I don’t mean to sound alarmist but if you know or care anything about government finances this article in today’s Los Angeles Times might terrify you.

The lede:

California Gov. Arnold Schwarzenegger, alarmed by the ongoing national financial crisis, warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal government within weeks.

And, why we all might need to worry:

The state of California is the biggest of several governments nationwide that are being locked out of the bond market by the global credit crunch. If the state is unable to access the cash, administration officials say, payments to schools and other government entities could quickly be suspended and state employees could be laid off.

Plans by several state and local governments to borrow in recent days have been upended by the credit freeze. New Mexico was forced to put off a $500-million bond sale, Massachusetts had to pull the plug halfway into a $400-million offering, and Maine is considering canceling road projects that were to be funded with bonds.

Read the rest of the latest good news from Wall Street. It’s ironic that for four years, the city of San Diego has done nothing if not try to prove to Wall Street that it is credit worthy. Now, just as it comes close to proving it finally, Wall Street is showing signs that it might not have any credit to offer.

SCOTT LEWIS

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