Well... that's not exactly what some would call a "solution"... but there it is. The Muni bond market has gotten killed over the past several weeks as this story has been leaking out, and then waterfalled when Whitney made her prognostication on CNBC a couple weeks ago.
There are SOOOO many ways that this can play out - municipal borrowing rates soar, defaults spur a deflationary wave, the Feds come to the rescue by printing and spur an inflationary wave... no matter what, pink slips are on the way to millions of state and local workers (thankfully).
How'd we get here? A tremendously complex economic model has evolved in the U.S. and the ROW... and it is being tended to by folks with no mathematical, analytical, nor economic talent. Our system, at least in the West, is still Lawyer based. We would be better of with physicians, and FAR better off with accountants, running the show... but that just ain't the way it is...
And in the background, Oil is slowly chocking the living snot out of the American economy.
OPEC, responsible for 40 percent of global supply, issued a statement on its website saying “there is more than enough oil on the market,” and promised action in the event of a supply shortage. The group is next due to review production quotas in June, skipping its usual first-quarter conference.
"Any assumption that there is tightness in the market is incorrect,” OPEC Secretary-General Abdalla El-Badri said in the statement. “In reality, commercial stocks remain well above the five-year average and forward cover stands at around 60 days. There is more than enough oil on the market.”
I love that. I love the smell of propaganda in the morning.... it smells like... Fresh Horse SH#!
Over the past 72 months, yearly world Oil production has increased ZERO. World population, on the other hand has increased by over 6.5% (just over 1.1% per year)... Per capita availability of Oil has decreased commensurately, and that can be seen in the price of crude today.
Does the world have 60 days of supply ("DOS") or what the OPEC spokesman refers to as forward cover? Perhaps, but I sincerely doubt that. There is simply no way to measure world inventories that accurately - and there no better a mechanism for the discovery of truth in a market place than price (and even that is not always so hot, especially when it comes to commodities or markets that are being interfered with by government).
For the sake of California's budget, let us sincerely hope that the OPEC spokesman is correct. No state economy is more dependent than the geographic colossus of California. New York relies on Banking... California depends on gasoline...
Because the use of propaganda is only going to escalate. What children should have learned at home is no longer being learned at home for reasons we have discussed ad nauseum... and the statists appear willing to continue the fight in spite of the water clutching their ankles as they sink their own ship... though a few of the rats are abandoning the sinking vessel... and all for want of a nail.
The laws of mathematics are immutable and common sense will once again rule the day.