Broke State of California To Issue IOUs
The State of California, the worlds 6th largest economy plans to begin issuing IOUs – formally known as registered warrants – to the tune of $3 billion from July 2, to fund its commitments to various suppliers and contractors to government; university students; and welfare and pension recipients.
The IOU terms (interest rate, etc) will be determined by the Pooled Money Investment Board which will meet on July. The IOUs will mature on October 1, 2009. You can find out all about the Californian public finances from the Department of Finance.
This will be the second time in recent history that the Californian Government has issued IOUs. In 1992, when the economy recessed badly it was forced to do the same. See the graphs above to see the correspondence of labour market conditions then and now.
