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Potential Across-The-Board California Downgrade Within Two Months Says Moody’s
Is California the next Greece? This is the question that should be on global analysts mind right now. Will the headlines which have swirled around Europe like vultures make their way across the pond to the United States? Is California preparing for this or is the state bureaucracy there filled to the brim with ostrich cynics who can’t handle the truth? And why is Jerry Brown’s administration so cool about its prison population being overcrowded so much so that even the incarcerators #1 in Washington are telling them to fix the problem?
His administration recently enunciated this:
In a few more months, the administration argued, “continued enforcement of the population reduction order will be unnecessary and legally inappropriate.”
Gulag Casino’s for the residents of California once they realize that their tax dollars and future have been wasted and exist no longer?
Moody’s credit rating service is making its way round the globe, issuing dismal reports for nearly everyone in the global economy. California is the most recent., and would obviously also make the best headlines: “California Defaultin’” for example. Moody’s stated Friday evening that many California counties, cities, school districts and other government agencies will soon fall victim to municipal bankruptcy filings. Moody’s announced they will begin a wide-ranging review of municipal finances due to the growing insolvencies in the state which issues approximately 20 percent of the municipal bond volume nationwide.
The Moody’s report comes on the heels of the Chapter 9 bankrupty filings of Stockton, San Bernardino and Mammoth Lakes. In California, cash-strapped cities are filing bankruptcy to avoid paying bondholders instead of cutting spending.
The report issues Friday noted that many cities across the nation are heading towards bankruptcy, but emphasized that most are expected to take place in California.
“Moody’s has an obligation to review changing circumstances,” Chris McKenzie, executive Director of the League of California Cities responded. “But we would suggest that their assessment of the framework and ground activities is perhaps exaggerated.”
“No city’s going to blithely skip into bankruptcy court to avoid its obligations,” said the spokesman for California State Treasurer Billy Lockyer. According to him, the report is “a little hyperbolic.”
Moody’s elaborates that more than 10% of California cities have already declared fiscal crises. Moody’s may issue “across-the-board rating revisions” over the next month or two for all California cities. McKenzie acknowledged that this “would have a terrible impact on taxpayers.”
2012-08-18 14:27:16
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