Eric Fry at The Daily Reckoning reports California "is facing a budget deficit this year of about $40 billion, which is roughly equivalent to 2% of the state's $2 trillion economy (GSP). That's, he says, "dismal."
At that display of stoic calmness, I held aloft a shot of tequila and toasted his amazing serenity in labeling California's $40 billion budget deficit to be merely "dismal," mostly because there are less than 100 million workers in the entire U.S. private sector, and this $40 billion represents $400 for each and every one of us private-sector workers in the Whole Freaking Country (WFC)!
"But over on the Mediterranean," Eric went on, "Greece's budget deficit is on track to hit $50 billion, which is a very big number for an economy that is one fifth the size of California's. . .What's more, Greece's accumulated debt totals $443 billion—a whopping 113% of GDP."
I ask the following question: "If you were the prancing, preening, know-nothing, government-leech blowhard who wanted a shot at fame and glory by fixing what cannot be fixed, with lots of other people's money, while paying yourself and your friends handsomely, what would you do?"
He writes, "Well, the correct answer is the pricing of credit default swaps (CDS) on 5-year bonds from California and Greece. (Simply stated, a CDS is an insurance policy against default. The higher the CDS price, the higher the cost of the insurance)."
Of course, I understand none of this because I am tragically stupid, pathetically ignorant, am too lazy to do anything about it, and thus totally disinterested in the whole concept, which means that it all sounds like gibberish to me, especially since the bottom line is always the same; losses are on the books, somebody is going to have to take the hit.
Fortunately, mastery of such complexity is unnecessary for me, as I just buy gold, silver and oil, which will benefit mightily as the government and the Fed ruin everything with their deficit-spending of more and more fiat money.
Calm in the Face of Fiscal Insanity
Source: GoldSeek, The Mogambo Guru (2/21/10)
". . .what would you do?"