California Controller: Cash Will Run Out In Late October (CDS at 284bps)

Jane Wells spoke with California State Controller John Chiang today on CNBC. 150,000 State workers took an unpaid day off today (a furlough Friday). Chiang said if nothing is changes "we will run out of cash in late October". They are facing a $19 billion deficit with tax revenues down 14% in 2009 and might have to issue IOUs again. Read Jane's blog post today (California Acts Stoned Over a Rock). So are they going to legalize marijuana in November with proposition 19? Maybe they should bump it back a month. State of California credit default swaps, or insurance on its debt, actually tightened a bit in July and August. The 5Y California CDS is currently trading at 284 basis points (2.84%) to protect $10 million in bonds. I found articles from yesterday on Cali CDS in the LA Times (How a credit default swap deal works, Credit default swap deals unnerve California). I also embedded a video from Arnold Schwarzenegger (8/13).

Arnold on the budget! He said the California pension system is $500 billion in debt.

State of California 5-Year CDS Chart Snapshot from