See: California is a greater risk than Greece, warns JP Morgan chief
Mr Dimon told investors at the Wall Street bank's annual meeting that "there could be contagion" if a state the size of California, the biggest of the United States, had problems making debt repayments. "Greece itself would not be an issue for this company, nor would any other country," said Mr Dimon. "We don't really foresee the European Union coming apart." The senior banker said that JP Morgan Chase and other US rivals are largely immune from the European debt crisis, as the risks have largely been hedged.
California however poses more of a risk, given the state's $20bn (£13.1bn) budget deficit, which Governor Arnold Schwarzenegger is desperately trying to reduce.
I have serious doubts about California coming to grips with it's debt problem. The Democrats own that state's legislature lock, stock and barrel. Even if Arnold Schwarzenegger were inclined to be a fiscal conservative, there is damn little that he could do to stop the Democrats from running the state smack into the ground.
The Democrats will not become fiscal conservatives. It just won't happen. Their very reason for existence is to create an ever expanding welfare state. It's what they promise to get elected and it is what they believe is right and good.
Given the Democrat's visceral hatred and fear of the concept that lowering taxes increases tax revenue, and their willingness if not eagerness to raise tax rates for both revenue collection and for social engineering purposes, what can we foresee them proposing to get themselves out of the mess that they have spent themselves into?
Can we really imagine for a moment that Democrats will seriously even entertain the notion of tax cuts and social spending reductions?
Tax cuts and social spending reductions, real tax cuts and real reductions in social spending, just won't happen.
Unfortunately, California is such a large part of our nations economy that when they hit the wall, the rest of us will feel it.