Suppose Congress Leaders Were Told Calif +4 Other States Would Default on Obligations this Monday?

[Blackhatjack]

Would Congress go into secret session to address the crisis?

Would they rush through a 4 page bill to give Calif and the other states Bailouts in the Billions of $$ like they did Wall Street?

The timetable might be off, but the events are entirely possible.

I think Congress would balk and say 'you are on your own.'

What do you think?

[LiberalFighter]

1. If they do anything it should be on the order of a receivership.

And suspend all elected Republicans in the state until it is back in the red.

[Statistical]

4. Back in the black right?

[Statistical]

2. How would CA default?

By choice? They control tax, they control spending. There is no way a city/state general obligation bonds defaults unless that entity say "fuck it" were not paying.

CA for example is offering a $5000 tax credit on the Nissan Leaf (on top of federal $7500 credit). While I find that laudable I find it less responsible when in a debt crisis. If CA or any state defaults it will be by choice. They SHOULD be told "you are on their own".

Of course we should have said the same thing to banks. Well actually I think bank bailout was necessary but it should simply be a liquidation and nationalization. If you owned bank stock it is worthless, bank bonds worthless, bank owes you a bonus or paycheck - worthless. Govt could have stepped in, saved bank (at 100% loss to all investors/owners) then turn around and reprivatized it after crisis passed at a profit. Sweden did this. Govt made a profit on saving banking system.

[Ozymanithrax]

3. We are talking about the Senate here.

Republicans would say states should not be too big to fail, and allowing them to fail is just good capitalism. Even if the Congress could get something through, the Senate could not act in time.

[notesdev]

5. If those states can't meet their obligations

they could very well lose their status as a self-governing state and revert to being U.S. territories.

Bailing out a state is the ultimate in taxation without representation, when the citizens of the other 49 states have to foot the bill for it.

If I'm paying for California's sins I deserve a vote in their elections.

[Winterblues]

6. Well is California "too big to fail"?

I don't think so.....