With Greece getting all the imminent default attention, have we forgotten California? Jim Grant chimes in.

Greece: 3% of Eurozone GDP

California: 13% of USA GDP

Rate Curves:

Greece

3 year: 3.45%

30 year: 6.26%

5 Year CDS: 400+

California

3 year: 1.89%

30 year: 5.59%

5 Year CDS: 333

Grant points out Trichet's Jan 14 commentary: "belonging to the euro area, you have an easy means of financing your current account deficit. You share a currency that is credible, so that you have a quality of financing that corresponds to that of a credible currency." Further: "this should be borne in mind, compared with the share of CALIFORNIA, FOR INSTANCE, in the overall GDP of the USA."

Grants reviews CA's Baa1/A- rating as the worst in the US, the S&P downgrade and the structural not cyclical problem of California.

State Revenue up 22% in decade debt service cost +143%.

Interest expense to consume 10% of revenues by 2013.

Howerver Grant's notes that Californida's debt / gdp ratio of "perhaps 25% is dwarfed by Greece 113%"



Yet as Zero Hedge has pointed out how much does a standalone credit metric such as a state's GDP truly matter? We know CA's trust fund when it comes to funding unemployment benefits is now empty and every month sees greater borrowings from the Treasury.

Case in point, we present State Unemployment Benefits as seen from the Treasury's (outflow) perspective ($MM):

Jan-08 3966

Feb-08 3572

Mar-08 3673

Apr-08 3664

May-08 3123

Jun-08 3053

Jul-08 3885

Aug-08 4650

Sep-08 5146

Oct-08 4951

Nov-08 4341

Dec-08 7384

Jan-09 8513

Feb-09 8808

Mar-09 10607

Apr-09 10883

May-09 9998

Jun-09 11982

Jul-09 11979

Aug-09 11454

Sep-09 12102

Oct-09 10749

Nov-09 10869

Dec-09 14065

We expect once the rumored cabal of Goldman and Soros finish their toying with Greece, they will look into the US. Then again, for fears of retribution by the President once it becomes known that a "US bank" (or hedge fund) is actively pushing CA CDS wider, this may be one of the most mispriced securities currently available. To those not fearing the wreath of the UAW, it may be worth the gamble on the short risk side.