California, the eighth biggest economy in the world is in the danger zone with the state's governor Arnold Schwarzenegger declaring a fiscal state of emergency. The BBC reports that California has a budget deficit of $19 billion and that state employees have been instructed to take three days unpaid leave a month.
It's a diabolical mess. California has been operating for a month without a budget because their fiscal year ended in June and the lawmakers are still fighting about it.
Is it any wonder that the Los Angeles Times reports that five million Californians now say they have mental health problems and one million of them meet the criteria for "serious psychological distress." The financial crisis might be driving a lot of that.
What happens in California is not going to stay in California. The state's deficit comes from low personal income tax collections, because of the recession and high unemployment, reduced housing prices and turmoil on the stock market. California is a microcosm for what's happening right across America. The question is whether other states will declare a fiscal state of emergency. Or whether the Obama administration does the same.
no comment untill now