California Approaching Bankruptcy

The state of California has been teetering on bankruptcy for years now. They have been bridging the gap using loans and bonds. Now their bond status has been downgraded and the potential for the state to get money has decreased. I am sure you have all seen the educational cutbacks in the news.

So that leaves me with a question, what happens when a state goes bankrupt?

I got a (golden gate) bridge to sell you?

second line.

Obama has spent hundreds of billions bailing banks and companies out. It would take only a small fraction of that to keep California from going bankrupt. Why allow one of the biggest economies in the world to fail when all Obama has to do is have them press a few buttons on a computer somewhere? Why is it that some banks are "too big to fail" yet California isn't? No, California also is too big to fail. It's not going to happen. The federal government will save the day.

I am a Californian.

In my opinion, the partisan conflict is tearing the State of California apart.

We elected A. S. to solve the problem as a middle-road politician, but he could not.

The SofC cannot bring itself to the reality that it cannot afford the public programs it has build over the past 50 years. The collapse of property taxes have increased the problem threefold.

California needs to audit itself. It needs to stop fraud, waste, and abuse. It will not do it. Therefore, the partisan warring will continue as they defend their own constituents. Damn the torpedoes, full steam ahead.

California legislature is like the proverbial ostrich with its head in the sand. If it comes to a realization of its pitfalls, and bipartisan cooperation develops, it will be too late. The die is cast, the the future is determined.

For example, the Department of Health and Human Services, Child Protective Services Division, had a big article in the Sacramento Bee today. They don't have the funds they need to protect the children. Boo hoo. Well, the facts speak differently. 61% of the cases CPS handles are real cases. The others are not. If California reduced the CPS budged by 40%, CPS would have to back off and stop splitting up families over the smallest of issues. They are family destroyers. Look at the websites about it. If the State legislators had the strength of conviction to look at the facts and make the right decisions for the State rather than themselves, the State would flourish. However, they are watching out for their own political careers. So be it. You reap what you sow. People without courage do not deserve to live in democracy. Freedom has a price, and the legislature in California does not have the brave heart to pay that price.

they legalize pot.
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reply to post by ivorywire


Unfortunately it's not just California, most states face major budget shortfalls this year. California just gets most of the attention from the media because it is the biggest.

From what I have read however, state governments are not permitted to go bankrupt. See this article from a year ago:

Federal law permits individuals, businesses and local governments to file for bankruptcy reorganization and sometimes debt forgiveness. States are not covered by the law. No U.S. state has ever declared bankruptcy
...
But should state finances became especially dire, Illinois could keep going by not paying back money it has borrowed. Such a move is unlikely and the consequences of default would make the state's financial situation worse.

That's because it would greatly hinder the state's ability to borrow in the future. Plus, the people Illinois owes money to could go to court to force the state to pay.

www.dailyherald.com...

It seems to me though that a bailout of California would set a precident that would have most other states begging DC for the same treatment. More money printing = Extreme inflation and federal debt. Damned if they do, damned if they don't.

So if the Feds bail out the states ...who bails out the fed? (Fed as in federal government not the reserve)

reply to post by Chett


The IMF? World Bank? I honestly don't know, but you can't keep passing the buck forever.

reply to post by oneinthesame


Thank you for your input. That is good to know. I work for a security company (like security guards) and one of our largest clients is the state of CA. I think if we lose this contract, I lose my job. Thats what my main concern is. But then again the state's refusal to pay would probably cause a lot of small companies of mine to go out of business. That would in turn lower tax revenue and create a vicious circle.

The reason that the government is letting stuff like this slide is that they know something is coming that is so big that pretty soon it won't matter whether anybody's finances are in order or the roads and bridges are passable or Iran attacks Israel. They'll all be holed up under Denver New World Airport waiting it out.

If you ask me California has always been a boom and bust state ... viva Mexico and the Gold wars.