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Thursday, May 21, 2009

Why Obama Might Bail Out California

... because the numbers are so small.

Say California needs $20B. Well, what's the big deal? We're already going to borrow (and print) $1.8T this year. What's the difference between 1.8 and 1.82? Would anyone be able to tell them apart? You're only adding 1.1% to the deficit. You can save the state and all the wondrous progressive spending priorities with what amounts to a rounding error.

This is the problem with running gargantuan debts - adding a little more doesn't make any perceptible difference. Let's make this more personal. Say you owe $30,000 on your credit card. 1.1% of that is $333, the cost of an iPod Touch. If you're already $30K down and your MP3 player breaks, why not put the iPod on your credit card?

On the plus side, it's shiny!

Bailing out the unions in California and gaining mastery over the entire state just like he has siezed the banks and the car companies is substantially more attractive than an iPod touch. If I was a betting person, I'd wager that at least a portion of the California deficit will be backed by the Feds.

1 comment:

  1. The only reason you don't buy the iPod is because the bank has lowered your available credit so that you no longer can. But, as you pointed out, that doesn't apply if you're printing your own money.

    I guess that means we all need to become counterfeiters.

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