Why would anyone believe what these lying shits have to say?
California is royally screwed and has NO WAY of repaying their obligations.
But keep working they need your tax revenue to give to the bankers.
Careful California posters, this could get ugly on you real quick.
I think I have figured out the plan. The Feds will refuse to bail out states, the state ratings will be slashed, the prices for state debt will plummet, Goldman Sachs will buy up all the state debt, then the Feds will change their mind and pay all the states' debts with taxpayer funds, and Goldman Sachs will earn a huge profit, and the Goldman Sachs bankers will eventually spend a fraction of their bonuses in the real economy. That should really get things going again.
BTW, it seems to me that the situation in CA is genuine empirical evidence to support the argument against excessive debt funded spending. Consider that on its own CA might qualify as a large "developed" country, yet its credit rating is collapsing (and presumably it's real borrowing costs are increasing).
So OK, California can't print its own money, but does that really change the calculus of stimulus when it comes to real interest rates paid vs. stimulus benefits?
Why hasn't California's big budget insured it against economic downturns?
Anyone have a source on how much the interest on the IOUs is going to cost CA? I'm starting to worry this will rapidly spiral (further) out of control, with the IOUs driving bigger and bigger budget gaps, in turn delaying the creation of a budget, requiring more IOUs, etc.
do we buy when the rating gets to C? or D? I mean, at this rate, we're only a few months away from F. (but we all know that no one gets that rating until they are officially a banana republic)
I read that they released 53-54mm USD worth of IOUs last week, and the grand total for the end of the month should be north of 3bb USD. At 3.75%, you can do some basic FIN 101 math to get an idea of how much this plan will cost CA. Granted, they may end up paying the IOU's interest with more IOUs in which I have no idea what the total "cost" of the program will be.
ac...take that argument the next step and you start to realize how ludicrous it is that people still think that the US of A cant somehow become a banana republic.
Anyway, here is the e-mail I sent to Paul Kadrosky after he stated that CA's constitution provides debt service has priority over other spending:
Dear Paul, your article about a California bond default piqued my interest with this:
Because California has $5.7-billion in debt servicing obligations. And while that will grow, debt occupies pride of place in California's constitution -- only education must be paid off before the next slug of cash goes to creditors.
After some research I think this is completely wrong.
First I read what I thought were all the relevant parts of the state constitution and did not find such a provision. The closest thing I found was a law that required funding of education at a certain level. But nothing establishing the schools-debt service-everything else priority you claim.
I did find using Google a two similar claims made before yours, one in the LA Times and in the other in promotional material from Charles Schwab, but these too were unsourced. And then I found other assertions that provided your blog post or Seeking Alpha article as a source.
Interestingly, if this were true it would be a great selling point for bonds, but the state treasurer’s extensive website promoting state bonds does not mention this, nor do brokers other than Schwab on their pages promoting California bonds, even though they discuss other issues like tax treatment and credit rating in detail.
Again, there is the possibility that some IOUs will have their interest paid off in IOUs of some kind. If that happens, then I would expect a lot of dominos will be knocked over in ways that most of us cannot imagine. If they start siphoning off their USDs to pay off the bond market while the rest of the stakeholders get IOUs, then there is no telling what the "real cost" will be.
When the Feds step in, I imagine that the costs will only rise--as opposed to being contained.
ac,
Good point...the same question could be asked of Japan. It's stimulus packages haven't resulted in any long-term return to significant GDP growth.
And Japan's attempts seem much more reasonable to me in comparison simply because Japan was in much better shape fiscally (it had the means to service its debt) and wasn't competing with a bunch of other countries that are simultaneously flooding the debt markets to pay for stimulus.
I won't go as far as saying "stimulus is doomed to fail", but I do think chronic deficit spending is doomed to fail, and that's what I see us doing here.
The California State Administrative Manual does support the assertion that GO has constitutional priority over all but K-14 education:
"SAM - Chapter 68006871 GENERAL OBLIGATION (GO) BONDS
(New 5/98)
Definition: GO bonds are a form of long-term borrowing in which the state issues municipal securities and pledges its full faith and credit to their repayment. Bonds are repaid over many years through semi-annual debt service payments. The California Constitution requires that GO bonds be approved by a majority vote of the public and sets repayment of GO debt before all other obligations of the state except those for K-14 education.
Key statutory authorities: Article XVI, Section 1, of the California Constitution prohibits the Legislature from creating debt or liability which exceeds $300,000 without a majority vote by the people, except in case of war."
My preference is always to look for Pre-Refunded obligations where the issuer has actually retired the obligation but is paying them from a pool backed by USTs. Absent that, I would look for issues that had the insurance from Buffet's company - the only one which might be around to pay in the case of a default.
Ultimately everything is backed by USTs at this point, and I'm hedged against those with TBT. If it all goes to hell, none of this will matter anyway.
The updated budget forecast assumes that revenue growth will slow in 2006-07, and then rebound somewhat in 2007-08. The current estimate for 2005-06 and 2006-07 is up moderately from the 2006-07 Budget Act projections, mainly reflecting higher PIT collections. The budget’s General Fund revenue projections are summarized in Figure 4.
2007-08 Forecast. The budget forecasts that General Fund revenues and transfers will be $102.3 billion, a 7.7 percent increase from 2006-07. Adjusting for one-time factors in both the current and budget years, the underlying growth rate is about 6 percent, or slightly faster than the projected growth in the state’s economy.
So OK, California can't print its own money, but does that really change the calculus of stimulus when it comes to real interest rates paid vs. stimulus benefits?
BTW, I've read some articles from Krugman that would argue "yes it does", but I think he assumes to much about the behavior of investors and how they will react to attempts to change the variables in his equations that represent the price of bonds vs. money.
I don't think you can abstract human behavior to equations.
California will be bailed out. No doubt about it. Boatload of money sitting in TARP right now. California is too big to fail .... too much systemic risk. It will be bailed out and market will rally hard. What we see is all theater ..... I will not be fooled by this theater on my next trade.
If CA gets bailed out, it will be a political shitstorm. Most of the other states will cry "no fair!". Not sure what other ramifications there will be, but it will be ugly politically. Freepers will go postal.
If CA gets bailed out, it will be a political shitstorm. Most of the other states will cry "no fair!". Not sure what other ramifications there will be, but it will be ugly politically. Freepers will go postal.
So it will be done in some nutty underhanded way that most people don't understand to be a bailout.
Like having some special insurance plan for all muni-bonds that will act exactly like a bailout for the states with bonds that are most in trouble (California).
EDIT:
Oooo... there's an idea: Money from the Fed "politically laundered" through investment banks to effectively monetize California's IOUs.
I say California won't be bailed.
It's FED, Treasury, Goldman Sachs and FEDERAL GOVERNMENT against the rest of us.
The idea is to drive the states and people to BK.
Don't think we can even afford the carry cost if inflation sets in and rates head up. And those higher rates will do wonders for the housing market, which will do even more wonderful things to RMBSs on banks' balance sheets, etc...
They have firmly lodged themselves between the rock and the hard place. No easy way out.
And now: an arbitrage market for California’s IOUs.
Who says capitalism is dead?
“If you are receiving a California IOU and need cash immediately, please contact me,” reads a posting on Craigslist. “I may be of assistance."
He didn't get the whole post:
“If you are receiving a California IOU and need cash immediately, please contact me, I may be of assistance. Will pay 110 cents on the dollar.
-benb37"
"If CA gets bailed out, it will be a political shitstorm"
========================================
No political shitstorm ........... Everybody will know they will get their bailout, so we get through this politically. This is how humans are in general. Only a few of us really see the evil spiral down being perpetrated. One day the masses will wake up, but I don't think we're close to that event yet.
Too many times I say ...... this is the event that ends the game, but the game just continues to continue. Why should it stop now ? People still seem content amidst alot of bad shyt that has happened to them. They look for gov't more then ever now. I hope I recognize the game changer before it happens, but the Cali situation is not it. It's too easy.
Isn't the CA state story one thing? They also have cities, like Oakland, with problems. So even if CA state gov thinks of something...the state itself still has leprosy? Its just spots here and there...
CA will be bailed out, the UST is just holding out as a negotiating ploy. If you haven't figured it out yet, BHO wants to control the entire economy, and state's rights are a big impediment.
The other states won't complain at all, because they know they could be next, and whatever deal is struck for CA will not just be CA-only, it will be a deal for all the states.
Eventually all the national debt will be inflated away, and our creditors won't complain, because they have no choice. What are they going to do, stop buying our debt? Not if they want access to our consumers.
The only people "paying" for this will be what's left of the middle class.
I think that I am going to start issuing IOU;s and then I will pay them back with my inflated dollars a few years down the road. That is what CA plans to do, right? Same with the US payback of the Chinese. There is a plan. The whole thing will take bout 15 years or so to play out but when you are trying to save a country, you dont do it in two years.
Keep on believing that the Federal Government is too big to fail.
I double dog dare you.
When, not if, the USD ceases to maintain its role as reserve currency; BOOM!
My guess is less than five years.
Of course, I could be wong; but Hu's your daddy.
They will all get bailed out. THIS IS THE SCRIPT ! You bail out the banks and autos, but you don't bailout the states ? My lord ... I think that would be the event that causes major political disruption. Think logically of what TPTB will do, and keep that seperate from your common sense approaches. The 2 trains of thought are at conflict. TPTB won't listen to us ..... they are following the only script they know now ..... BAILOUT .... until the bond market has enough of it.
ghostface....you touch on the bigger problem...all the debt floating around, that is all relied on so heavily, and is yet, so precariously funded. If we go down, and treasuries go down, then down goes US further, then china, etc, in one big set of dominoes, until all the nasty debt gets wrenched out of the system. What's amazing is, we've set this massive delveraging going, and we have so little control over it. The best we can hope for is a series of cascading feedbacks....cash flow pays down debt, delveraging means less income spent, meaning more asset devaluation, meaning more problems for the real economy, fewer jobs,, more cash flow destruction, and on and on.
This is already in place. And yet, I dont see one credible plan out there as to what reverses the process. All we've done is rack up more debt, mortgaging the future, to make the delveraging slower. Yet, Im not convinced that the final point of cash flow equilibrium is any different. It onlh makes the future look that much worse. I really feel like we are completely screwed for a few decades at this point, given the obligations weve baked into the cake plus the inescapable demographic change ahead.
Yes, but does it not increasingly appear that the US govt is NOT too big to fail? I know it something you dont want to think about, because of the awful consequences, but that doesnt make it impossible. So you are saying, all the evidence can point to fail, and all the trend can point to fail, and yet, we dont. Hmm. How long can the denial go on?
ac (profile) wrote on Mon, 7/6/2009 - 4:41 pm reply Ignore user If CA gets bailed out, it will be a political shitstorm. Most of the other states will cry "no fair!". Not sure what other ramifications there will be, but it will be ugly politically. Freepers will go postal.
So it will be done in some nutty underhanded way that most people don't understand to be a bailout.
Like having some special insurance plan for all muni-bonds that will act exactly like a bailout for the states with bonds that are most in trouble
Tonight, a special announcement from the President of The United States of America...
I can not in good conscience allow the children of CA to starve, The homes of your fellow citizens to burn because there is no money for firefighting...etc
Yes, this is the "United" States and together we can do this. I think the xx Billion in financial aid will be repaid by the great state of CA quickly.
What do you think the concessions will be for CA when the bailout comes? I mean, it has to come, and it has to come with strings attached, and it has to be pre-packaged, which I think is what is happening behind the scenes. I just wonder how you trample the states rights sufficiently. It's a fine line.
Put me down on the side of the bet that there will be no direct federal bailout of California. There are too many small states with balanced-budget requirements that have been cutting and cutting and cutting various programs to get authorization through the US Senate. California can solve its budget problem simply, although the consequences would be interesting, to say the least: participation in Medicaid is not required. California could shut down Medi-Cal and free up something north of $30B per year for other purposes. I expect to see one or more states withdraw in the next several years, although absent California's current status, would have bet that one of the Southern states would be first.
If the feds are looking to bail out all the states in some sort of equitable fashion, assuming full fiscal responsibility for Medicaid would come close.
What are you trying to do with your password and IDs?...Every website has their own unique way of providing it....It is getting totally overboard....
For the non ITs- How are you juggling all of these IDs and passwords required for each website? This is what I call overload....End result.......drop off the radar screen for those that would like to comment....
I am getting close to the point that I will no longer put up with this....I would rather have a "root canal" or plan my budget for the next 10 years....
I am sick and tired of having to jump thru IT hoops, because they have not come up with a better solution....or maybe its time to go back to snail mall for authorization/approval....All I know, is that the current system is not helpful....more of the burden is being placed on the general public....
snark/off
CCC status coming right up...just wait til' next week.
is fitch taken as seriously as moodys or s&p?
isn't debt service a priority payment under the California Constitution, second only to education?
Edited: Duh, it helps to read the entire article (thanks, crazyv)
Fitch Downgrades Calif. long-term bond rating to 'BBB'
OK, this is real progress here, but think a bit bigger.
wink wink nudge nudge
Basel Too (profile) wrote on Mon, 7/6/2009 - 4:07 pm
* reply
* Ignore user
isn't debt service a priority payment under the California Constitution, second only to education?
based on the article only with regard to the GO debt.
Why would anyone believe what these lying shits have to say?
California is royally screwed and has NO WAY of repaying their obligations.
But keep working they need your tax revenue to give to the bankers.
Careful California posters, this could get ugly on you real quick.
I think I have figured out the plan. The Feds will refuse to bail out states, the state ratings will be slashed, the prices for state debt will plummet, Goldman Sachs will buy up all the state debt, then the Feds will change their mind and pay all the states' debts with taxpayer funds, and Goldman Sachs will earn a huge profit, and the Goldman Sachs bankers will eventually spend a fraction of their bonuses in the real economy. That should really get things going again.
BTW, it seems to me that the situation in CA is genuine empirical evidence to support the argument against excessive debt funded spending. Consider that on its own CA might qualify as a large "developed" country, yet its credit rating is collapsing (and presumably it's real borrowing costs are increasing).
So OK, California can't print its own money, but does that really change the calculus of stimulus when it comes to real interest rates paid vs. stimulus benefits?
Why hasn't California's big budget insured it against economic downturns?
albrt: Bill Gross will get his share too.
I plan to take a sizeable position in NC GO Munis when the yields get to double digits. I have no doubt that they will get there.
Anyone have a source on how much the interest on the IOUs is going to cost CA? I'm starting to worry this will rapidly spiral (further) out of control, with the IOUs driving bigger and bigger budget gaps, in turn delaying the creation of a budget, requiring more IOUs, etc.
HomeGnome, what is the worst case scenario for CA? Default/BK? How do you think that would impact residents?
OCTOBER!?!? for Pete's sake, they aren't paying their bills NOW!!!
do we buy when the rating gets to C? or D? I mean, at this rate, we're only a few months away from F. (but we all know that no one gets that rating until they are officially a banana republic)
I read that they released 53-54mm USD worth of IOUs last week, and the grand total for the end of the month should be north of 3bb USD. At 3.75%, you can do some basic FIN 101 math to get an idea of how much this plan will cost CA. Granted, they may end up paying the IOU's interest with more IOUs in which I have no idea what the total "cost" of the program will be.
I think it is inaccurate to say that GO debt has constitutional priority like education spending, and this is a result of several misunderstandings.
Any interested in my reasoning?
$3.36 billion * .0375 interest accrued over 3 months... ~ $21 million
edit: this assumes all $3.36B will be issued at once. Which is not the case...
ac,
Good point...the same question could be asked of Japan. It's stimulus packages haven't resulted in any long-term return to significant GDP growth.
ac writes: "OK, this is real progress here, but think a bit bigger."
First read this as think a tit bigger. Were that one could....
That downgrade explains the 100 pt move in the Dow into the close.
Chainsaw, how do you plan to collect if NC goes TU like California?
Do you plan on being paid in I.O.U's?
Burn, California is ALREADY BK.
The I.O.U's are just a sick joke on the People.
TPTB don't really give one wit about the Constitutionality of any of their ideas.
SO, STFU and Sit down, CONsumers!
ac...take that argument the next step and you start to realize how ludicrous it is that people still think that the US of A cant somehow become a banana republic.
So CA is really the UK - just a mile farther down the road?
"At 3.75%, you can do some basic FIN 101 math to get an idea of how much this plan will cost CA. "
VCAIX (Cali intermediate term muni fund) was paying over 3.9% as of May 31.
What happens if Cali's yield curve inverts?
We aren't there yet, but could be before long.
Wow Cali sinking fast and after September 2009 the shit will hit the fan!
Anyway, here is the e-mail I sent to Paul Kadrosky after he stated that CA's constitution provides debt service has priority over other spending:
Dear Paul, your article about a California bond default piqued my interest with this:
Because California has $5.7-billion in debt servicing obligations. And while that will grow, debt occupies pride of place in California's constitution -- only education must be paid off before the next slug of cash goes to creditors.
After some research I think this is completely wrong.
First I read what I thought were all the relevant parts of the state constitution and did not find such a provision. The closest thing I found was a law that required funding of education at a certain level. But nothing establishing the schools-debt service-everything else priority you claim.
I did find using Google a two similar claims made before yours, one in the LA Times and in the other in promotional material from Charles Schwab, but these too were unsourced. And then I found other assertions that provided your blog post or Seeking Alpha article as a source.
Interestingly, if this were true it would be a great selling point for bonds, but the state treasurer’s extensive website promoting state bonds does not mention this, nor do brokers other than Schwab on their pages promoting California bonds, even though they discuss other issues like tax treatment and credit rating in detail.
What happens if Cali's yield curve inverts?
Again, there is the possibility that some IOUs will have their interest paid off in IOUs of some kind. If that happens, then I would expect a lot of dominos will be knocked over in ways that most of us cannot imagine. If they start siphoning off their USDs to pay off the bond market while the rest of the stakeholders get IOUs, then there is no telling what the "real cost" will be.
When the Feds step in, I imagine that the costs will only rise--as opposed to being contained.
ac,
Good point...the same question could be asked of Japan. It's stimulus packages haven't resulted in any long-term return to significant GDP growth.
And Japan's attempts seem much more reasonable to me in comparison simply because Japan was in much better shape fiscally (it had the means to service its debt) and wasn't competing with a bunch of other countries that are simultaneously flooding the debt markets to pay for stimulus.
I won't go as far as saying "stimulus is doomed to fail", but I do think chronic deficit spending is doomed to fail, and that's what I see us doing here.
Greg,
The California State Administrative Manual does support the assertion that GO has constitutional priority over all but K-14 education:
"SAM - Chapter 68006871 GENERAL OBLIGATION (GO) BONDS
(New 5/98)
Definition: GO bonds are a form of long-term borrowing in which the state issues municipal securities and pledges its full faith and credit to their repayment. Bonds are repaid over many years through semi-annual debt service payments. The California Constitution requires that GO bonds be approved by a majority vote of the public and sets repayment of GO debt before all other obligations of the state except those for K-14 education.
Key statutory authorities: Article XVI, Section 1, of the California Constitution prohibits the Legislature from creating debt or liability which exceeds $300,000 without a majority vote by the people, except in case of war."
General Obligation (GO) Bonds
HomeGnome,
My preference is always to look for Pre-Refunded obligations where the issuer has actually retired the obligation but is paying them from a pool backed by USTs. Absent that, I would look for issues that had the insurance from Buffet's company - the only one which might be around to pay in the case of a default.
Ultimately everything is backed by USTs at this point, and I'm hedged against those with TBT. If it all goes to hell, none of this will matter anyway.
I guess things never work out as planned....
The updated budget forecast assumes that revenue growth will slow in 2006-07, and then rebound somewhat in 2007-08. The current estimate for 2005-06 and 2006-07 is up moderately from the 2006-07 Budget Act projections, mainly reflecting higher PIT collections. The budget’s General Fund revenue projections are summarized in Figure 4.
2007-08 Forecast. The budget forecasts that General Fund revenues and transfers will be $102.3 billion, a 7.7 percent increase from 2006-07. Adjusting for one-time factors in both the current and budget years, the underlying growth rate is about 6 percent, or slightly faster than the projected growth in the state’s economy.
Thanks for your reply Chainsaw.
I think it's already gone to hell though...
Lock and load, this American LZ is HOT!
So OK, California can't print its own money, but does that really change the calculus of stimulus when it comes to real interest rates paid vs. stimulus benefits?
BTW, I've read some articles from Krugman that would argue "yes it does", but I think he assumes to much about the behavior of investors and how they will react to attempts to change the variables in his equations that represent the price of bonds vs. money.
I don't think you can abstract human behavior to equations.
Looking at the budget forecasts - they were really caught by suprise...
How many other states were planning rosy forecasts like this? I will answer myself - all of them...?
California will be bailed out. No doubt about it. Boatload of money sitting in TARP right now. California is too big to fail .... too much systemic risk. It will be bailed out and market will rally hard. What we see is all theater ..... I will not be fooled by this theater on my next trade.
It's the CALPERs 7.75% expected rate of return on a mass scale. Investment geniuses!
If CA gets bailed out, it will be a political shitstorm. Most of the other states will cry "no fair!". Not sure what other ramifications there will be, but it will be ugly politically. Freepers will go postal.
We have a chicken dinner winner!
Carlo,
CA is the cute, blond haired kid of the funding problem so, maybe, yes. What about all her ugly stepsisters like
Maria = NJ
Shonda = MI
Tiffiany = OH
Ogla = MI
Teresa = AZ
and on and on....
When/if CA gets bailed out it will just hasten the eventual downgrade of US Sovereign debt.
We've already absorbed much of the debt of wall st.. Can we really take on the states' debt as well? How much can that donkey carry?
A Brand-New Arbitrage Market for California's IOUs
Don't leave us out:
Betty Sue = NC
and she's from the FUGLY family.
If CA gets bailed out, it will be a political shitstorm. Most of the other states will cry "no fair!". Not sure what other ramifications there will be, but it will be ugly politically. Freepers will go postal.
So it will be done in some nutty underhanded way that most people don't understand to be a bailout.
Like having some special insurance plan for all muni-bonds that will act exactly like a bailout for the states with bonds that are most in trouble (California).
EDIT:
Oooo... there's an idea: Money from the Fed "politically laundered" through investment banks to effectively monetize California's IOUs.
I say California won't be bailed.
It's FED, Treasury, Goldman Sachs and FEDERAL GOVERNMENT against the rest of us.
The idea is to drive the states and people to BK.
ac,
Again, just rolling up more under the umbrella of USTs. I'm not saying it won't happen, but you can only stuff so much sh*t in Timmay's sack.
I thought the idea was to use massive inflation to make all the debts seem very small.
Don't think we can even afford the carry cost if inflation sets in and rates head up. And those higher rates will do wonders for the housing market, which will do even more wonderful things to RMBSs on banks' balance sheets, etc...
They have firmly lodged themselves between the rock and the hard place. No easy way out.
Yes, because they often seem to be ahead of the curve.
At least, compared to the others.
I believe this is the first time in a long time that any state has failed to qualify for an A rating on GO debt.
And, it's the largest state, by far the largest state in debt markets and GO debt outstanding.
And now: an arbitrage market for California’s IOUs.
Who says capitalism is dead?
“If you are receiving a California IOU and need cash immediately, please contact me,” reads a posting on Craigslist. “I may be of assistance."
He didn't get the whole post:
“If you are receiving a California IOU and need cash immediately, please contact me, I may be of assistance. Will pay 110 cents on the dollar.
-benb37"
"If CA gets bailed out, it will be a political shitstorm"
========================================
No political shitstorm ........... Everybody will know they will get their bailout, so we get through this politically. This is how humans are in general. Only a few of us really see the evil spiral down being perpetrated. One day the masses will wake up, but I don't think we're close to that event yet.
Too many times I say ...... this is the event that ends the game, but the game just continues to continue. Why should it stop now ? People still seem content amidst alot of bad shyt that has happened to them. They look for gov't more then ever now. I hope I recognize the game changer before it happens, but the Cali situation is not it. It's too easy.
Isn't the CA state story one thing? They also have cities, like Oakland, with problems. So even if CA state gov thinks of something...the state itself still has leprosy? Its just spots here and there...
CA will be bailed out, the UST is just holding out as a negotiating ploy. If you haven't figured it out yet, BHO wants to control the entire economy, and state's rights are a big impediment.
The other states won't complain at all, because they know they could be next, and whatever deal is struck for CA will not just be CA-only, it will be a deal for all the states.
Eventually all the national debt will be inflated away, and our creditors won't complain, because they have no choice. What are they going to do, stop buying our debt? Not if they want access to our consumers.
The only people "paying" for this will be what's left of the middle class.
I guess I picked the wrong lifetime to be a saver
Wed July 15th 11:00AM. No reason to change my guess.
In the mean time I am offering 94.4¢ (+$18 processing) on CA Warrants. Down (up?) from Thursday's 96.0¢ (+$18 processing).
I think that I am going to start issuing IOU;s and then I will pay them back with my inflated dollars a few years down the road. That is what CA plans to do, right? Same with the US payback of the Chinese. There is a plan. The whole thing will take bout 15 years or so to play out but when you are trying to save a country, you dont do it in two years.
Keep on believing that the Federal Government is too big to fail.
I double dog dare you.
When, not if, the USD ceases to maintain its role as reserve currency; BOOM!
My guess is less than five years.
Of course, I could be wong; but Hu's your daddy.
I think that I am going to start issuing IOU;s and then I will pay them back with my inflated dollars a few years down the road
If I really believed that I would go out and buy a McMansion....
"BHO wants to control the entire economy,"
Replace wants with needs and you are correct.
nova (homepage, profile) wrote on Mon, 7/6/2009 - 4:35 pm reply Ignore user Carlo,
CA is the cute, blond haired kid of the funding problem so, maybe, yes. What about all her ugly stepsisters like
Maria = NJ
Shonda = MI
Tiffiany = OH
Ogla = MI
Teresa = AZ
=============================================================
They will all get bailed out. THIS IS THE SCRIPT ! You bail out the banks and autos, but you don't bailout the states ? My lord ... I think that would be the event that causes major political disruption. Think logically of what TPTB will do, and keep that seperate from your common sense approaches. The 2 trains of thought are at conflict. TPTB won't listen to us ..... they are following the only script they know now ..... BAILOUT .... until the bond market has enough of it.
ghostface....you touch on the bigger problem...all the debt floating around, that is all relied on so heavily, and is yet, so precariously funded. If we go down, and treasuries go down, then down goes US further, then china, etc, in one big set of dominoes, until all the nasty debt gets wrenched out of the system. What's amazing is, we've set this massive delveraging going, and we have so little control over it. The best we can hope for is a series of cascading feedbacks....cash flow pays down debt, delveraging means less income spent, meaning more asset devaluation, meaning more problems for the real economy, fewer jobs,, more cash flow destruction, and on and on.
This is already in place. And yet, I dont see one credible plan out there as to what reverses the process. All we've done is rack up more debt, mortgaging the future, to make the delveraging slower. Yet, Im not convinced that the final point of cash flow equilibrium is any different. It onlh makes the future look that much worse. I really feel like we are completely screwed for a few decades at this point, given the obligations weve baked into the cake plus the inescapable demographic change ahead.
Keep on believing that the Federal Government is too big to fail.
I double dog dare you.
Yep. The underlying assumption behind all these bailouts is that the US govt is "too big to fail".
If not, these bailouts may really just be "catastrophe postponements".
Elephants and Asses
Trampling the Masses
Does it matter who steals from you?
Red or Blue?
Wake up, America!
You're being played.
Yes, but does it not increasingly appear that the US govt is NOT too big to fail? I know it something you dont want to think about, because of the awful consequences, but that doesnt make it impossible. So you are saying, all the evidence can point to fail, and all the trend can point to fail, and yet, we dont. Hmm. How long can the denial go on?
CaliBBBoomsday.
It is cute the way all you other 49 keep pretending you have a choice in this matter.
ac (profile) wrote on Mon, 7/6/2009 - 4:41 pm reply Ignore user If CA gets bailed out, it will be a political shitstorm. Most of the other states will cry "no fair!". Not sure what other ramifications there will be, but it will be ugly politically. Freepers will go postal.
So it will be done in some nutty underhanded way that most people don't understand to be a bailout.
Like having some special insurance plan for all muni-bonds that will act exactly like a bailout for the states with bonds that are most in trouble
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Exactly ..... like Ford getting $5 1/2 billion for future developmental program
Carlo,
Actually I can see it:
Tonight, a special announcement from the President of The United States of America...
I can not in good conscience allow the children of CA to starve, The homes of your fellow citizens to burn because there is no money for firefighting...etc
Yes, this is the "United" States and together we can do this. I think the xx Billion in financial aid will be repaid by the great state of CA quickly.
blah blah
Rich, gold and miners have been getting killed lately, SLW down another %7.74 today. Are they finished?
What do you think the concessions will be for CA when the bailout comes? I mean, it has to come, and it has to come with strings attached, and it has to be pre-packaged, which I think is what is happening behind the scenes. I just wonder how you trample the states rights sufficiently. It's a fine line.
We're playing the stone soup game. Unfortunately, the other 49 of us also brought stones for the pot.
Near pigged!
Thing is Obama is most afraid of the CA State government shutting down and no one noticing.
What do you think the concessions will be for CA when the bailout comes?
VAT.
Little PIG little PIG let me come in.
Sportsfan:
And I just reread Art XVI Sect 1, which is available here:
http://www.leginfo.ca.gov/.const/.article_16
and again, I do not see where it says in the event of default that GO bonds have priority.
Deering's Annotated CA Constitution does not mention this either. So what's the language and what's the reasoning?
Big Bad Bonds. Thats about right.
Gee, sounds like another green shoot to me.
Hoopajoops LTD: If you are writing any books, put me on your order list. I like the way, you think, dude.
Put me down on the side of the bet that there will be no direct federal bailout of California. There are too many small states with balanced-budget requirements that have been cutting and cutting and cutting various programs to get authorization through the US Senate. California can solve its budget problem simply, although the consequences would be interesting, to say the least: participation in Medicaid is not required. California could shut down Medi-Cal and free up something north of $30B per year for other purposes. I expect to see one or more states withdraw in the next several years, although absent California's current status, would have bet that one of the Southern states would be first.
If the feds are looking to bail out all the states in some sort of equitable fashion, assuming full fiscal responsibility for Medicaid would come close.
snark/on
Question for the non-ITs
What are you trying to do with your password and IDs?...Every website has their own unique way of providing it....It is getting totally overboard....
For the non ITs- How are you juggling all of these IDs and passwords required for each website? This is what I call overload....End result.......drop off the radar screen for those that would like to comment....
I am getting close to the point that I will no longer put up with this....I would rather have a "root canal" or plan my budget for the next 10 years....
I am sick and tired of having to jump thru IT hoops, because they have not come up with a better solution....or maybe its time to go back to snail mall for authorization/approval....All I know, is that the current system is not helpful....more of the burden is being placed on the general public....
snark/off