Posts Tagged: federal debt ceiling

Illinois and the federal debt default

Paul Merrion of Crain’s Chicago Business got a jump Wednesday on an issue already generating a sub-genre of stories — how would a federal debt default impact local governments and communities? As has been diligently chronicled over the last months, the expiration of the debt ceiling would be devastating to the American economy. Illinois –  a state that already owes billions in interest payments — would have to start making good on major payments as the state’s credit rating could be lowered. Money to pay off the debt means less money for Medicaid, education, and everything else the state must pay for.

In worry over federal debt ceiling, California puts $5 billion in the piggy bank

Preparing for the day Washington’s brinksmanship results in financial calamity, California’s state treasurer is lining up $5 billion in loans, reports Kevin Yamamura of The Sacramento Bee.

The move is being launched to forestall a “cash flow disruption and market turmoil” should elected federal officials fail to break their impasse, leaving the nation’s most populous state unable to pay its bills.

According to Michael Marois of Bloomberg, the state will seek competitive bids on the private notes July 26. In the event that congress averts a crisis, the sale will be canceled.