California Credit Rating Cut Close to Junk

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California’s credit rating was cut for the second time in as many weeks by Fitch Ratings after a stalemate over how to close a $26 billion budget deficit forced the most-populous U.S. state to pay some bills with IOUs. Fitch lowered its rating of California’s general obligation bonds by two steps to BBB from A-, placing the debt two ranks above so-called high-yield, high-risk junk ratings, and said the state may be cut further. The credit-rating company last lowered its assessment of California on June 25. California, the largest issuer of municipal bonds, last week began issuing IOUs for the second time since the Great Depression as Governor Arnold Schwarzenegger and lawmakers remained deadlocked over the budget cuts needed to make up for revenue lost because of the recession. California Controller John Chiang said the step was needed to conserve cash. “The downgrade to ‘BBB’ is based on the state’s continued inability to achieve timely agreement on budgetary and cash flow solutions to its severe fiscal crisis,” Fitch said in a statement.
http://www.bloomberg.com/apps/news?pid=20601087&sid=acm0ciQMV.WY
 
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It looks like those IOUs cause cancer in the state of California. Cancer to their credit ratings anyway.
 
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 Originally Posted By: rshaw125
Kalifornia is leading the way. It won't be long before the credit rating of the US is downgraded.
Remember when we heard that AIG was too big to let fail? We will be hearing that again, except they will substitute the word "California" for "AIG". Anyone care to guess what the world will think of our dollar when that happens?
 

Tempest

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I'm waiting to see if the banks "helped" by the Feds will "forgive" the Cali IOU's in an effort to "support" the California economy and therefore the national economy.
 
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Looks like the Californians should have elected 'girly men' instead of what they have now as their governor.
 
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 Originally Posted By: Tempest
California is now accepting the IOUs for tax payments. They are effectively printing their own money at this point. http://latimesblogs.latimes.com/lanow/20...some-taxes.html It's illegal to use gaming chips to pay for things (even within the same casino), but IOU's are just fine...
Blame the politicians that refuse to compromise in the state senates, the have been stalling for the longest time. Instead of passing a piecewise solution they decided to held the whole thing hostage.
 
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 Originally Posted By: rshaw125
Kalifornia is leading the way. It won't be long before the credit rating of the US is downgraded.
That's up to China, Japan, Saudi Arabia, etc because it would be bad for them and good for us if we devalue the dollar and automatically forgive our loan.
 

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 Originally Posted By: PandaBear
Blame the politicians that refuse to compromise in the state senates, the have been stalling for the longest time. Instead of passing a piecewise solution they decided to held the whole thing hostage.
They are $26 Billion in the hole, even after significant tax increases...
 
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Look at the entire general page, and half of it is. And most of it's civil. Must be legit, and all of it's a good thing.
 
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 Originally Posted By: CivicFan
Looks like the Californians should have elected 'girly men' instead of what they have now as their governor.
Careful. Something like that might get a "political" stamped on it from above. LOL.
 
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There are 2 choices: 1. Hope an earthquake breaks it off from the rest of the U.S 2. Contact Super Obama and his crew to rescue them.
 
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