I live in Los Angeles, so naturally I’ve been reading a lot about California and it’s own economic crisis. We are in a very similar situation to what the US is in.
Like the US as a whole, we have a large economy, a horrible state senate and assembly, an incompetent leader, taxes out the wazoo, and we happen to be in the forefront of immigration and health care issues. Worst of all, Los Angeles and the state at large, are not business friendly in the least.
I’ve been reading about the potential collapse in Greece too, and have blogged about that recently in a post called Greece and California Death Match, which was a bit of a play on words.
Greece has no Treasury of its own. California issues IOUs. S&P downgraded California’s credit rating from AA to AA- which means that the issuance of new debt – debt that we need – will cost more and add to user fees and taxes, depending on the type of debt issued.
Jamie Dimon recently commented on Greece and California in Barron’s and I thought his words were more in line with mine about what would happen with California’s debt service.