He's just a lame duck, but that doesn't mean his state isn't facing an imminent fiscal crisis. So Arnold is forced to act.
State Engineers Sue Over a Highway to Golden Gate Bridge Because of Foreign Investors; Potential Impact Nationwide.
We reported almost a month ago that Robert Rizzo, the city manager of Bell California, was being paid millions to push paper in the city of Bell California. It turns out that he was on the take and the city is prepared to announce criminal charges. It's about FREAKING TIME. He should be happy that he was not tarred and feathered. The LA Times reports:
We can't make this stuff up. Yesterday we reported How Do Cities Go Broke? By Building $578 Million Dollar Schools. Late last night Bloomberg reports that California delays 2.9 billion school and county payments due to budget impasse.
"California will delay paying $2.9 billion of subsidies to schools and counties in September, a month earlier than projected, to save cash amid an impasse that has left the state without a budget for 54 days.
The state’s top financial officials -- the controller, treasurer and finance director -- told lawmakers today that the 90-day deferrals need to start next month instead of October to make sure there’s enough money to pay bondholders. The amount is in addition to $3.2 billion the state pushed back in July.
According to municipalbonds.com, current yields on California debt ranges anywhere from the low 4% to mid 7%, and the curve on this debt is realatively flat, with only a gradual increase. Why haven't yields exploded and the curve steepened is beyond us. This is the exact kind of apathy that is common before investment instruments like these implode.
But what happens to the California economy as austerity measures continue? In a government based economy, things will continue to slow. Watch employment to continue to rise and the yield curve should continue to steepen as risk is priced in.