Octobe 24, 2007 (LPAC)--While forest fires rage out of control, California is scurrying to sell $7 billion in notes to cover a budget shortfall that is growing greater by the day as mass foreclosures across the state send state tax revenues down the tubes.

Given the rate of foreclosures in California, the third highest in the nation, it's questionable whether the state will be able to pay off those bonds when they come due eight months from now.

This will be the largest sale of short-term "revenue anticipation bonds," as they are cleverly known, since Democratic Gov. Grey Davis was recalled from office in 2003 on the pretext that he could not manage the state's budget crisis. As Lyndon LaRouche warned at the time, the recall opened the door for George Shultz's hand-picked Fuehrer for California, Arnold Schwarzenegger.

Schwarzenegger took office swaggering that the state's indebtedness would never increase under his reign. But with cash receipts in the first three months of the current fiscal year (from July to September) coming in $777 million lower than projected revenue, and the state spending $10.2 billion more than it received in taxes and fees, indebtedness is increasing. What comes next is budget slashing, Schwarzenegger's budget spokesman, H.D. Palmer, told Bloomberg wire service October 24.