Towards the end of last year, I did a blog entry looking at how California was a bigger bankruptcy risk than Slovakia. In retrospect, that was unfair to Slovakia which has been growing quite well, although its GDP growth is expected to slow this year as a result of the global economic crisis. That said, the blog entry was saying more about the precarious state that California finds itself in.
Now we have reports that the state is out of cash, it's laid off scores workers, put more on unpaid furloughs, Standard & Poor's has lowered its bond rating to the lowest in the nation, it has stopped paying counties and issuing income tax refunds. Add to that the infrastructure projects that have been shelved. And its lawmakers can't put up a budget with Republicans locked into their refusal to raise taxes.
The question is whether is California is the canary in the coal mine with Kansas looking to raise $225 million in certificates of indebtedness to pay state workers.
no comment untill now