Feb 14 2009
Borrowing When You Have No Credit.
Has anyone tried to get a mortgage or credit line lately? To get a mortgage you have to have 15%-20% down, a perfect credit rating and a steady job. For a line of credit, you have to have perfect credit.
California thinks it can borrow its way out of part of the budget problem while having none of these things.
California has the worst credit rating possible for a state. There is not a steady stream of income, in fact the income stream is going down. The state certainly doesn’t have any money in savings that could act as a buffer or “down payment” type of assurance.
Regardless, the state believes it can borrow almost 25% of the total needed to balance the $40+ billion deficit.
This is criminal. The fact that anyone would vote for this is criminal. Borrowing is not a solution, it is simply pushing the issue to someone else. Someone else is going to have to deal with the situation when California hits its constitutional debt limit and cannot borrow anymore, or bond-fund projects (which count against the debt limit).
The credit cards have run out of room. Anything that is done on credit is going to cost our children, and ourselves in later years, much more in dollars than any other solution. Any borrowing done will be over the limit borrowing and needs to be stopped.
What the legislators are doing is criminal. They are violating the trust their constituents placed in them to act rationally and in the best interest of the voters.
Borrowing to fund a deficit caused by borrowing is a bad idea.
