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  • Do California IOUs Carry an Implicit Guarantee from the Federal Government? [View article]
    I think you're right - there is an implicit US guarantee on these IOU's

    Under a truly federal system like the US it is hard to imagine that the central government will let the state go down and the systemic inter-connections would be more fearsome than even those for a major Wall Street bank.

    If you want to contemplate a less secure scenario i.e. one not part of a federal system think about what would happen if a Eurozone economy started issuing IOS's - would the ECB honor those?
    That's less straightforward.
    Jul 05 11:48 am |Rating: +2 -2 |Link to Comment
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