What happens when an immovable object is hit with irresistible force? Well. California is about to find out the answer to this question. However, without some mechanism in place to reorganize like GM and Chrysler have it could be a real mess. My wife and I were talking about municipal Bonds, for example. If these bonds are not honored no one will ever invest in California's Municipal bonds ever again. This is just a fact of life.
The problem really appears to be that the state was once so fat that some retirees, like teachers are retiring now on like $6000 a month retirement pensions from the state which is much more per month than they made while they were working as teachers. Some city or county supervisors make $100,000 or more for 1 or 2 hours work per year. There are thousands of problems like this that are politicla hot potatoes within California. And finding a way to address all these types of overpayments at once would have to be done for it to be fair.
So, I think the only way to move forward for California might be some kind of Bankruptcy reorganization that would look something like a corporate Chapter 11. Without this kind of reorganization, just servicing California's debt will drag the rest of the country down into bankruptcy with California.
So, obviously a new way of thinking about all this is necessary for California and the U.S to move through all this successfully.
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