Credit default swaps on California bonds

As Badlands Journal anticipated several months ago, a hot topic of the fiscal year is credit default swaps bought to insure holders of California bonds against possible default by the Golden State, which appears to be rapidly going the way of Argentina,  It's the same-old, same-old derivative gambling, played by those familiar high rollers, JP Morgan Chase, Barclays, Goldman Sachs and Citigroup, who, incidently, also handle the bond sales here in our lovely unregulated, post-Glass Steagall Act economy.
Apparently, none other than the state Treasurer, Bill Lockyer (former attorney general, former state Senate pro tem, former assemblyman, and all-round argument for term limits in one politician), has complained to the bankers about this and wants information there is no doubt he will be unable to obtain on the buyers of CDSs on California bonds. Lockyer's remarks on any subject, after having served in the state Legislature and in statewide offices since 1973, should be taken with pain killers.
Badland Journal editorial boardmembers held a meeting on the subject. Frequently accused of complaining about things but never coming up with positive, win-win, public-private solutions to the problems of our times, in this instance the board came up with what we think is a dandy solution: the state should buy CDSs itself to insure against its own default. If that proves impractical, we suggest that the very least the state can do is monitor the private financial portfolios of its top officials and members of the Legislature concerning how many CDSs in what amounts may be contained in those portfolios.
Badlands Journal editorial board

California Banks: Who Are They Working For?
by Laura Flanders
Calif questions banks selling its debt and CDS