In honor of the fact that household ownership of municipal bonds -- a $2.8 trillion market -- now exceeds $1 trillion for the first time ever, indicating that Americans are extremely comfortable with the credit exposure they have to state and local governments, I bring you the following report from Toronto's Globe and Mail, "California On 'Verge of System Failure,’" which makes you wonder just what those investors -- gamblers? -- are thinking:
Golden State, like many others, is nearly bankrupt and desperately needs a bailout
Arnella Sims has seen a lot in her 34 years as a Los Angeles County court reporter, but nothing like this.
Case files piling up by the thousands, phones ringing off the hook, forced midweek courthouse closings and occasional brawls as frustrated citizens queue for hours to pay parking fines.
“People think we’re becoming a Third World country,” said Ms. Sims, 55. “They don’t understand.”
It’s a story that’s being repeated all across California – and throughout the United States – as cash-strapped state and local governments grapple with collapsed tax revenues and swelling budget gaps. Mass layoffs, slashed health and welfare services, closed parks, crumbling superhighways and ever-larger public school class sizes are all part of the new normal.
California’s fiscal hole is now so large that the state would have to liberate 168,000 prison inmates and permanently shutter 240 university and community college campuses to balance its budget in the fiscal year that begins July 1.
Think of California as Greece on the Pacific: bankrupt and desperately needing a bailout.