Iceland and California are two places you don’t often find mentioned in the same sentence.
But they are part of the reason why mayhem in the financial markets shows no sign of quieting down anytime soon.
California’s budget problems are well documented in these news pages. This newspaper warned just a few weeks ago that the phony budget signed by Gov. Arnold Schwarzenegger would not begin to address the state’s built-in deficit problems.
It took less than a month for the folks on Wall Street to realize that California’s cash cupboards remain bare. Schwarzenegger has gone hat in hand to the Federal Reserve, looking for $7 billion in emergency funding to float the Golden State’s short-term borrowings until a more permanent solution can be found.