AFTER THE SNOW

...and boy, did it snow. 30 inches. Pretty, but not a lot of fun.

Anyway, on both sides of the pond, the talk is more or less the same: Portugal in Euroland and America's Portugals, Illinois and California over on this side. The ECB has apparently been buying up Protugese debt at a fairly brisk rate in an attempt to hold spreads more or less steady and keep the pressure off Spain as if investors have no idea that there may be a larger problem in Iberia looming. I almost laughed out loud when I heard the ECB exercise as an effort to limit the contaigen like it was some kind of a face mask one sees in Japanese subways. Please.

Overhere, California's governor Moonbeam Brown just today announced his budget which includes tax increases for the next 5 years and spending cuts across the board. I haven't had a chance to look at it closely but I will. Meanwhile, here in the fly-over zone, the biggest mess of them all, Illinois, is undergoing a remarkable exercise in one-party rule that appears to be--up to now--unsuccessful in approving a 75% rise in the state income tax and a concurrent rise in the corporate tax rate and a God-awful fight as to what spending cuts will be made. All of this is going on against the back-drop of a newly elected legislature which arrives on Wednesday which, while not changing the majority party, considerably reduces the majority's size. In the midst of all of this remains the belief down in Champlain, the state capitol, that the U.S. Gov. will NEVER let Illinois default which of course doesn't make cutting a deal any easier when a bunch of guys feel a bail-out is just around the corner. Sure, it's The Leader's home state but I don't think there's a snowball's chance in hell that a bail-out is in the offing by any normal legislative proceedure. Further, if some sort of special action were to be taken by The Suit's boys at Treasury, every other state, municipality and ten-person township would be lined up in front of ol' Al Hamilton's statute before you could say Boo. As for the Fed; moved no forwarding address. Even do-gooder Ben has made that fairly clear.

Then again, you never know. I suspect this mob will cobble together some sort of a package in the next 48 hours and announce that the state has been saved. I further suspect no one will believe it and the next time Illinois comes to the market the price is going to be enormous if the market is there at all. At a point I'm pretty certain we are going to be in a land unknown to all and the only real question is which side of the pond makes the discovery first, the Euros or us. We'll follow-up tomorrow with a review of the state of play and a closer look at California's solution.