Free Republic

Pretty soon, all US taxpayers will be insuring state and muni debt of the broke state of California. See, the state needs to raise $15 billion in fresh debt over the next few months, but of course, since the economy there is so terrible, and its government has been horribly mismanaged, nobody is willing to lend it money. Solution: Get the feds to insure the debt. Governor Schwarzenegger and other state officials have sent a letter to Barack Obama and the Congress pleading for help. They claim there's very little risk of default, but that: “Currently, we have only limited...

California has joined the lengthening queue of supplicants seeking help from Uncle Sam. State Treasurer Bill Lockyer is lobbying some in Congress to secure a federal backstop or guarantee on $12 billion to $16 billion of short-term revenue anticipation notes, or RANs, that the state may need to sell as early as July. Lockyer thinks it may not be possible to sell this debt without federal help, and is seeking to have the Troubled Assets Relief Program, or TARP, expanded to allow banks to sell municipal debt to the federal government, according to a state treasury spokesman. Barring that, he...