Stock Market Toppy Tuesday, LA City Runs Out of Money on June 30th?

Stock-Markets / Financial Markets 2010
Apr 06, 2010 - 09:22 AM

By: PhilStockWorld

Is Los Angeles unique or just the first?

City Controller Wendy Greuel declared an "urgent financial crisis" http://www.latimes.com/news/local/la-me ... 2176.story and said the only way to continue paying bills in the short term was to begin to drain the city’s already limited emergency reserve. Greuel said the city would need to pull money from its $191 million in reserve funds immediately to pay its bills next month. She expects the city to be out of money, and probably in the red, by June 30. Some officials fear that using that money would not only leave the city without reserves in case of emergencies, it would also probably trigger another downgrade in its Wall Street credit ratings.

Cities all over the nation are scrambling to pay their bills and that’s nothing compared to the disasters state budgets face. A study released Monday by Stanford University estimates that California’s three largest state-operated, public-employee pension funds—the California Public Employees’ Retirement System, California State Teachers’ Retirement System and University of California Retirement System—currently face a total shortfall of more than $500 billion. Gov. Schwarzenegger warned Monday that pension-fund shortfalls could lead California, which faces a $20 billion budget gap in the coming fiscal year, to divert more funds from other state programs to cover pension costs. http://online.wsj.com/article/SB1000142 ... tions_news

Fortunately, for the dollar, we are by no means the most screwed-up economy on the planet. The Euro is dropping to new lows this morning amid speculation that a plan for Greece to obtain European Union and International Monetary Fund help in cutting its budget deficit may falter (again). The report that Greece “isn’t keen on the IMF being involved in any bailout would seem to throw the whole plan into question,â€