California defaults!

[Mega]

http://www.marketoracle.co.uk/Article11818.html

They need to roll over $28 Billion between now & Sept.......Like no f*cking way!

Fitch has just cut them to "BBB"
Mike

[metalman]

Re: California defaults!

http://www.marketoracle.co.uk/Article11818.html

They need to roll over $28 Billion between now & Sept.......Like no f*cking way!

Fitch has just cut them to "BBB"
Mike

now, mega. cal did not default. they may... looks probable... but they did not.

that makes your title 'incorrect'.

[rj1]

Re: California defaults!

http://www.marketoracle.co.uk/Article11818.html

They need to roll over $28 Billion between now & Sept.......Like no f*cking way!

Fitch has just cut them to "BBB"
Mike

There is one way I can think of. The U.S. government can pitch in.

[SuitablyIronic]

Re: California defaults!

In lieu of cash, California issued i.o.u.’s to meet obligations to vendors and citizens, postponing payments on its current liabilities.

But current liabilities are short-term debts. Ergo, based on this standard definition, California is already defaulting.

It’s not the same as defaulting on its bonds. But for reasons I’ll explain in a moment, I’m now more convinced than ever that a bond default is also coming.

The article does state that California has already defaulted by issuing IOUs instead of cash.

[newnewthing]

Re: California defaults!

The article does state that California has already defaulted by issuing IOUs instead of cash.

The key sales pitch for CA bonds is that they are senior debt to nearly everything including the prisons. The problem is that the debt seniority is likely to be treated with as much respect as GM's senior debt was. IE, fuggitaboutit

[WildspitzE]

Re: California defaults!

The article does state that California has already defaulted by issuing IOUs instead of cash.

Not if the lenders accept it. If so, it's just a restructuring. :rolleyes:

[metalman]

Re: California defaults!

Not if the lenders accept it. If so, it's just a restructuring. :rolleyes:

exactly. if an iou = default, the usa has already defaulted... look in your wallet.

[thunderdownunder]

Re: California defaults!

Based on 12 million households in California (census quick facts) in a population of 36.7 Million that earn $56.000/year/household

California needs to raise roughly $30 billion to stay solvent

Why thats only $2500 extra per household they need to squeeze either from them or by asset sales or by cuts to expenditure.

Possible but not probable in this economy. A solution that needs to be found urgently invariably ends up costing more than planned.

California would qualify absolutely for "To big to fail" so I expect a handout will be taken from the US taxpayer.
an alternative would be a Temporary State VAT or GST (trouble with new taxes is that they are never temporary and encourage the buggers to spend more)

Which ever way you look at the problem it is not going to be a picnic for householders in CA or the good folks from the rest of the USA.

[WildspitzE]

Re: California defaults!

There is one way I can think of. The U.S. government can pitch in.

Of course, this is why JPM extended its treasury arb to including a cali line of credit. Basic credit skills and some zero cost of funds is all it takes.

[D-Mack]

Re: California defaults!

paper for the collectors?

California IOUs Sought by Souvenir Hunters, Investors (Update1)

....

Auctioning Debt

Freeman will likely sell the IOUs through her own auctioneering business, Auction Ten, on July 11, along with collections of American and European 19th and 20th century antiques.

“At some point, everybody’s going to have to quit doing business with the state if they don’t pay,” she said.

Several posters on Craigslist are offering to purchase the warrants at a discount. One self-proclaimed investor in Maine will buy the IOUs for 69 percent of face value, while another will pay 80 cents on the dollar.

“If you need CASH now and have a CA issued IOU, please contact us immediately,” said another Craigslist ad, offering to pay 85 percent of face value. “While our state might be insolvent, we aren’t.”

http://www.bloomberg.com/apps/news?p...d=an3UdTqwSJsA

[grapejelly]

Re: California defaults!

course, don't governments ALWAYS reneg on their loans, eventually?

[Kimmons]

Re: California defaults!

Just for fun, next month a bunch of us could pay all our bills; mortgage, CC and the like with some IOU's; I'm printing up some right now (they look very official, mind you). If enough of us did it, we could trade them as currency...we could call them tulip dollars or something.

[touchring]

Re: California defaults!

exactly. if an iou = default, the usa has already defaulted... look in your wallet.

looks more like a Republic of California currency to me than an IOU.

now what if the unthinkable happens - if Cal IOU appreciates against the US dollar? lol

[metalman]

Re: California defaults!

Just for fun, next month a bunch of us could pay all our bills; mortgage, CC and the like with some IOU's; I'm printing up some right now (they look very official, mind you). If enough of us did it, we could trade them as currency...we could call them tulip dollars or something.

bonar : n. 1. a debt instrument backed by the full faith and credit of the latest corrupt US political regime; 2. a share in USA, Inc., a technically bankrupt Enronesque nation whose monetary institutions have been alternately managed by crooks and fools; 3. a currency which will eventually be valued at a rate of $1,000,000 bonars to one barrel of oil; 4. the currency issued by the United States of America, formerly know as the US dollar. See "US dollar."

[santafe2]

Re: California defaults!

now what if the unthinkable happens - if Cal IOU appreciates against the US dollar? lol

Here's an investment idea. Create a CDO backed by Cali IOUs. Fitch and Moody's will go gaga. CNBC will pimp for interviews. GS will go both long and short this package and off load a CDS red carpet. Don't miss it. This $26B default will generate 10X in fees before it's over. If I can make this shit up in a few minutes imagine the real plan.