World's 8th Largest Economy Seeks US Government Help

So far taxpayers in the United States have channeled trillions of dollars into failing institutions such as General Motors, Chrysler, Freddie Mac, Fannie Mae, Deutsche Bank, Société Générale, Barclays, AIG, Citigroup, Goldman Sachs, the International Monetary Fund, etc. etc. etc.

Now the 8th largest economy in the world is asking the US Government to underwrite its debt which means they are asking the US Taxpayer to insure their debt.

News reports indicate that the People's Republic of California:

1. Needs to float $13B to $15B in debt to stay afloat,
2. The interest rate they are offering is not attractive to investors,
3. The return they would have to offer to generate interested buyers they cannot afford,
4. They need the money,
5. They want to offer the lower interest rate and have the US Government guarantee the bonds in case they default,
6. Such US guarantees are the burden of the US Tax Payers in the event of default,
7. California says they won't default because they are going to tax their citiziens to pay for the bonds,
8. Californians love to pay taxes and will not take any action (like leave the state) so with this in mind plus US taxpayer guarantees, investors (like insolvent Citigroup) will buy the bonds,
9. And, just like Freddie, Fannie, GM, AIG, and so on, if this works out they will be back next quarter for more money because nothing is going to change in the short term to fix their underlying problems....

Your humble oracle blogger predicted this would happen back on October 26th, 2008.

What does all of this have to do with my long awaited treatise on why we will have a global currency to replace the US dollar? Here is a clue: It is not considered debt if you never plan to pay it back.