California’s brush with insolvency
Should we bail out California and other credit-starved states?
“Wall Street’s crisis is walloping state finances across the country,” said The New York Times in an editorial. California warned it will need a $7 billion federal loan if lending markets don’t recover soon; Massachusetts made a similar plea; and Wall Street–dependent New York can’t be far behind. Washington needs to help these and other struggling states “get past their short-term liquidity squeezes.”
If the states don’t get federal help, said David Callaway in MarketWatch, they’ll have to start cutting "essential services and jobs”—think cops and bridges—soon. It’s that serious. After saving Bear Stearns and letting Lehman Brothers fall apart, Treasury Secretary Henry Paulson now has to decide if “California is too big to fail.”
“If something is too big to fail,” said Daniel Henninger in The Wall Street Journal, “isn’t it . . . too big?” Yes, California and other states are in trouble, as is the federal government. But the reason is their very “unmanageable public bigness.” Like the emerging megabanks, they are, in effect, “too big to succeed.” The solution is a “crash diet.”
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Create an account with the same email registered to your subscription to unlock access.
-
'A direct, protracted war with Israel is not something Iran is equipped to fight'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
Today's political cartoons - April 17, 2024
Cartoons Wednesday's cartoons - political anxiety, jury sorting hat, and more
By The Week US Published
-
Arid Gulf states hit with year's worth of rain
Speed Read The historic flooding in Dubai is tied to climate change
By Peter Weber, The Week US Published