According to Clusterstock today, California is in trouble.
Serious, serious trouble:
California officially has a drop-dead date now. State Controller John Chiang told Arnold Schwarzenegger last night that the state has 50 days before it hits a financial meltdown.
And Clusterstock quotes the Economist’s Free Exchange blog as saying:
California is the world’s eighth largest economy, and it contributes roughly an eighth of total American output (and drives much of the output in surrounding states). It’s very difficult to imagine the European Union standing by and allowing a budget crisis to ravage the German economy, or the IMF doing nothing at all to assist a Russia or a Brazil as they melted down.
Were California forced to make significant cuts to its spending, the ramifications could be quite serious. School systems and universities would be endangered (which would threaten the state’s long-term economic prospects). Increases in crime, homelessness, and serious poverty would encourage residents to leave. Service cuts could threaten key industries. In short, the recession could grow far more serious in the state than it already is. That would threaten recovery across the nation.