Well. It looks like we are almost there again to IOUs for many contractors with the state government. Mr. Chiang the state financial controller said he has no choice but to start sending IOUs to state contractors soon. There are certain bills that have to be paid but many contractors including counties and cities will receive IOUs for now.
Though money might be borrowed at a much higher interest rate the Governor thinks it is better(since our debt got us here in the first place) to face it now full in the face.
I think the whole nation needs to look a AIG, GM, Chrysler and California as a symptom that could eventually bring down or at the very least hamstring the whole country eventually.
Since California is the 8th largest GDP among nations in the world, a collapse toward something resembling bankruptcy will definitely affect the whole world and the U.S. in specific.
California already in this crisis has the lowest credit rating of any state. If California's credit rating goes much lower no one will be loaning California money to stay afloat. This could in the end force the federal government to loan California money to stay afloat.
The primary cause of California's problems came from companies like Enron who threw cozy utility theft through out of state energy companies forced the state to step in so the poor and elderly wouldn't owe hundreds of thousands of dollars each in utility bills. FERC (Federal Energy Regulatory commision) under Bush was a part of the conspiracy against the western states who this theft of Billions and billions of dollars perpetrated against us.
Just as Companies like Enron have been the downfall through legal theft of California's money reserves, AIG, GM, Chrysler, The Banks and California may be the downfall of U.S. Government financial security.
How all this is handled will affect whether the U.S. stays on top or falls through the cracks in the next 10 to 20 years.
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