What would happen to Apple, Google, and Nvidia if the State of California defaulted on its debt? It’s not an unrealistic question given the state’s occasional fiscal lapses, plus the question becomes more reasonable in light of the size of California’s economy: if it were a country it would be the fourth largest economy in the world. In which case the value of California debt, or the shrinking value of it, could theoretically have an impact on some of the leading business lights in the state.
Except that there would realistically be no impact to speak of. Owing to the fact that Apple, Google and Nvidia are multi-trillion dollar companies, financial institutions around the world are lined up to lend to them, buy equity in them, and basically do for them whatever they need. And this wouldn’t change if the finances of California did.
California came to mind while reading a passage from Ben Bernanke’s “21st Century Monetary Policy” in the New York Times. Every so often readers need to be reminded of the impressive fatuity that is “economics,” along with those who possess PhD economic credentials. Bernanke always delivers in this regard.
Read the entire article at Forbes
