The world's
eighth-largest economy has just gone belly-up. When midnight tolled on
Tuesday night with legislators and Gov. Arnold Schwarzenegger still
deadlocked over how to resolve the state's staggering $24 billion
budget shortfall, California became unable to pay its bills. The state
will have to begin issuing IOUs to its creditors as early as Thursday.
It is the worst budget crisis in the state's modern history.
Over six million people are now out of work, and unemployment figures released today show that now-record number is continuing to climb.
Congress and the Obama administration face an excruciating dilemma. To restore the crippled financial system, they are told, they must put up still more public money--hundreds of billions more--to rescue the largest banks and investment houses from failure. Even the dimmest politicians realize that this will further inflame the public's anger. People everywhere grasp that there is something morally wrong about bailing out the malefactors who caused this catastrophe. Yet we are told we have no choice.
DAVOS, Switzerland - One of the few indicators on the rise at this time of economic and financial crisis is the level of repudiation expressed about those responsible for the disaster, and about the institutions sponsoring them.
This became apparent at this eastern Swiss tourist resort, the venue for the annual sessions of the World Economic Forum (WEF), one of the arenas which has supported the deregulation policies blamed for causing the crisis.
This weekend, House Republican leader John Boehner played out the role of Jude Wanniski on NBC's "Meet The Press."
Odds are you've never heard of Jude, but without him Reagan never would have become a "successful" president, Republicans never would have taken control of the House or Senate, Bill Clinton never would have been impeached, and neither George Bush would have been president.
When the
government of Ecuador failed to make a scheduled interest payment on
private bonds today, it was hardly the first time a country had
defaulted in the middle of a financial crisis. In fact, it wasn't even
the first time for Ecuador. The small South American country did so
just 10 years ago, at a time when the economy was reeling from natural
disasters and a drop in oil prices.
