Posted on 01/22/2009 9:23:11 AM PST by NormsRevenge
California, tied with Louisiana for the lowest credit rating among the states, now is in more danger of claiming rock-bottom all for itself.
Moody’s Investors Service today warned that it might downgrade California’s general obligation bond rating, currently A1, because of the state’s "significant budgetary shortfall, impending liquidity crisis, and lack of legislative solutions."
Louisiana also is rated A1. All other states are rated higher on Moody’s scale, typically AA or AAA.
Moody’s shift follows a similar warning on California’s debt rating by its rival, Standard & Poor’s, on Dec. 11. S&P also has California tied with Louisiana for last place on the ratings scale.
California_state_flag Moody’s indicated it’s running out of patience with the state as Gov. Arnold Schwarzenegger and the Legislature fail to agree on a plan to plug California’s massive projected budget shortfalls -- $15 billion in 2009 and $25 billion in 2010.
"Although the legislative and executive branch continue to debate fiscal and cash measures, and the legislature is required to come up with solutions by Feb. 3, we do not yet know whether solutions will actually be passed, or whether they will be workable, reasonable, and of a sufficient magnitude to achieve a degree of credit stabilization consistent with the current rating level," Moody’s said in a statement.
In theory, a low credit rating means a state should pay more to borrow than states with higher ratings. But because of its size and the large investor base for its tax-free bonds, California hasn’t always been penalized by the market despite its low credit standing.
Even so, some money managers say they’ve been avoiding California’s $57 billion in outstanding general obligation bonds in part on the assumption that the state’s rating would fall further into the basement.
(Excerpt) Read more at latimesblogs.latimes.com ...
socialism eventually collapses in on itself. The idiots on the left don’t see it because they hate democracy so much.
The U.S. is already broke... over 60 Trillion dollars in debt, our credit rating WILL be downgraded later this year, just as many Euro Countries have already... and the Treasury printers just keep on printing...
Louisiana was Baa1 in the 90s. We’re slowly crawling out of liberal fiscally irresponsible behavior. Welcome to the barrel.
I live in Florida - but your "welcome to the barrel" is truer for us than I'd like to think...
Bye, bye California. I’ll always remember when you were a good state. Oh, to have good credit as good Spain or Portugal or Italy or Greece... We can only dream.
So, has anybody started a California bankruptcy count down clock yet?
How bout Bill Jones can win??? (grimace)
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