Yes, we know it should be red and not green...
California is in trouble. How much? Better-late-than-never rating agency, Moody's is about to smack the state with a downgrade.
Zero Hedge:
A downgrade of Cali would set off a chain of events, that will not only trash the ratings of virtually all other states, resulting in a skyrocketing of the MCDX, and major pain for associated index arbs, but also impair insurance companies directly and indirectly, with a final outcome likely being comparable to the Lehman blow up, however more protracted and, ultimately, more pronounced. And instead of confronting the problem head on and possibly finding way to resolve the state funding crisis before it is too late, the administration, day in and day out, keeps its head in the sand, pretending that things are getting better when in fact the economy is collapsing. In three months, when California "pays" all its vendors with IOUs and state refunds are indefinitely delayed into the next decade, any mention of 'green shoots' with just come from Dick Bove, who will likely issue a Strong Buy rating on Sacramento despite "horrific" mass hysteria and bands of roving Mad Max copycats coasting along I-5 at 120 mph in nitrous-retrofitted China-made Hummers.Empahsis ours. ZH is a tad on the wordy side (not a bad thing), so I'll summarize. California gets downgraded, Lehman-esque reaction in the markets, every man, woman, and child for themselves.
A parade should cheer everyone up though.California Soon To Get Junked By Moody's [Zero Hedge]
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Signaling that California is slipping deeper into financial crisis, the state’s controller said Wednesday that his office would soon be forced to issue i.o.u.’s to scores of the state’s creditors, the first time since 1992, when 100,000 state employees were paid with them.
