Cash-starved states need to play the banking game

On February 19 California narrowly escaped bankruptcy when Governor Arnold Schwarzenegger held the state senate in lockdown mode until they signed a very controversial budget.

If the vote had failed, the state was going to be reduced to paying its employees in IOUs.

California avoided bankruptcy for the time being, but 46 of 50 states are insolvent and could be filing Chapter 9 bankruptcy proceedings in the next two years.

One of the four states not insolvent is North Dakota. Since 2000, the state’s GNP has grown 56 percent, personal income has grown 43 percent and wages have grown 34 percent...