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Growing debt problem
December 15, 2010
Adding further to the mounting problems facing the state, California’s credit rating is the lowest in the nation. So the state pays 1.1 percent interest (an interest rate 1.1 percent higher than other states), which leads to an added $12 billion to pay off $54 billion in debts over the life of loans.
Controller John Chiang said that the state does not appear to be facing a cash crisis through the end of the fiscal year on June 20, but thereafter, “we see a very different story.” But even if the state could eliminate Medi-Cal, which is going to be $18 billion, it will not be enough to retire the deficit.
The rich, the poor and the middle class have all borrowed themselves into debts that they can never repay. So if the slightest little thing gets out of balance or goes off in any way, the whole thing is poised to crash like a bunch of dominoes. Everybody loses but the ones who loaned the money and now own everything. The mortgages which were sold to banks, pension funds and investors were packaged in such a complex way that they practically defied understanding. As a result, many financial firms aren’t even sure how much money they’ve lost yet — or how much the remainder of their mortgage-backed assets are worth.
Ted Rudow III,MA