As I am in CA, the state's financial problems affect most of my clients.
The problems here are not too different than in other states, they all spent too damn much.
Our new guvernator has basically said that he and the rest of the elected senators and assemblymen are incapable of passing laws that will attempt to alleviate the 'crisis'.
They plan to hold an election in say June .. deferring action for another 4-6 months at least. Then if the legislation that the elected officials should be able to pass does not pass.. we are right back where we are today..
This will affect investors in CA .. it will affect taxpayers .. it is not good news for anyone in CA .. tax rates will most likely have to go up and spending will have to go down .. so the 'golden' days here in CA may be over for some time ..
CA is a very nice state to live in, but it and many of its cities are just run by stupid people that have no concept of proper long term planning, etc ..
Quite frankly, retired people who can afford to move out of CA might be well advised to do so.. ditto for people with transferable skills ..
One upshot of all this will be that the federal gov't will have to continue pumping more money into the economy to try and help both the feds and the states..
More money pumped into the economy will lead to more inflation .. I know that the Fed seems to think that there is no inflation out there, but I don't think any of those people go shopping.. I do my own shopping and there is no question that a lot of commonly bought items are going up in price....
So I will continue to have about 10% of my holdings in Gold (etfs and NG, EGO and AEM) .. in addition, I will hold onto my energy related stocks ..
I also will continue to own solid stocks with worldwide sales .. some that I like YUM, UPS, CAT, GE, DD, DE, HON, EMR, BA, AAPL, QCOM etc..
I have reduced the amount of REITs that I own, but still like the mortgage REITs with their over 10% yields (NLY) .. also MLPs like LINE are pretty attractive too..