The attention of the world’s media has shifted in recent months toward Greece — small European country, population 11m, ‘difficult’ economic situation — and away from California.
Remember California? The US state, home to 36m people, governed by a bodybuilder-turned-action hero, an economy among the largest in the world, something of a housing crisis and a bit of a cash crunch?
At least one person hasn’t forgotten about the not-so Golden State: Jamie Dimon. As the Telegraph reported over the weekend:
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.
Related links:
California economy still waiting for recovery – Sacramento Bee
California: ‘insolvent within weeks’ – FT Alphaville
California’s nightmare – FT Alphaville
Lahde Capital letter to investors: short California, and CMBS – FT Alphaville