Will California Repudiate Its Debt?

[lynnf]

http://www.lewrockwell.com/orig5/seiler11.1.html


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The state’s debt currently stands at $68.8 billion, according to Treasurer Bill Lockyer’s Web site. The cost to service the debt is $5.5 billion in fiscal 2010–11, H.D. Palmer told me; he’s the deputy director for external affairs at Gov. Arnold Schwarzenegger’s Department of Finance.

Last December, the possibility of default was brought up by Bill Watkins, an economist at California Lutheran University in Thousand Oaks. He wrote on his blog:

In my opinion, California is now more likely to default than it is to not default. It is not a certainty, but it is a possibility that is increasingly likely….

Already, we’ve seen California officials surprised with the interest rates they have had to pay. What happens if no one buys California’s debt? We saw last September [2008] what happens when lenders refuse to lend to large creditors.


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[AZJoe]

"Ultimately, such accounting gimmicks obscure a government’s true financial condition and undermine fiscal transparency by limiting the public’s ability to fairly and accurately evaluate the state’s budgetary and fiscal health. For example, the state has repeatedly resorted to borrowing from internal pools of money to “balance the budget.” On paper and in reality, this type of gimmick misrepresents actual costs to citizens, the media, departments, and policymakers."
http://uscommonsense.org/research/un...-wall-of-debt/