Fiscal Therapy 2

About the June 15 entry, Fiscal Therapy, a friend asked “Don’t you also have to consider what would happen if you don’t bail out California and those other (similarly situated) states?”

Fortunately, there are more than two choices here.  We are not limited to a) send them a check or b) turn a deaf ear.   We should take a third way which would be that they should be rescued by Federal loans but those loans should be tied to very strict fiscal therapy that those states should be required to go through. That would involve putting their house in order. This is similar to what the IMF requires of wayward countries in order to get their help. If there is no price for irresponsibility, then we will simply continue until the last bailout agency collapses. The comment to that original post is also very interesting.
PS There are some signs that California is getting serious with cuts and revisions of pension plans etc.