Well, there's one clue in how it is starting to affect states. In this story from the Boston Globe , Massachusetts State Treasurer Timothy P. Cahill takes note of the immediate effect the credit-shortage (not quite a freeze yet) is having here and now in his state:
In need of $1.3 billion in quarterly payments for cities and towns -- money those localities use to fund everything from teachers to trash collections -- Cahill said he "has had to jump through a complex set of financial hoops to make it work."
The borrowing maneuvers are not uncommon -- that's how states make payments before the tax revenue comes in. What's uncommon are the rates the state is having to pay to do that short-term borrowing -- 6 percent, rather than the more normal 2 percent.
"This stuff is unheard of," Cahill said. "It's like going to the loan shark for money."
