Once famous for the “gold rush,” California’s fertile land drew anybody who wanted to strike it rich, sadly those days are long gone and have been replaced with tax and spend policies that have ended in massive deficits.
California’s financials offer proof that the month of October painted serious accounting problems for the state. According to the October Statement of General Fund Cash Receipts and Disbursements report from California State Controller John Chaing, the state’s income plunged by $3.6 billion. On the other side of the balance sheet, California’s spendaholic ways will increase by $10.2 billion this year. The governor and state legislators don’t seem to be smarter than a fifth grader- that's a $6.6 billion deficit.
According to Chriss Street of Cal Watchdog, “California has already drawn down 85 percent of its credit lines and only has $4 billion remaining to fund a $13.8 billion deficit. With the same sovereign credit rating as basket-case Portugal, California’s debt is at maximum risk of being downgraded to ‘junk’ bonds. With credit lines almost tapped-out, the sovereign debt crisis that has hammered Europe may arrive in America.”
For the past few years California, like the federal government, has stayed afloat by borrowing money. However, unlike the federal government, California cannot print money, and is set to run out of “borrowed” cash in a couple of weeks.
While President Barrack Obama’s Administration tries to decide if Italy or Greece is too big to fail, the once “Golden State” is teetering on bankruptcy and risks a devastating new trend for America.
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© Copyright 2011 Kimberly Dvorak All Rights Reserved.
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