Like the action heroes he played in movies, the governor of America’s most populous state is racing the clock against a dastardly foe – the credit crisis. Admitting when he may have met his match in real life, Arnold Schwarzenegger was forced to inform the US Treasury that his state may temporarily need to borrow $7bn.

A federal loan directly to a state or local government would be almost without precedent. California is trying to distance itself from comparisons with New York City, which faced bankruptcy in 1975 and asked for an outright federal lifeline that was rejected. That episode was about local fiscal mismanagement, but New Yorkers did not see it that way, as memorialised in the famous tabloid headline: “Ford to City: Drop Dead”.