MarketWatch: Is California too big to fail?

[marmar]

DAVID CALLAWAY
Is California too big to fail?
Commentary: Let's hope they don't put it to a vote

By David Callaway, MarketWatch


SAN FRANCISCO (MarketWatch) -- You've got to give California Gov. Arnold Schwarzenegger credit for being the first to stick his hand out.

Even before the vote on the $700 billion bailout bill last week, the wily Terminator of fiscal discipline had a letter on the desk of Treasury Secretary Henry Paulson making the case for a $7 billion loan to keep the nation's most populous state running past October. Arguing that California -- and many other states -- have been frozen out of the credit markets like a subprime homebuyer, Schwarzenegger said the state needs the money to pay teachers, cops, firefighters, nurses, and other state-funded enterprises of some importance.

California was quickly followed by Massachusetts, whose reputation as "Taxachusetts" hasn't seemed to help it stay above water. And now the race is on to see whether any of these states can tap into the bailout frenzy before all the money goes to save Iceland.

So the question that Paulson and Fed Chairman Ben Bernanke always ask themselves at times like this is whether the foundering entity is too big to fail? Bear Stearns was. Lehman, not so much. AIG? You bet. But what of California?

Sure, we're a blue state, with a large bear on our state flag. And yeah, the housing crisis that is now plaguing the entire world probably started here. And, uh, Nancy Pelosi is our senior representative. We want to preserve the salaries and lifestyles of our Hollywood fat cats. We've been known to favor gay marriage, smoke dope, prance about in garters, save owls and seals, and generally flip a silver-studded finger to any Bush & Co. suggestion or policy over the last eight years. Oh, and we think Barry Bonds got a raw deal.

But should that exclude us from a federal handout at the expense of the Red State gun-toting, Sarah Palin-loving taxpayer? All I can say is thank god it will never come to a nationwide vote. We'd be on our own quicker than you can say, uh, Arnold Schwarzenegger. ......(more)

The complete piece is at: http://www.marketwatch.com/news/story/california-too-big-fail/story.aspx?guid=%7BB022EE8E%2D8109%2D419E%2DADBB%2DADCBF0B93758%7D

[damntexdem]

1. How are the retirement systems doing?

I receive benefits from two of them.

[ContinentalOp]

2. You'll never convince me that the credit crunch California and Mass are facing wasn't...

intentionally manufactured. Interesting how it's only blue states. Oh that's right it's our out of control spending isn't it. :eyes:

[moggie]

3. Gay marriage states

That'll be God's punishment, presumably. :sarcasm:

[AndyTiedye]

4. In California, It Started With the 8 Billion Dollar Ripoff by ENRON

[BuyingThyme]

5. I don't understand why we don't hear anything about Enron these days.

Enron was supposed to "change the way we do business."