The number of foreclosures in California have sky-rocketed.

According a report in the LA Times, the number of foreclosures in the state in the first quarter this year is up a staggering 327% from year-ago levels — an average of 500 foreclosures a day.

Ominously, the paper quotes research from DataQuick warning that the widening foreclosure problem could “spread beyond the current categories of dicey mortgages, and into mainstream home loans.”

Bill Bonner sees a paradox at work.

“The sky is said to be falling…but investors aren’t running for cover. The S&P is still selling at nearly 20 times earnings. In other words, a person who buys a share is willing to wait 20 years to get paid back out of earnings — if all remains the same. Twenty years is a long time in the stock market. Like dog years, companies measure time in quarters, not years. Only one of the original Dow companies — General Electric — is still on the list. So, a 20-year outlook is fairly optimistic.”