It is not just business and consumers who are discovering the “loan window” is closed:
LOS ANGELES — California, the nation’s most populous state and the world’s sixth-biggest economy, has warned the Treasury Department that it may need a $7 billion emergency loan from the federal government because it is running out of cash and has not been able to borrow more.
State officials said they hoped that the $700 billion federal bailout of the financial system approved by the House of Representatives on Friday would help open credit markets that have balked at providing the kind of short-term financing California and other states and local governments routinely rely on to keep operating.
…In his letter, Mr. Schwarzenegger wrote that the situation in California was so acute because the state’s “short-term cash flow needs exceed the entire budget of some states.”
Creditors, shaken by the economic turmoil, are not providing the kind of short-term financing that governments, normally safe bets, depend on to stay afloat until tax revenue is collected.
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