California was downgraded by Fitch Ratings today. This will have two major impacts. The first is that it will be harder for California to borrow money. It’s a bad time to borrow and a rating downgrade will make it harder. This means California will have a harder time paying its bills. The second, assuming California can borrow, the interest rates will be higher. This extra interest rate increase means less spending on other items.
Our politicians need to negotiate and solve the budget problem once and for all! Enough politics, unemployment is spiking (9.3% now) and the housing market is still going down. The good news is that California may get around $21.5 billion from Obama’s stimulus bill. I guess our politicians should wait to see what comes out of the stimulus package before fixing California’s budget. That means we will have to wait a few more weeks for any sort of solution.