Wednesday, August 19, 2009

Pay It Back? No, Borrow MORE!

Much has been made of California paying back the "Golden Bear Chits" a month early starting September 4th. Bearshit. Complete lie of the largest order. I was unable to see how the Aug cash flows supported this and now I find out why. California is not paying back old debt, it is rolling that debt over through a sweetheart deal for JP Morgan. LATimes has the story:

Treasurer Bill Lockyer says JPMorgan Chase & Co. has agreed to lend California $1.5 billion as part of Controller John Chiang's plan to begin redeeming IOUs on Sept. 4.

The IOUs, which the cash-strapped state began issuing July 2 to pay many of its business vendors and other creditors, were supposed to mature Oct. 2. But Chiang said last week that the budget passed by the Legislature produced enough savings to allow for earlier redemption of the scrip -- provided the state could get a $1.5-billion short-term loan by Aug. 28.
...
The risk to JPMorgan is virtually nil: The loan will be repaid by late September, when the state plans to sell $10.5 billion of so-called revenue anticipation notes, or RANs -- securities that will mature next spring.

So. "Paying back" means getting a short term loan and then "paying back" the short term loan with a medium term loan.

10 comments:

Northern Renter said...

First to state the trivial fact that there's a spelling error in the posting title.

NR

Gator Fan said...

It's almost genius, but makes me want to cry

Rob Dawg said...

If only the budget were as easy to fix as a typo.

wagga said...

A short-term loan converted to a medium-term loan can be a life saver.
Ask me how I know.

Rob Dawg said...

That's because unlike California or Casey, you are good for it.

Property Flopper said...

I'm just happy to get rid of the damn thing. I've got one sitting at home on the dining room table. Tax return.

Now, what I object to is the fact that when I need to make a tax payment, I can't send them their own IOU as part of it. They won't accept them as payment.

Hey - if they won't accept them, why should I have to?

Rob Dawg said...

The whole sordid affair is so clearly illegal on so many levels. This bit about laws and Constitutions and stuff is so democratic republic and has no place in Neuvo Kalifornia.

Rob Dawg said...

Sadly, Calculated Risk is fast becoming unreadable.

con said...

Could it be the "dawg" effect?

<<:-)

tj and the bear said...

That's what happened at HBB -- got too damned out of control. Sigh.