Don't Quit Your Day Job…

We recently covered a lot of the fallout from Standard and Poor’s recent downgrade of the debt of the United States. The United States has 50 states which also issue their own debt, and get their own credit rating from the credit ratings firms. Luckily (this time) the legwork has been done, and I’m able to just link you to the primary source, the Tax Foundation! So view on to see the credit ratings of the states.

Excuse me for posting consecutive articles on the same theme, but I thought that this would be a very enjoyable topic for many of our readers. As of right now, the State Controller of California, John Chiang, is refusing to pay California Lawmakers a salary until they can agree on a balanced budget for the most populous state.  Of course, this has attracted the attention of many people (including yours truly) as an interesting example of voter anger – the law that allows Chiang to withhold pay until a balanced budget is submitted was passed just last year by California voters.

“So we have no choice but to make California far more efficient and effective than it is, by running this thing a little bit more like a business,” proclaimed Meg Whitman, in one of her ads during her failed run for the Governor of California. Of course, it’s tough to run your business when your employees are almost 37 million strong and own all of its shares. However, in a perfect world we have theories like ‘Benevolent Dictatorship’, which means that you readers can take a whack at it. It, of course, being balancing California’s massive $19 to $26 billion annual deficit.

California increased its income and sales taxes recently, in the midst of a recession. That measure was intended to be a temporary increase. Coupled with an increase in the yearly car registration fee, it appeared that plenty of funds would be raised by the new levies. Well, the summer showed that California hadn’t yet left budget crisis mode. As part of a deal to close a $26 billion budget deficit, California is resorting to a dirty trick- taking a no interest loan from its constituents.

A collection of links and carnival hosts for the week.

According to this post at Real Clear Markets, foreclosures in July in the United States are overwhelmingly concentrated in a few states. Yes; you know that the sunbelt states have been hit hard by the mortgage crisis, but the pain must be spread around nationwide, right? Well… maybe not as much as you think. California, Florida, Nevada, and Arizona make up a whopping 57% of the nation’s foreclosures.

Yesterday, California started to issue IOUs (technically, registered warrants) to creditors since it is ensnared in a major budget impasse. California has taken this step before, most notably in 1992, but they also issued IOUs during the Great Depression.

Since the warrants are unavoidable at this point, I’ll shift my focus to another issue- constitutionality. Is what California is doing legal under the terms of our Constitution? And what is a ‘bill of credit’?

Everyone’s got prison on their mind!

With Bernard Madoff in the news due to his 150 year sentence for running a massive ponzi scheme, the floodgates have been opened in terms of the number of prison related articles in the news. In this article I’ll share with you some of them I found most thought provoking, and maybe I’ll even throw in a few thoughts of mine. Today I offer you this offbeat post about prison.

Can states default on their debt? The state of California has been in the news recently because of a $24.3 billion gap in funding. Is it possible that we may soon hear of a state actually going ‘bankrupt’? What are the economic and political ramifications if California takes such a step?