Californians Say "Party On and Let Our Kids Pay For It"
Nothing needs to be added to the wisdom of the Mish re California's passing of a boatload of bond measures this past election:
"Voters in California approved all $43 billion in bonds they were asked to consider this year..."
Anyone voting in favor of those bonds wants something for nothing. Did voters think for one second about how all of this will be paid and what it truly means? The answer should be obvious. Californian's have no chance in hell to be able to afford this. Housing is slowing, there is an exodus of citizens from California, cities like San Diego are technically bankrupt, property taxes are capped, and the US economy is headed for a recession.
What California did is deeply immoral and economically suicidal to boot. But once again, as long as total toxic waste like this keeps getting a bid, things will appear to be OK. Inquiring minds may be asking "Who is buying this junk?" The answer is state and federal pension plans, all sorts of government bond funds, and hedge funds chasing yield without any regards as to risk.
Rest assured a massive "Credit Event" is coming. When it happens, no matter how bad it seems at the time, try to remember that it will be a good thing. Unless and until there is a total and complete repudiation of these excesses, the ultimate consequences will just keep rising. The sooner we have a debt purge the faster the recovery will be. Japan fought deflation for 18 years. Is the U.S. doomed to follow suit?
No, this is NOT the golden age of financing, unless of course you have been investing in gold on account of it. Consumer credit did turn down, but the next question (assuming this is not an outlier) is: "Will total credit follow?" For a county so totally hooked on "borrow and spend" the consequences will be enormous when (not if) it happens.