California and the IMF: Perfect Together?
If California’s financial mess is Greek to you, then maybe it’s time you took a look at the troubles plaguing Greece — to see the parallel between the Mediterranean nation and the American nation-state.
So writes Terry Keenan (of CNN and Fox News fame) in the New York Post, citing the “very real possibility” that the erstwhile cradle of democracy will need a bailout from its European Union buddies, or maybe even the International Monetary Fund, to stave off a debt default. Meanwhile, the Golden State looks to Washington for a multi-billion handout/bailout to void a fiscal meltdown this summer.
“Like Greece, California and the 49 other states can’t print their own currency, and, like Greece, California can no longer pay its bills without the help of a central authority — in this case Washington, which has pumped up the state’s finances with billions in stimulus dollars.
Yes, to be sure, last summer, the State of Schwarzenegger did issue IOUs for a time in a desperate bid to keep California afloat, but it’s a stunt not likely to be repeated. Suffice it to say, California is as dependent on Washington for a sound currency as Greece is on Brussels.
More worrisome, while Greece is the Delaware of the EU, representing just 2 percent of its economy, California’s economy is the sixth-biggest on the planet, clocking in with about 13 percent of national GDP. This week the price of credit default insurance on California’s bonds rose to levels that are double the prices back in October. It’s not a huge stretch to imagine a day this year when California has a failed-debt auction, similar to the one in Portugal last week that led to new worries about Greece and market panic around the world.”