Tuesday, January 15, 2008

California Bond Downgrades

Businesswire reports:

Fitch Places State of California's Ratings on Negative Watch

SAN FRANCISCO--(BUSINESS WIRE)--Fitch has placed the State of California's approximately $43 billion outstanding general obligation (GO) and $5.9 billion in related state appropriation-backed bonds on Rating Watch Negative. Bonds affected by the action are detailed at the end of this release.

The action reflects California's widening structural budget and cash flow imbalances as the state's economy slows largely due to the housing downturn. Risks are heightened given the long-term lack of political consensus for fiscal solutions to California's chronic structural budget imbalances, as well as concerns regarding state economic and revenue forecasts developed in early December, since which time the general economic outlook has diminished. Underlying assumptions project that the California housing downturn bottoms out later this year, and revenue deceleration reverses in the new fiscal year, which in Fitch's view is uncertain. The depth and diversity of the underlying economy, despite short-term direction, remains a strength. Debt levels are moderate, though rising, and proposed new authorizations would substantially increase this burden.

Rating downgrade would be triggered by the lack of timely action during the emergency session to implement proposed cash conservation or equivalent measures to offset cash shortfalls projected through August, accelerating economic and revenue weakening, extended delays in budget enactment, or the absence of sustainable structural measures incorporated in the final budget.
----
Right on schedule. Anybody want the scores for the next three superbowls?

11 comments:

Jake said...

First!

Edgar said...

California should default, like everyone else. Murst!

Property Flopper said...

Casey for Govenator!!! He has the experience to default on these obligations and lead CA toward the future*

* Note: The above only applies if "the future" is defined as "Jamba Juice".

chickenlittle said...

Go Packers, Yes!

Rob Dawg said...

The sadness of Green Bay winning is the prospect of facing the Patriots two weeks later.

GB 34 NYG 20
NE 27 SD 17

NE 38 GB 20 (or 27)

Brady will not start the second half against San Diego. Okay, possible cameo at best. Moss will not play the 4th quarter.

Superbowl will be the most watched in history. Possibly so many people that it will resemble a World Cup soccer quarterfinal audience.

chickenlittle said...

I'd be happy just to see Favre make it there and play a good game.

BTW- I never bet on football!

Rob Dawg said...

Chicken,
Yep. A good game three weeks from now is desireable. Imagine the disappointment of Giants v Chargers.


Back on blog. I am not talking football so much as I am talking the US economy.

I am frankly confused by the entire MLB & NFL economies. The numbers look bubbly. I'd much rather entré with a 60 sec spot in the competing puppy bowl than spend those big dollars in the game or with the sport*.

H Simpson said...

So how much will the downgrade cost California in increased interest?

The budget is going to need more money, or the legislature is going to need some brass ones to do the right thing and start hacking at expenses.

h.

Edgar said...

BTW, I hear Fitch has an impeccable reputation for lying and chiseling.

Jake said...

I think SpotBot already owns PuppyBowl advertising rights.
I tivo it every year and burn it on dvd. My dog loves it.

Jake said...

But wait, I do remember commercial breaks last year, so you may be right. I think the previous year, there were no breaks, expect for when there was a Foul! and the spotbot was needed.

But you can buy the DVD from the official store, which has no commercials and extra features!