You can see this coming. It is looming and has been for some time. Remember that California is the biggest loser in the housing crash and it has one of the highest unemployment rates in the United States. I have been warning that this would be a problem since last Fall when it was evident that revenue was going to come up short (see my post “Is the State of California bankrupt?)”. The Wall Street Journal discusses the potential for bankruptcy in the video below.
I have said that Obama would step in here. This is an option discussed in the video. It will not be an easy politically for Schwarzenegger or Obama.
You should also note that tax revenue is a lagging indicator. The Journal’s blog Real Time Economics did a good job of pointing this out and putting some statistics toget...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.