Forget Iceland. The government of the world’s ninth largest economy is having serious funding difficulties.
Obtained by the LA Times, the below is a letter from Arnold Schwarzenegger, the governor of California, to Hank Paulson. Here’s the two killer pars:
We expect to issue $7bn in Revenue Anticipation Notes for short term cash flow purposes in a matter of days.
Absent a clear resolution to this financial crisis that restores confidence and liquidity to the credit markets, California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the Federal Reserve for short-term financing.
Let’s not forget: Tarp 2 is being voted on tonight. Presumably the letter was quite knowingly leaked. Then again, as Arnie said in The Running Man:
I’m not into politics. I’m into survival.
