VANCOUVER ( Bullion Bulls Canada) -- Observing the California economy is like watching a train wreck in slow motion. Indeed, this "slow-mo" effect is such that when glancing back at my archive of commentaries, I had no idea it had been well over a year since I had last written on this economic catastrophe.

The other aspect to this pathetic melodrama which tends to have an hypnotic effect on observers is the way in which California's political "leaders" seem perfectly content to merely sleep-walk toward implosion. This is an economy which has been in an admitted "economic crisis" since 2007. Yet in a new piece discussing the nightmare of the current fiscal year -- a $19 billion budget-gap (plus $6 billion in unpaid bills from last year) -- was the revelation that this is composed of a $10 billion collapse in revenues + $9 billion in spending increases (inherited from the "fiscal conservatives" known as Republicans).

To already be hopelessly insolvent, and then to ratchet-up spending is the obvious behavior of a deadbeat. Sadly, the combination of massive corruption and political gridlock is severely compounded by the refusal of U.S. governments to "govern."

In what is purely the abdication of responsibility, California (like most U.S. states) has deliberately chosen to "tie its own hands" when it comes to economic (mis)management. Even if total political gridlock didn't make it impossible for state "leaders" to take the first "baby steps" in controlling exploding debts/deficits, the choice of U.S. states to permanently entrench unsustainable spending and permanently entrench inadequate taxation into their budgets must result in bankruptcy.

Thanks to the reader who forwarded a wonderful clip, which took a historical look at the economic policies which existed in the U.S. when it was at its peak of prosperity: maximizing wages for the middle class and a 90% income-tax rate for the highest earners. The historian, Michael Hudson, who discussed this era in the U.S. (which ended after World War II), noted that even with high wages the U.S. was able to out-compete low-wage jurisdictions in manufacturing, and even with a 90% tax-rate, the very rich got much richer.