Golden State Halts Payments on Its Debt Obligations

California is prepared to freeze its debt payments for at least two years. In other words, the state is declaring a full-scale default.

This is not just about any ordinary U.S. region. California’s GDP amounts to $4 trillion, surpassing, for example, Japan’s economy. Suspending debt obligations could have the most unpredictable consequences not only for the state but also for the United States as a whole — at the very least, the cost of servicing American national debt will rise.

The root of California’s economic troubles lies in massive capital flight, exorbitant living costs, and the collapse of local social policies. The state’s cities have been overwhelmed by drug addicts and homeless populations. Businesses are fleeing high taxes. Even Hollywood’s film industry is dying; over the past year, Hollywood’s revenues have plummeted by 40%.