont think beyond the end of our dicks.

Thats why we keep stepping on it!

Thu, 02/25/2010 - 07:38 | 244682 Anonymous
Anonymous's picture

My idea was to buy CDS on a country, and then invade it, thus paying for the war. Except for the small moral hazard problem, it's a win-win.

Thu, 02/25/2010 - 00:57 | 244542 albion402
albion402's picture

Send the Lt. Governor-in waiting off to DC to plead the case.

Thu, 02/25/2010 - 01:15 | 244555 Anonymous
Anonymous's picture

I was in Cali when Orange County went bust. At that moment, I thought to myself, first the county, then the state next the country. This was back in 1994 when I started becoming aware of the the fraud at Fannie and Freddie. Later, around 1999 after hearing a C.A. Fitts podcast, I knew it would get worse. Who do I blame......JEW BANKERS.

I know, label me Ant-S, I don't care. The truth is the truth. Obviously all Jews are not crooks, likewise all muslims are not terrorists. BUT, the jewish people best be aware of the anger their kind has brought to today's world. If not, a repeat of the 30's and 40's will happen to all of them.

Thu, 02/25/2010 - 06:36 | 244660 Problem Is
Problem Is's picture

"Who do I blame......JEW BANKERS."

Note to Uncle Jamie and Aunt Lloyd:

If you dislike the ethnic stereotypes... try not acting like the ethnic stereotypes...

Attached are some PR ideas to get out in front of that nasty ol' banker pogrom.

Much love, your nephew Timmay G.

PS: Bennie Bernak-ster says Hi!

Thu, 02/25/2010 - 01:50 | 244585 Anonymous
Anonymous's picture

IMO, here's how they're going to bail out Calif. Some financial institution is going to buy new issue Calif. bonds at a discount and the Fed is going to accept them as collateral at par value. Wink, wink...

Thu, 02/25/2010 - 02:54 | 244604 Anonymous
Anonymous's picture

Federal bankruptcy laws prevent states from declaring bankruptcy. Good try though..

Thu, 02/25/2010 - 03:00 | 244608 irieblue
irieblue's picture

nice try, but under federal bankruptcy laws, a state can not declare bankruptcy.

Thu, 02/25/2010 - 04:28 | 244634 jeff montanye
jeff montanye's picture

didn't there used to be a law or something against holding american citizens forever without charges or representation while torturing them?  or assassinating them anywhere in the world?  apparently laws can be changed.

Thu, 02/25/2010 - 08:30 | 244691 MarketTruth
MarketTruth's picture

Shhh, don't wake the sheeple as they have to be fleeced today on the Stock Exchange to keep Goldman Sachs and JP Morgan sending money to the Rothschilds, Rockefellers, Warburgs, Morgans, etc. Only he truly stupid still believe i GLD, SLV and other paper ETFs while the Rothschilds, Rockefellers, Warburgs, Morgans, etc hold actual physical gold and silver.

Remember: J6P American is really not that smart, with about 30% are not graduating High School nowadays even though the USA has drastically dumbed down the basic standardization test! Last thing the world needs is people who can actually critically think for themselves, as America needs stupid drone bees for their military.

Thu, 02/25/2010 - 03:11 | 244610 Anonymous
Anonymous's picture

Cue the earthquake(s)

Thu, 02/25/2010 - 03:23 | 244614 vainamoinen
vainamoinen's picture

Uh-oh - - - -


Leaving for 3 week vacation to Istanbul this Sunday - - - - - ???????

Thu, 02/25/2010 - 05:23 | 244649 Anonymous
Anonymous's picture

California is bigger, has substantially higher population, and probably more than 5 times the GDP of Greece. An in addition it is more bankrupt, or at least as default as Greece, just couple of years earlier. It's good that there is a post from time to time as well on this topic as I cannot hear anymore about Greece in the media. I just wait for the newspaper indicator that the EUR has crashed in order to put some directional on it. So far long EUR with sold options appears the better alternative - it can stay here for a while if it wishes...

Thu, 02/25/2010 - 06:09 | 244658 Anonymous
Anonymous's picture

The Turkey coup plot was from back in 2003. Clearly, it never got further than the drawing board and frankly, each coup they have ever had has been a bit of a damp squib. Terribly orderly stuff, no rivers of blood etc.

I wouldn't change my travel plans.

Thu, 02/25/2010 - 06:38 | 244664 JimboJammer
JimboJammer's picture

Too  many  people ,   not  enough  jobs ...  

Too  many  Government   programs...

at  least  6  other  states   are  next  in  line...

Thu, 02/25/2010 - 11:15 | 244819 Anonymous
Anonymous's picture

About 300 million Chinese and Indians entered the workforce the last 10 years. so there must be plenty of jobs.

Thu, 02/25/2010 - 11:20 | 244829 Anonymous
Anonymous's picture

And there is nothing you can do about it. We have our modern day USSR: geitner, bernhake, blankfein, sumstein, orszag, summers, shapiro, feinberg, barovsky, axelrod,ram emmanuel, . Like Marx, Engels, Lenin, Molotov. Dont like it? they will stick you in a death-camp. This battle was lost in 1945.

Thu, 02/25/2010 - 12:36 | 244978 Anonymous
Anonymous's picture

they delayed the bond sale for one week.... lets keep it real.

Thu, 02/25/2010 - 13:24 | 245075 Mr Lennon Hendrix
Mr Lennon Hendrix's picture


Thu, 02/25/2010 - 13:42 | 245105 Anonymous
Anonymous's picture

The Futures So Bright (I Gotta Wear Shades)


Thu, 02/25/2010 - 19:32 | 245873 Rusty_Shackleford
Rusty_Shackleford's picture

How's this idea for debt reduction?


California Assembly passes resolution for 'Cuss Free Week'

Fri, 02/26/2010 - 12:17 | 246732 Anonymous
Anonymous's picture

diebold voting machines will save you from stalin 2.0 duhmerikuh death kamps. look up eustace mullins (r.i.p.) sometime. think that fancy new seed bank is meant to save your sorry ass?

Sat, 04/17/2010 - 09:49 | 305483 Tom123456
Tom123456's picture

Good Linux hosting option package offered by ucvhost which not only provides the best in terms of hosting packages but also believes in truly being there for the customer, 24x7. cheap vps Moreover , they offer unlimited bandwidth as well as nearly 1GB storage along with database maintenance, email facility along with storage, availability of sub domain and many other important features for a very low price. ucvhost thanks

Wed, 05/25/2011 - 17:12 | 1310397 sun1
sun1's picture

you give so many great tips especially since I use word press and the plug-in section of your blog is great. some of the tips i get here I can’t find anywhere else. health administration

Fri, 06/17/2011 - 20:23 | 1379198 sun
sun's picture

Dude, the Star Wars is cracking me up. Thanks for the great post, these are my fav so far. xbox 360 slim

Fri, 06/24/2011 - 06:22 | 1397863 kevin22
kevin22's picture

rajasthan tour packages has been successfully handling groups and individual travellers from Europe & the USA for last more than ten years, with the help of a well co-coordinated network of experienced associate offices throughout India & abroad.

Sun, 06/26/2011 - 10:30 | 1402785 sun
sun's picture

I found lots of interesting information here. The post was professionally written and I feel like the author has extensive knowledge in the subject. Keep it that way sports degrees

Mon, 07/11/2011 - 15:03 | 1444890 hama
hama's picture

The post was professionally written and I feel like the author has extensive knowledge in the subject. Keep it that way

Mon, 07/11/2011 - 15:12 | 1444932 hama
hama's picture

The post was professionally written and I feel like the author has extensive knowledge in the subject.

Tue, 07/12/2011 - 10:55 | 1447695 hama
hama's picture

China, and according to the record history, he could be the first pianist in China that offered a long term contract.
cheap car insurance

Wed, 07/13/2011 - 08:01 | 1451050 hama
hama's picture

We are confident the SEC will aggressively pursue this line of questioning as they attempt to justify their $1 billion porn download budget. We are also confident, that should the SEC truly take its role of protectors of investor interest seriously.
cheap car insurance

Wed, 07/13/2011 - 18:31 | 1453938 hama
hama's picture

En las Termópilas el rey Leónidas y su guardia de elite de 300 hoplitas espartanos se enfrentan a miles y miles de persas. La muerte es segura, pero el honor es eterno. Así arranca el relato épico del cómic de Frank Miller después de su exitosa Sin City.
Hybrid Cars

Fri, 07/15/2011 - 06:04 | 1458664 hama
hama's picture

And there is nothing you can do about it. We have our modern day USSR: geitner, bernhake, blankfein, sumstein, orszag, summers, shapiro, feinberg, barovsky, axelrod,ram emmanuel, . Like Marx, Engels, Lenin, Molotov. Dont like it? they will stick you in a death-camp. This battle was lost in 1945. Thanks
same day payday loans online

Do NOT follow this link or you will be banned from the site!