California hasn't paid some health care providers since June. 85 freakin' days without a budget. Talk about bad timing. Now the credit markets are "frozen." Well, not really frozen so much as demanding market rates for California exposed debt instruments. Anybody here ready to lend the Poway School District some money in anticipation of them getting paid back but the State and then paying you? Thought not. A useful peek behind the curtain is on the Stone & Youngberg web site. This audience is smart enough to figure out the meaning. In the anticipation that Young Specuvestor™ will read as well; California is hated by the lending community. Don't pay any attention to the ratings. California is paying junk rates for short terms.
From the LATimes, "Credit crunch puts California governments in a corner":
Credit crunch puts California governments in a corner
State and municipal payrolls may be unmet and services cut if debt markets don't loosen up soon, leaders warn.
By Marc Lifsher, Los Angeles Times Staff Writer
October 2, 2008
SACRAMENTO --
With credit markets all but paralyzed and state and local governments unable to borrow money, California officials joined calls Thursday for quick approval of a financial bailout plan working its way through Congress.
The warnings were stark, including suggestions that operating funds to pay state workers, teachers or even healthcare workers could dry up in the weeks ahead.
"It is daunting that California, the eighth-largest economy in the world, cannot obtain financing in the normal course of its business to bridge our annual lag between expenditures and revenues," Gov. Arnold Schwarzenegger wrote in a letter to the state's congressional delegation in Washington.
California is swiftly running out of time to float $7 billion worth of short-term debt needed to pay workers and bills as early as next month, state Treasurer Bill Lockyer warned in his own letter.
"This isn't just a gridlock in Washington problem or a Wall Street financial problem, there are real-life impacts on local school districts, on providing healthcare for the aged and on and on," he said.
California is swiftly running out of time to float $7 billion worth of short-term debt needed to pay workers and bills as early as next month, state Treasurer Bill Lockyer warned in his own letter.
"This isn't just a gridlock in Washington problem or a Wall Street financial problem, there are real-life impacts on local school districts, on providing healthcare for the aged and on and on," he said.
The threat of a prolonged cash crunch has leaders of the main state workers union alarmed, said Jim Zamora, a spokesman for the Service Employees International Union Local 1000, which represents 95,000 people....
In the meantime, local governments, school districts and public agencies are shying away from selling bonds because of a lack of buyers or demands that they pay extremely high interest rates.
...
"All we know is that we can't do it today, we couldn't do it yesterday, and we couldn't do it for the last week and a half," he said.
According to a trade publication, the Bond Buyer, at least five public agencies in California are having trouble finding buyers for their municipal debt, known as munis.
...
----
Read the article for some juicy quotes. Storm's a' comin'.
28 comments:
Did Sarah Palin shoot the bears used to make both of those slippers? Or just the furst one? Bwahahahahaha!
NR
Is everyone still in the previous post?
Dude, if it wasn't for NR, I couldn't gotten MURST about 4 hours after the posting!
I can't wait for next week's article... California, world's 8th largest economy... Too big to fail?
On the positive side, Ahnold did take the time to sign a law requiring all CA restaurants to display a calorie count on their menus.
Mass had problems recently as well.
I don't think most people are grasping what a credit crunch really is and does. We haven't had a true one in our lifetimes.
Hey Dawg,
Aren't you going to host a VP Debate drinking game? This should be a good one! Palin is one of the funniest things on the intertubz since KC in his heyday.
Drinking game? Based on medical advice and marital imperative I won't even sip for anything short of nipplage.
Do other conservatives feel sick to their stomachs.
This is a funny show....
There is no drinking game. Just conservative drinking to block it all out and something celebratory for Democrats. I am starting now.
I think Akubi is going to be pretty happy going forward. Maybe Obama/Biden won't be so bad.
Did she just speak in favor of equal rights for gay couples????!!!!
WOW, never thought she would support adoption within gay couples.....
I've sent the following message off to my putative representatives:
Title: Your vote for Pork & Pork & Lentil Soup = My vote for your Opponent.
Dear Representative:
I think of myself as a neutral observer, & that's generally true.
But NOW I'M REALLY MAD.
This LOAP* bailout bill is "sweetened" by adding on pork.
Example: No tariff on children's wooden arrows to make one congress-critter happy enough to vote for it. (That's only 6 million dollars)
Example: Funds for those affected by the Valdez disaster. (Only 223 million dollars) - Mobil-Exxon successfully weaseled out their billions of dollars of responsibility through the legal system.
Probably 435 distinct bribes glued onto this bloody pig.
What pottage are they adding on to this so that you will sell our birthright? Remember Esau selling out to Jacob?
This is bribery & corruption.
Personally, the effect of passing the bill would benefit my clients, & hence my business, but this thing is so wrong, so full of moral hazard it's TOXIC.
In an honest world, political corruption would lead to jail. For you. Your corpus in an actual jail.
In the real world, we will just vote you out of office.
I'm very aware that that it's very unlikely that you will read this, so the email title speaks for itself, so that the staff who insulate you from the real world can just tally up the score.
Four words to die for:
Privatize Gains, Socialize Losses.
Signed: A deeply unhappy constituent.
* Lipstick On A Pig
You have my permission to plagiarize, copy, xerox, whatever - just email the message off to your rep. & bust their fucking servers!
Am I watch SNL or what?!
This is INSANE!
So mortified while typing I meant "Am I *watching* SNL"...
I do believe there is some potential for this song properly remixed and such.
I can't believe Palin passed on so many opportunities.
She said only one line about Biden's past failed Presidential campaigns and less than that about how he ripped into Obama in the primaries.
She only twice and poorly pointed out Bush is not running this time.
I watched on AC and didn't care so much about the content. I was aghast at the "balance." Biden was always centered or slightly to the right of the screen. Palin was always to the further right. Biden got easily twice as much only time on screen. When she was talking he was split screen with facial gestures. Not a word about the "moderator." Were i Palin I'd have opened with "I'm pleased you could find the time to moderate this debate given your busy schedule promoting your new Obama book."
Personally I would have pointed out that someone who first took Federal office in the Nixon years was hardly the party of change.
I sure would have mentioned I had balanced more budgets than both of them combined and signed more bills into law than Obama had even ever had cross his desk. That kind of stuff.
Biden is just a Senator and does a darned good job at solidifying our opinions of the body. 35 years of back benching. Stale.
She's not ready. She needs to tear a few body parts off an opponent and use the blood as lipstick. Then she'll be ready.
She did leave opportunities out there, and it is a shame that this Ifill was the moderator. I think the MSM and the Dems tore her down so much over the last few weeks they set the bar low for her to hurdle with an easy pass. She's not ready, but it was not a disaster. If McCain loses a close race, watch the social conservatives rally around her 4 years from now during the primaries.
Best get some Astroglide Dawg, because sooner or later, the taxpayers are going to take a hard one up the back side without a kiss or kind word.
they need to raise new revenues or cut spending. the later is always off the table.
@H simpson,
Fishy Astroglide reminds me of earlier thoughts of the day: Mackerel Economics in Prison Leads to Appreciation for Oily Fillets
Packs of Fish Catch On as Currency, Former Inmates Say; Officials Carp
I would like to see a return to Koi economics.
Interesting, I listened to the debate on the radio the first time and thought Palin bombed. She sounded weak and used to many slogans instead of specifics. I watched it later with my wife and Palin's expressions and enthusiasm totally changed my take on it. Biden seemed confident and very competent on radio while his shitty grin on TV made him seem like a politician.
What the hell! Mackerel is going up. I'm gonna get out of dollars ASAP.
California public employee unions have finally killed their golden goose.
$700b looks inevitable. Great chance to short the financials. Oh wait.
Now CA "needs" a payday loan of $7b from Uncle Sugar because in a shocking development revenues are down slightly but the credit markets are voting on an impossible budget by offering rates deserving of Casey's credit record. As well they should.
Did anyone go to the Stone & Youngberg link in the post? There's some fish stuff almost like some people know something.
ROSEVILLE CALIF SPL TAX yielding 6.50% and due 3/1/09 at 103 currently offered at 88.40? That looks to me like double tax free returns of about 25%.
Rob, I'm impressed that you're looking at the munis. There are some great deals out there for those with access to the muni and commercial paper markets. Especially on short-term paper that is very likely to be paid off, discounts translate directly into profits if you're willing to hold to maturity.
The old saying is that the best time to buy is when everyone is panicking, and that time is now, at least in the credit markets (stock market is still disconnected from reality, but you already knew that.) If I wasn't a regulator and didn't have restrictions on what I could hold, I would definitely be looking.
That Roseville offering has got to be a misprint.
I'm probably going to pick up something with insurance instead.
They passed it!
House passed the bill this time.
I've been watching Vanguard's California Money Market Account. It's yielding close to 5.5% now (free from state and federal taxes). It's rated as MIG-1 by Moody's. I took the plunge and put in $20K.
Post a Comment