Moody's bearish on L.A.

The credit ratings agency issued a negative outlook to the city because of delays in dealing with the massive budget deficit. The change affects about $3.2 billion of debt - not the end of the world, but a clear indication that Wall Street is watching the antics at City Hall and doesn't like what it sees. From Moody's:

The revised outlook primarily reflects the possibility that the city may experience an extended, multi-year period of significantly diminished general fund reserves, limiting its financial flexibility and weakening its balance sheet to a level inconsistent with the current rating.

Moody's does point out that the city has a modest debt burden (so far) and a very diverse economic base that appears to have bottomed out from the recession. But it also questions the city's cost-cutting proposals, including privatization of parking structures, consolidation and outsourcing. In November, L.A.'s credit was downgraded by Fitch Ratings.