Wednesday, August 13, 2008

California too dependent on borrowing money

California too dependent on borrowing money
San Mateo Daily Journal
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California too dependent on borrowing money


In California, they had it all figured out where the rich could stay rich and feed the poor on borrowed money, now $15 billion in the hole. They kept borrowing money and selling bonds that borrowed more money. Well, people will trust you for so long, and then quit trusting your ability to ever pay it back. So if you keep living on borrowed money, there comes a day when you have to pay it back when those bonds begin to come due.

These debts began to come due with all their big high interest rates and they didn't have the money to pay them back. She'd been living on borrowed money all the time and wasn't even raising enough money for her current expenses, much less to pay back her debts. So if California goes bankrupt and defaults on all these debts, all these bonds are worth nothing. All these people who put their money in the bank can't get it back because the bank goes bust because the money's gone, and it's all just on paper.

Ted Rudow III,MA

Menlo Park

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