California inches closer to junk bond status as budget talks fail

California inched closer to junk bond status with downgrades from Moody's and Fitch. Even so, key leaders of California couldn't even resume talks to find a solution to the state's $26.3 billion deficit. State treasurer Bill Lockyer continues to warn of dire consequences to the state's ability to do business if its bonds fall to junk ratings.

"Tens of thousands of jobs would be lost and billions of dollars worth of business for California's businesses may be lost" if the governor and the legislature don't quickly solve the crisis," Lockyer told the San Francisco Chronicle. "We're on the edge of being classified as junk bond. When that happens, it becomes not only expensive, but almost impossible to borrow."