The Millstone

I'm not a budget/billing guy, but I gotta think that California State is SMUDs largest single customer, by far. All those downtown Sacramento buildings...consuming electricity whether there are two or three furlough days per month per state employee.

I am a doomer, sure, and the writing I see on the wall is this -- California will fail to make payments for electricity sometime before autumn and SMUD will have to eat it. An IOU isn't a payment, dear.

SMUD just approved a three-tiered rate increase, the first of which is set to take hold in September. They also just approved the installation of new metering units, a very expensive [up-front] proposition. Now, we're going to see the effects of a state that can't govern itself and can't balance itself manifest as unpaid liabilities to a whole host of lenders...SMUD being one of them. I don't know how my job or my projects will be affected by this, but in any event I ain't too worried.

What I see is a state and local economy that has been hanging on, carrying on like nothing ever happened, like the prognosis that the patient's chemotherapy has actually cured him, when indeed all it did was buy some time before the really bad shit starts. Every day without pain or sickness provides a glimmer of hope, a chance. But I don't see how we've changed the fundamentals...the patient is still smoking, eating fried pork and 'resting.'

I see more bottom ahead. More foreclosures, more jobs lost, debt will become even a bigger millstone around our necks, and sustained market malaise. My local government and my state are leading the way with loads of debt and we haven't seen anything yet regarding either curtailment of services, the cutting of jobs, or increasing taxes.