Oct 6, 2008
California governor Arnold Schwarzenegger has notified the Treasury Department that the “golden state” may need a seven-billion-dollar emergency federal loan before the end of the month.
That’s because California is running out of the cash it needs to run its day-to-day operations, including the paychecks of state workers.
California certainly is wealthy. If it is in financial dire straits like this, in what kind of shape are other states and cities? Not good, of course. The media has already reported that New Mexico, Massachusetts and Maine are in serious trouble. It’s more than likely that they are not the only ones.
The serious financial trouble that states and municipalities are in is a result of the ongoing financial crisis. All state, county and local governments rely on loans to make their daily cash payments, until tax money kicks in in the spring. But, right now, banks have stopped issuing loans.
So, after the ongoing pay cuts, layoffs and foreclosures, now we see another big wave of the financial storm approaching the population. How soon will it be before state and municipal workers get “IOU”s – that is, worthless pieces of paper – instead of paychecks? And workers of private companies may be next – for companies also, especially big ones, rely on loans to write paychecks.
And that’s just the beginning. In California, the cuts in public services and social programs that the state government just announced in its new budget may easily be overtaken by an avalanche of austerity measures, starving education, public services, social programs and health care.
This is how the financial crisis is hitting us, while Congress just passed a 700-billion-dollar handout to the very Wall Street thieves whose greed caused the crisis in the first place!