For the last few years, California stood more or less unchallenged as a symbol of the fiscal collapse of states during the recession.
Now Illinois has shouldered to the fore, as its dysfunctional political class refuses to pay the state’s bills and refuses to take the painful steps — cuts and tax increases — to close a deficit of at least $12 billion, equal to nearly half the state’s budget.
The state’s last elected governor, Rod R. Blagojevich, is on trial for racketeering and extortion. But in 2003, he persuaded the legislature to let him float $10 billion in 30-year bonds and use the proceeds for two years of pension payments.That gamble backfired and wound up costing the state many billions of dollars.
Then there is the spectacularly mismanaged pension system, which is at least 50 percent underfunded, and Illinois reports that it has $62.4 billion in unfunded pension liabilities, although many experts place that liability tens of billions of dollars higher analysts warn, could push Illinois into insolvency if the economy fails to pick up.
Perhaps, but many analysts, liberal and conservative, warn of a potentially far grimmer reckoning — Greece Tragedy by Lake Michigan.
German leaders today approved the country’s share of the rescue package for debt-laden Greece after a boisterous debate in which the finance minister told them they had no alternative to the unpopular measure.
My Big Fat Greek Meltdown….
Greece’s credit rating was cut three steps to junk by Standard and Poor’s, the first time a euro member has lost its investment grade since the currency’s 1999 debut. The euro weakened and stock markets throughout the region plunged. Greece was lowered to BB+ from BBB+ by S&P, which also warned that bondholders could recover as little as 30 percent of their initial investment if the country restructures its debt.
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California’s three major public pension funds are underfunded by more than half a trillion dollars, according to a report released Monday, the San Jose Mercury News reports.
Gov. Arnold Schwarzenegger (R) commissioned the study, which was prepared by graduate students at the Stanford Institute for Economic Policy Research (Theriault, San Jose Mercury News, 4/5).
The University of California’s retirement system (Walters, “Capitol Alert,” Sacramento Bee, 4/5).
What happens if Greece really defaults?
With a loan modification and good FICO you can have this handy man special. Just visualize with landscaping, new curtains, and fresh appliances you could enjoy for another 2400 years..