That the cost of new borrowing for California just went up is just the tip of the iceberg. If Moody's is right, California will have trouble even coming close to balancing its budget next year. A recession will make that even harder.
In other words, a further downgrade is likely next year. The problem is, California debt is already close to "junk bond" status. Once it enters that category, the cost of debt skyrockets.
California is in trouble, and that trouble is likely to get worse.
Well said. I think that the higher electric power prices to be paid principally be California industries and the air pollution regulations that target business, will also make economic recovery that more difficult. It is a world competitive market and California has handicapped its business community with high electricity and regulatory costs. That spells trouble for employment, income tax revenues, sales tax revenues for the state.