All Aboard For Bankruptcy!

10 Jul, 2012 by John Hawkins

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Good news – well, if you’re betting on California to default on its debts sooner rather than later. The bankruptcy express is: laying down some high speed rail: in California and getting ready to start moving down the tracks!

The state Senate voted by a bare majority today to fund initial construction of California’s $68 billion high-speed rail project.

….The bill approved by the Senate authorizes $5.8 billion to start construction in the Central Valley, including $2.6 billion in rail bond funds and $3.2 billion from the federal government. Lawmakers tied that funding to nearly $2 billion to improve regional rail systems and connect them to high-speed rail. That regional money was considered necessary to lobby hesitant senators about the project’s potential significance to their districts.

In what: SHOULD BE a related story,

Even as California faces a $15.7 billion deficit that has grown almost 70 percent since January, the state spells opportunity for municipal-bond investors.

…The budget strain, due in part to Governor Jerry Brown’s overestimate of tax revenue, may cost California an opportunity for a higher credit grade from Standard & Poor’s. S&P, which raised its outlook to positive in February, rates California A-, six grades below AAA and lower than any state.

…Brown, 74, announced May 14 that the deficit had grown from $9.3 billion in his January budget plan. The governor was counting on a gain in revenue that didn’t materialize, partly as a cooling economy depressed tax intake. Collections in April for the most-populous state were $2 billion below estimates.

….Investors see California as having a lower risk of default than some countries in Western Europe, including Belgium and Italy.

So, California has a 15 billion dollar deficit and roughly: 500 billion dollars: in debt. Now they’re going to add a 68 billion dollar (so far) Choo-Choo to Nowhere on top of that. Maybe they can write,: “Lower risk of default than Belgium and Italy”: on the side of the train, even though that’s a bit like saying you’re a little less likely to be found dead of a drug overdose than Charlie Sheen.