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Brett Owens
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Brett earned his first contrarian investing profits in 2004 when he purchased an obscure investment (at the time): sugar futures. His friends on Wall Street stopped laughing soon enough when sugar rocketed to multi decade highs, illustrating that it indeed pays to be contrary. Brett quickly... More
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  • Did the Elections Cast "Perfect Setup" for California Credit Default? 0 comments
    Nov 3, 2010 2:37 PM | about stocks: BCL, BCK

    This may be an interesting time to go long a future "credit event" involving debt issued by the State of California.  Trading volume in Intrade's Prediction Market is still light - but those 2011 contracts sure look potentially interesting: 

    California Credit Default Futures ContractSource:

    California (as usual) bucked the national trend last night as a lone bright spot for Democrats.  As an impartial, local armchair observer to the farce that is California's budget, things sure look like they may be all teed up for a California default over the next few years.

    Let's see the magic combination of ingredients that have dropped into our financial crock pot:

    1. A stagnant economy (leading to stagnant tax revenues)
    2. A lack of low hanging fruit in terms of budget cuts - the easy stuff has been lopped off
    3. Jerry Brown back in control (not that Whitman would have brought austerity, but Brown is the guy you'd have cast your vote for if you were rooting for all out system collapse, simply playing the percentages)
    4. Republican control of the House (less likely to be sympathetic to a bailout of the hippies in California)

    For the record, I lean towards the small/no government school of thought.  Which is not embraced by either political party - the Republicans talk a good game, but I haven't seen any evidence of Republican control actually shrinking the size of government.

    So given the choice of Democrat/Republican, I choose neither.  Let's let the whole system come down.  California is usually a leading indicator for the United States - for better or for worse - and this time, I think we're teed up to lead the way with a debt crisis.

    Bring it on.  System collapse is the only way out - might as well get it over with as soon as possible.

    "If something is about to fall off a cliff, it deserves to be pushed." - Friedrich Nietzsche 

    Disclosure: No positions
    Stocks: BCL, BCK
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