The Californian budget crisis is so severe that all public employees are having to take pay cuts. Public-health services are under serious threat, and there is talk of pushing Aids patients and the terminally-ill out onto the streets. It has proved impossible to raise taxes any further and the bond markets are in revolt. California is looking to Washington for help. But with the federal government running budget deficits of 12% of GDP, and the federal debt pushing up towards 100% of GDP – you have to wonder whether California’s present might, once again, be America’s future.

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California is in trouble – hard to imagine what that means « The Bankwatch (via FT)