California…Collapse AND Growth are a Process

Our California Governor has declared a state of FISCAL emergency which as @gregormacdonald points out does not mean a bottom is at hand.

Gregor has been covering the California mess for the last few years for Stocktwits on his blog and weekly Macro papers.  His Sunday night live show is amazing.   Here is a piece from his post this morning :

The news out of California this evening, that the Governor has declared a state of fiscal emergency, is a reminder that the collapse process which began 3 years ago still has a way to run. Accordingly, my work on California continues. I updated much of my analysis of food stamp usage, sensitivity to energy prices, and unemployment in California for my late April presentation, California in a Time of Energy Transition, given to the CFA in San Francisco. There was no indication then, just as now, that any event or combination of events is imminent that would kick the Golden State off of its current path.

There are a number of old-line economists in California who have been calling for a rebound in the state’s economy for over a year now. Like most economists, they completely missed the destructive nature of the housing bubble when it was underway, and never integrated energy factors into their models. It should not be surprise that many economists are still using post-war recession models to account for extraordinary conditions in California today: oil prices above 75.00 dollars a barrel, overlaid on 21.9 % broad unemploymentHello: those are not post-war recession numbers.

Read the whole post.

I will ask Gregor to put a list together that chronicles all the posts on the way to last night… to what now seemed inevitable.

In the markets as in life, most of us want instant gratification. In reality, all events take time and play out over very long periods. Hopefully this event that to Gregor seemed inevitable can be the beginnings of better monetary and policy decisions that will begin a growth process.

I am skeptical but optimistic as always.


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