According to the Shanghai Securities News reported that covers the entire US economy 13% of the total United States first great state of California is facing a bankruptcy situation. Open Tuesday, the White House rejected the crisis of the State Government to provide emergency assistance, and that the needs of California's own to solve immediate problems. If you cannot find a new way, faced with huge budget deficit of $ 24 billion of California Government may have to be in the next couple of months to declare bankruptcy.
Refused rescue
"Obviously, now on California, is a difficult period," White House spokesman Gibbs at a Conference on Tuesday.
A reporter asked whether it would be a financial crisis in California to provide emergency assistance. Gibbs implicitly gives a negative answer: "we will continue to focus on the challenges facing them, but unfortunately, the current budgetary problem may resolve itself by California. ”
Affected by the recession, California government revenue dropped significantly, State unemployment is increasing, while the property market crisis also. Only in the past years, California government revenue is reduced by 27%, first in the late 1990s. California's budget deficit the Government currently has more than 240 billion, which also limits the Government by issuing bonds to finance efforts to make the financial crisis is becoming increasingly serious.
Insider, in response to the crisis in California, United States Government has recently held a series of top-level meetings. Geithner, the White House Council of economic advisers Director Roemer, the White House National Economic Council Director summers et al. 's view, California, and you can rely on our own forces support a period of time, should solve budget problems and not by the Federal Government assistance.
California audit shortly before the Yangtze Chun-Hui always warned that if you cannot immediately locate the solution, not 50 days, California Government have closed. Schwarzenegger said last week, June 15, after that, each day will endanger the delay from the State Government of liquidity and the functioning of public institutions.
Dilemmas
The moment to California, is the most "leg" of the period. For Schwarzenegger proposed resolution 240 billion budget deficit of the plan, the California Assembly this week a consensus cannot be reached, it also makes California may soon fall into no money available in an awkward position.
Rating Agency standard and poor's on Monday warned that may lower creditworthiness rating of California, the State further seek bond financing brings greater challenges. Sandp says California without the 2010 budget to carry out large-scale adjustment, may be unable to repay debts on time.
Standard & Poor's put California nearly 670 million of bonds include negative credit watch list, and that the State's structural budget deficit may cause serious liquidity gaps, debt arrears or forced to release securities instead of cash for debt repayment. Standard and poor's warning that if California Government does not resolve the problem, you may put the State's rating drops to A following.
On the Federal Government, is now in a dilemma. If you do not aid in California, is likely to cause greater confusion; if you open the head, and other State tops, putting a heavy burden on the Federal Government.
Compared to the mess of California, United States and many other State's financial situation or not. According to professional organizations in the financial year 2010 and 2011, the United States there are 50 States facing budget deficits are 47, cumulative deficit of up to $ 3500.
In this one, most of the deficit will raise taxes or cut expenses have been resolved, but will still be a considerable part of the ultimate in some form to pay by the Federal Government.
There is still room for
However, taking into account the special position of California, the Federal Government seems to not speak dies. Before Congress to receive questions, when asked are you sure you want to exclude the possibility of rescuing California, Geithner said that in order to resolve the confusion that we might have to take some unusual behavior, as we previously adopted measures. "This is not easy, but I just want everyone to know that I'm afraid we have to do some of the things you want to go back. ”
California is not only the United States's most populous state, economy of scale is quite huge, covering the entire US economy approximately 13% of the total. Statistics show that as an independent economic entities, California's economy rankings or even into the top ten in the world.
California financial officer Lockyer has warned that if California economic collapse, not to say that world-wide, at least, it will be shaken financial markets in the United States.
From California Congressman lovfgren said, it's not just California, is the United States. "I can't speak for the President, but as the 50 States, a member of the California economy ranked eighth in the world, such a State if you are unable to recover, it is difficult to see the entire national economy. ”
Los Angeles a research institution of analysts Thornburg, let the California bankruptcy for California and the United States economy stakes are too high. "I think the Federal Government does not have enough courage to say no to California. ”
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