A week after he sent a letter to Hank Paulson saying he might need a small loan of $7 billion to shore up California’s economy, Governor Arnold Schwarzenegger wrote Paulson another note saying the state probably wouldn’t need his help after all.
Schwarzenegger claims he’s “cautiously optimistic” that California will be able to raise the money it needs in the credit markets, after Massachusetts was able to do so earlier this week. (Really, Ahnuld, have you looked at the credit markets lately?)
NY Times: “Although California feels the enormous effects of our current economic crisis, I am optimistic these efforts to improve liquidity are moving the country toward more stable economic footing,” Mr. Schwarzenegger wrote, even as the stock market once again dropped sharply.
The letter comes as Mr. Schwarzenegger, a Republican, begins appearing in radio advertisements intended to drum up interest in California bonds. The state plans to return next week to the bond market, which administration officials call their best hope, to seek $4 billion in normally routine short-term loans. It may seek more at a later date.
Analysts agreed the bond sales to Massachusetts and a couple of other states were encouraging, and said the governor had good reason for a more optimistic assessment as he entered the market seeking investors. Moreover, a loan from the Treasury would face difficulties. Aside from legal entanglements, assistance from the department could lead a bevy of state and local governments, also suffering financially, to ask for loans, too.
Hmm, “these efforts to improve liquidity”…Like the bailout bill that includes a bunch of tax breaks for Hollywood, enabling studios to keep film and TV productions in Southern California?
Indeed, we already noted that the Hollywood tax breaks would provide a nice boost to the Los Angeles area economy. But could Governor Schwarzenegger’s confidence also have been inspired by the fact that since he sent his first letter to Paulson, the Dodgers made it to the National League Championships? Those baseball games should also increase revenue in and around Dodgertown, which—fun fact—could soon be the official name of the area around the LA stadium.
Business Insider Emails & Alerts
Site highlights each day to your inbox.