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[quote user="Dakguy201"]   <blockquote> <div><img src="/TRCCS/Themes/trc/images/icon-quote.gif" /> BillBlom:</div> <div>   The legislature approved the sale of almost 4 billion in bonds to start the process. Moodies, meanwhile has been tracking their debt, and tripled the amount of unfunded pension and health benefits for California retirees.  That may sink their already low credit rating to junk status, and sink the whole project. (It's obvious that they are moving in that direction.) After all .. if it comes in with a 20% interest rate, California won't be able to move forward.  The numbers were all set up for a super low interest rate. The state is already almost $20 billion in the hole in this year's budget.  </div> </blockquote>   Although there are no provisions in the bankruptcy code for accomodating a state financial problem, the reality is that California is moving toward that point.  In those circumstances is it reasonable to assume there is ANY "arms length" bond buyer out there?  I have doubts.  The state of Michigan just took control of Detroit's city government.  They can do that; city goverenments are, after all, creations of their state.   However, no mechanism exists to put an entire state under the supervision of adults.  As was demonstrated in the auto company bailout, when an ad hoc quasi-bankruptcy solution is put together on the fly. the bondholders take the majority of the haircut.     How many of us are so sold on the necessity of high speed rail that we would put our IRA's and 401's into such bonds? [/quote] Great question.   As to the presenting question, why did the California legislators approve California's commitment to the HSR project, I may see part of the reason through the actions of the Texas Legislature.  I don't know anything about the California legislature, but I know several members of the Texas Legislature. They are clueless when it comes to finance. To them Monopoly money is high finance. Over my long career in the utility business, I was assigned to the Austin Government Affairs Office from time to time.  This was how I got to know some of the legislators and their staff members.  They are well meaning folks, but they don't have the skills to get their minds around complex financial issues.
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