California Collapse Worse Than Greece, Ireland, & Portugal Combined

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Lots written about PIIGS countries these days and what will happen if one of them collapses.

Here is how they rank by GDP in the global economy according to Wikipedia:

Italy – 7
Spain – 9
Greece – 28
Ireland – 37
Portugal – 38

Italy has a giant cash economy, so it actually might rank higher in the world, but with their strict code of omertà, we’ll never know.

As state economies go, California’s economy ranks 1st in the United States by Gross State Product with $1.846 billion.

By that measurement, California would rank 8th in the world in terms of economic size. California’s collapse would be worse than that of Spain alone. California’s collapse would be worse than Greece, Ireland, and Portugal combined.

Why do we care about Greece other than for compassionate purposes?

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Category: Economy

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3 thoughts on “California Collapse Worse Than Greece, Ireland, & Portugal Combined”

  1. How likely do you think California is of defaulting on its interest payments?

    Granted I have not looked at this since last summer, but if I recall, back then the CA budget had been slashed from $100B to $80. There was about $40B of education related expenses which were most senior in priority. Interest to debt holders was #2 with about $5B of commitments. That would mean that the tax revenue base would have to decrease close to 50% from what it was in 2009 for debt holder to be worried.

    In addition doesn't the constitution only allow municiaplities and couties to declare bankruptices but not states. Would that mean that should the state not be able to make its interest payments, it would have to issue IOUs and eventually pay back what is owed?

  2. When is “eventually” and what would the payment be worth when “eventually” arrives? I believe that would be the ultimate question on the minds of investors. It's not like investors have no other alternatives, but I suppose that the pension plans in California have plenty of firepower.

  3. When is “eventually” and what would the payment be worth when “eventually” arrives? I believe that would be the ultimate question on the minds of investors. It's not like investors have no other alternatives, but I suppose that the pension plans in California have plenty of firepower.

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