Where is the Genuine Fear and Terror regarding the state of the U.S. Fiscal House?

California will go bankrupt.

Now that Brown/Red has been re-entombed as Governor, the perfect storm is brewing. California will not be able (or willing, now) to meet its pension and unemployment obligations. The incoming Republican majority in the US House of Representatives has already signaled it will not bail out basket-cases like California. The once great state that twice elected Ronald Reagan will be cast adrift.

Remember, state revenue obligations are sold with the “full faith and credit” of that state, not backed by the US government in most cases (mostly, they are backed–in theory, at least, with the real property in that state). The US taxpayer is not on the hook for state obligations.

Then the dominoes will cascade. California will default on its general obligations, and multiple billions of dollars of wealth will be erased overnight. The barest of government functions will cease. I cannot envision a scenario where this does not come to pass. And thousands of Americans that own the once-revered California gold-plated securities will see their investments vanish like a vapor of smoke…

This will cause the rapid deterioration of the value of similar paper in New York, Illinois, and anywhere else where the books are upside down. And what becomes of these carbuncles which will be clinging to the body politic of the United States? Soon, I think it would be likely that, as these states cannot provide the barest essentials of law, order, sanitation and safety, that civil chaos could ensue.

What of the retirees that are depending on the promises made to them during their working lives? What of the salaries of police officers, firefighters, sanitation workers, prison guards, and so on? What of the aggressive welfare recipients?

We are on the literal precipice here, and I see our president out cutting Indian rugs till dawn and throwing the enormous, massive hotel bills on the National credit card. What the hell is going on? What is it going to take to blow the Five-Bell Fire Alarm? This is insane. As the nerdy electrical engineer at flight operations for Apollo 13 said “We’ve got to shut it down. Now– the whole smash!”

Unless we shut the whole thing down, Now, we will not have enough power for re-entry. And I’m serious.