Posted by
rycK on Wednesday, October 15, 2008 8:00:22 AM
California is Selling Risky Bonds. The Situation Is Hopeless so Don’t Buy This Junk.
The
Marxist Utopia of California has demonstrated that they cannot crawl off their
drugs, the political worship of illegal aliens, sloth, sodomy, political
correctness and Green
Weenie Mentality of Environmentalism. They are wanton tax whores and are way out of
control. The situation is hopeless.
The
phony People’s
Marxist Republic of California has just spent about three months
haggling about spending, salaries, benefits and have proffered up some phony budget with magical tricks to
meet state law and now they will certainly not meet salaries and other obligations unless they find suckers to give them alms. They will not cut away the terminal cancer of
socialism. They have a counterfeit budget now and it will grow worse by Jan.
2009, when arguments and rioting will begin anew on the next wreckage of a
budget. They cannot do anything other than fumble and default on this sale
because they
will have a worse budget next year. Besotted with tears and drug
flashbacks they wring their hands and await, as I predicted,
the inevitable handout from the Federal Government, also packed with losers and
criminals and dunces. The Feds cannot afford this crap. The citizens of the state cannot afford this
crap. California is the perfect example of how
not to run a state.
But, they are selling short term bonds with
very high interest rates:
“Oct. 14
(Bloomberg) -- California sold almost half of the $4 billion of notes it is offering
this week to avert a cash shortage, with tentative yields as much as 1.1
percentage points higher than last year.
Notes due May 20, 2009, may offer
a yield of 3.75 percent to 4 percent and debt to be paid off June 22 might
yield 4.25 percent to 4.50 percent, said Tom Dresslar, spokesman for California
Treasurer Bill Lockyer, in an e-mail. The state sold
$7 billion of notes last year at 3.37 percent.”--
California Selling Short-Term Notes at Higher Yields (Update5) by Jeremy R.
Cooke [Emphasis is mine in all quotes.]This link references all
quotes in this essay unless otherwise stated.
There must be some heavy politics
in this as the bond ratings are highly rated for safety:
“S&P placed
California's long-term general obligation rating of A+ under review for
possible downgrade Oct. 10, citing ``concerns over the ability of the state, as
a result of recent market conditions, to
successfully access the short-term market to
meet its pressing cash flow needs.''
The state, the biggest
borrower in the municipal-bond market, has $51 billion in general-obligation debt
outstanding and is rated A+ by
Fitch Ratings and a comparable A1 by Moody's Investors Service.”
This
has to be a Fannie Mae-Level scam. They had a 15.2 billion dollar deficit last
July [about 10% short of ‘budget”] and they cooked the books so they [magically]
need only 4 billion to cover payrolls
until May. Their 2008 ‘budget’ is 141
billion with 57.5 in federal funds.
What will their 2009 budget be? 162 billion? Look at the trend.
4 billion is chump
change in this circus. They need only avoid default until next year when they will
start haggling again because the fiscal year ends in July 2009. What happens
when 2009 tax revenues plummet like a sick goose? Is anybody noticing that we
may be approaching a depression? They could easily have a 5% shortfall in 2009 tax
revenues [.05 x 141 is about 7 billion]. These are
short term obligations so where will the cash come from to pay off this AND service their 51 billion in outstanding debt?? What happens if their
interest rates have to rise because of their poor credit worthiness?
Will they need another
‘emergency’ bond sale in Dec 2008 or Jan 2009?
Is
anybody watching the farm here? How much did Schwarzenegger buy? I think Hollywood should pick up this one and take
the loss to save the Golden State and give the taxpayers of the
other 49 a break. This looks like another Fanny Mae scam.
You
cannot spend like this during a recession or a depression when tax revenues
will drop and hope to ‘balance’ the budget by debt. The leftists are even looking for ‘loans’ for
homeowners already in foreclosure so they can enhance their credit ratings!
How many of these are illegal aliens?
Advice from the Sacramento Bee:
“But the role of
loans for people who don't qualify for a lower-cost, prime loan should be to provide them with a loan so they can build a credit history and refinance into a conventional loan with better
terms when their credit improves.”—Pia
Lopez, Sacramento Bee.
California
should require mortgage servicers to file
monthly reports on loans, including loan modifications and foreclosures. These lender-specific reports should be made public.”-- Pia Lopez, Sacramento Bee.
rycK [a 5th generation Californian in exile.]
Comments
to: ryckki@gmail.com
California is Going Down. Prepare to Get
Out! The Situation is Hopeless