U.S. Taxpayers Should Not Be A Pawnshop to Guarantee California Bonds

In effect California wants the U.S. Government to indirectly beg China for financial assistance, so the U.S. can guarantee California bonds.

China currently holds most of all U.S Debt. It is unlikely U.S. Government could guarantee California bonds without first getting permission from China, America’s number one creditor.

If U.S. Government guarantees California’s bonds for the world’s eighth largest economy, it is foreseeable China could reconsider the risks of future loans to the U.S.; reconsider whether to renew a trillion in outstanding U.S. debt and at the least raise its interest rate charged U.S. Taxpayers via U.S. Government borrowing. Any increase in China’s interest rate charged U.S. Government’s could be devastating to the U.S. annual budget, depleting funds needed for Americans.

California Gov. Arnold Schwarzenegger and Democratic lawmakers say they are asking for help from the U.S. Government only until the California economy turns around. If California’s economy does not turn around, U.S. Taxpayers will be even more chained to China and to guaranteeing worthless California bonds.

Yesterday there were two conflicting TV news reports. The first, “The Recession is close to ending”, the second, “ Expect gasoline to go to four or five dollars a gallon.” Obviously if gasoline hits four or five dollars a gallon, many workers in CA and America could not afford to drive to work or buy as many store products or services. Much of America would not recover from the recession.