The Big Shake
California does have one catastrophic earthquake to worry about, and it's not coming from breathing swells of subterranean tectonic plates.
The credit default that have snarled and siphoned off many of state funds, compounded by local economies puffed up on pink bubble gum real estate balloons is now being shook down by one of many cycles.
Leveraged by immaterial assets whose values are now realized as worthless, this Californian and other state economies have effectively built their reserves on sand. What I see from here is a less-romantic beach sight of eroding waves dissolving in their ebbs once fantastic reserves of wealth: first, the residential real estate, followed by private and state-employee retirement funds, NOW state reserves, and soon deep into town: commercial real estate.
Many more banks are yet to vanish. In their corporate habits, I expect some banks to become agile in swapping out unsightly debts, create orphan months (month of december for Golman-Sachs), or some other illusory reports. But at the end, many will have to shut for good as one falls after another under a selective process of fitness.
Watch California be one of the first piece of many state domino. The shake is not only natural, but naturally necessary, as fire is to excessive forest ground brush - And California well aware of that too. As much as Nature abhors void, so does an economy built out of a complexity of credit voids and volatile financial gas.
The spark that sets it all out will ultimately reset economic elements back to their fair market value. It is what Great Depressions do.
D.
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