Saturday, 4 October 2008

Credit it's crunched!

California Gov. Arnold Schwarzenegger has sent a letter to U.S. Treasury Secretary Henry Paulson indicating that the state may need up to a $7 billion loan from the federal government within weeks, because the state is having increasing difficulty funding day-to-day operations and accessing short-term loans, The Los Angeles Times reported.

California routinely accesses short-term loans to remain solvent, but the state, like corporations and other businesses / organizations, is having trouble accessing funds from the bond market due to the credit crunch, The Times reported.

Lay-offs could follow, if the state is unable to access cash, payments to schools and other government agencies could quickly be suspended and state employees could be laid off.

Schwarzenegger's letter is another sign of the "financial crisis that is griping the world’s organizations and governments large and small."
These are all signs of increased apprehension by banks and other lenders as the financial crisis gets worse.

In his letter, Gov. Schwarzenegger said that absent a clear resolution to the financial crisis, "California and other states may be unable to obtain the necessary level of financing to maintain government operations.

1 comment:

Catherine said...

California, "the land of dreams", is yet another example of how this economic situation spares no one. The American banking system started a chain reation, a domino effect, on financial stability across the globe. So, what does this tell us? That we are all connected. We have to unite with a common goal in order to overcome, or correct, our situation.

Michael Laitman discusses this in greater detail on his website.

The Socialist Way

Blog Archive