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Broke New Jersey Seeking $2.25 Billion Bridge Loan At Up To 9% From JPMorgan For Emergency Funding
Is New Jersey the canary in Meredith Whitney's coalmine? According to the WSJ, New Jersey may be the first state to use the highly unconventional approach of using a commercial bank funded bridge loan as large as $2.25 billion to "plug a cash shortfall." The loan raised by Chris Christie's state, "would cover bills the state will need to pay as its new fiscal year begins July 1. Normally, states have some cash available as they finish one fiscal year and begin the next, while gearing up for a bond offering based on the new budget...Terms of the loan, also known as a credit line, haven't been finalized and negotiations could fall apart, according to the people familiar with the matter." And since this will likely be a benchmark loan whose term sheet will be promptly circulated to other cash-strapped states, it will be all the more important in defining such key term components as subordination, collateralization, and general interest rates.
It can take up to two months to prepare the necessary documentation for a bond offering once a budget is set for the coming fiscal year, while the state's cash crunch is likely to occur in the next few weeks, one of the people said.
Bank loans often require less documentation than a municipal bond does, and can be finalized in less time.
New Jersey put in place a $2 billion credit line in 2009, but didn't need to use the loan because of a surge in back taxes that arrived in time, state officials said.
This year, officials don't expect a last-minute reprieve, the person said.
The use of funds is tautological: repay debt.
The state would aim to repay the bridge loan with proceeds from the bonds it expects to issue later this summer, known as tax-and-revenue anticipation notes. Those bonds are expected to be paid off through tax receipts.
The source of the emergency funding would be loan shark extraordinaire, JPMorgan:
State officials are negotiating with J.P. Morgan Chase & Co. over terms for the bridge loan, following a spirited competition for the state's business, several people familiar with the selection process said.
And in true JPM fashion, the loan's interest would be low at first... then surge.
One person familiar with some proposed terms of the possible loan said the interest rate is relatively low, but it could shoot as high as 9% if the state didn't pay back the bank in six months.
When this loan closes successfully, expect many more states to follow suit shortly as everyone attempts to plug cash shortfalls "while things improve" when the assumption of such an optimistic outcome is certainly in question now that the economy has officially turned down.
The good news for M-Dub haters: the can has just been kicked down for another 6 months...
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But how to handle the 'fat tail' risk?
When a bailout benefits the TBTF, then it gets put through fast, no strings, no cost.
But when the bailout doesn't benefit TBTF directly, then it's no longer a bailout but a high interest loan.
Who heads up the Loan Shark Division at JPM anyway?
The JP Morgans, Goldmans, IMFs, World Banks, will not cease until they have every sovereign country, every state, every municipality by the balls. They want it all, folks. And the way we're going, they're going to get it.
C'mon Greeks.
Bugger them and send them to the cleaners.
Once you show the courage and the way like at Thermoplae, the Irish, the Spanish and the Portugese will follow suit.
This is the way the world can strip them of their wealth and power and bring it back to an even keel.
Ex-Citigroup banker allegedly embezzled 19 million U.S. dollars
http://www.ariva.de/news/Ex-Citigroup-Banker-soll-19-Millionen-US-Dollar...
He's a 35 year old ex-vice president of Citigroup.
He was arested at JFK airport last Sunday.
He faces up to 30 years in jail if the allegations are proven to be true.
The federal prosecutor filing the suit is U.S. attorney Loretta Lynch, New York.
Having been assigned a prosecutior by the name of Lynch is not a very promising outlook I think.
Yes, but still I would prefer the prosecutor be named Gilda Guillotine. Or Nancy Noose. Or Sally Sepuku.
What's the collateral for the loan?
Please God, let it be this http://www.thehollywoodgossip.com/gallery/cast-of-jersey-shore/
A Guarantee from JPM ( who would have issued a CDS predicting default for 10 times the amount)
I told you Christie is no good, he is not doing anything close to cutting.
He should have switched the state pension funds to 401K, now all the unions have to do is wait him out and blow out the pension funds again.
Shut government down 50% and lets see what happens.
Interesting. When did you tell us that Christie was no good, that he is not doing anything close to cutting?
I suppose it won't be too hard for you to go back and point out the specific posting where you said this since you have only commented on 23 articles over the last 15 months. But I figured I'd ask first.
Reminds me of all the Obama-nauts: thinking that as soon as he walks in the door, the score from the Good, the Bad, and the Ugly starts to play, the guns come out, and everything just starts happening instantly. Now when it comes to Obama, "He needs more time!", Christie? "He's incompetent", "He lied to us"...double-standard? Nah, politics as usual.
Perhaps the fact that Jersey is a Democrat dominated state has something to do with it.
Obama had a Democrat House and Senate and still gave his financial overlords everything their wettest wet dream could ever dream of.
BIG DIFFERENCE!
Just wow - you do realize government at all levels has checks/balances. It's not like the elected governor has instant dictator powers throughout the state. I'm not saying he's perfect but my God the man started with a huge mess and no human has been able to make the least bit of inroad into that statewide den or corruption in many many years. You can suddenly undo everything done before and any cuts no matter how miniscule are a massive battleground for mega-entitled opposition.
NJ isn't just any other state - that thing had massive problems that are marginally better now but they aren't remotely out of the spotlight yet. Sadly it's a really nice state especially the southern portion and their beaches.
Is JPM gonna bail out The Dodgers?
Silver breaking through and going to test the MA200 line.
... as the EUR blasts off again.
I feel the need, the need for USDHUF soon....
Maybe we need to watch MUB tomorrow.
Amazing how after last summer's disaster and Meredith Whitney's bashing and subsequent meltdown it is already climbed back to the highs.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=mub&inst...
Am I ever happy I didn't buy real estate here! Looks like property taxes are going up again. Christie reminds me of a certain Democrat in our White House. infinity8 is right he was on TV touting his latest legislation. He never mentioned we would need 2.25B in loans at 9% interest. Good thing we socialized the boardwalk in AC and are looking to bailout one of the ugliest buildings ever built in North Jersey.
Ex-governor of Illinois Blagojevich found guilty on 17 counts.
Looks like he will spend the rest of his life behind bars.
And never forget, always to sleep with the buttocks against the wall.
And never try to pick up the piece of soap in the men's shower.
Dream on. It'll all be concurrent. With 100:1 leverage on time off for shutting up.
They are building an addition to the big house in Joliet for former Governors and Representatives. They are going to need it once the Obominator and his gang of thugs and punks drops.
"Looks like he will spend the rest of his life behind bars."
Let's hope that isn't very long.
The cure for debt is.. more debt at credit card rates.
Do they get reward points for this one? That would be awesome. They could get Home Depot gift cards.
hey new joy zee.....what would the greeks do?
the insolvent banks can borrow at 0% but the insolvent states can't. WHAT A COUNTRY!
States don't have buttloads of worthless MBSs to present to the discount window.
If a pound of flesh is marketable then Christie can pay off all by himself!
Couple o' butt cheeks oughta do it.
nice!!
Annapolis, capitol of Maryland just received a 10M loan just to make payroll. It's getting ridiculous. Just stop spending dimwits!
Facing empty bank accounts by the end of the month, the Annapolis City Council voted Thursday night to borrow $10 million until tax revenue comes in later this year.
While the loan will cost taxpayers up to $300,000 in interest, city officials said they have no choice.... In addition to the new $10 million loan, the city has two outstanding $5 million credit lines with Bank of America.
http://www.hometownannapolis.com/news/CAN/2011/06/10-15/City-borrows-another-10M-to-pay-bills.html
If everybody had a bailout
Across the USA
Then everybody be'd busted
Like Californ-I-A
You'd see them canning their workers
And writing checks in scrip
Just go tell 'em in DC
we're Bailin' USA
frigging great....now get a surfer girl in it.
You'd catch 'em bailing in Trenton (Inside Outside USA)
In Sacramento too
Tallahassee and Athens
Lisbon and Madrid
All over the Baltic
and around the UK
Everybody's gone bailin'
Bailin' USA
Great plan, what could go wrong?
the note probably converts to a DIP financing arrangement after six months.
Sure Chris, I can give you the loan, if you stick my face on all New Jersey buildings, fuck you Jamie, no you are fucked Chris!
It's crazy.
You can clearly see that the ponzi has entered the final phase.
All the municipal, state and national governments are doing the same.
Frantically scrambling to find someone who is less broke thean them and who'd be willing to lend them some money in exchange for IOUs, i.e. paper for paper, just to make ends meet for the next 24 hours or so.
It's a joke.
The Ponzi will exist longer than you can stay sane.
Never mind; it already has.
If they default, JPM could sell NJ to Japan. Now that their island is getting more radio-active by the
hour, they will need to relocate somewhere and NJ has a similar environment as they are used to.
A long eastern seaboard, much pollution, and nuclear reactors just above sea-level. The Japanese
could use all of NJ's empty factories and put people back to work again.
actually that would be pretty cool. definitely will give the bridge & tunnel crowd a whole new je ne sais quoi.
Meredith Whitney's coalmine?
That just sounds wrong! At least say ruby mine or something.
At least it wasn't the gerbil in Bill Gross's habitrail.
Going for USDHUF @ 186.9, but looks like the EUR rise is stalling.
And I would guess 95% of the population has
a. no interest in gold, silver.
b. Would have no clue what to do about it if they did have an interest.
c. Do not have any idea how to buy it.
d. And would probably store it in a bank vault with C, BAC WFC...for safety, what crock that would be.
And countries, states, cities, nations all over are insolvent. And gold is in the summer doldrums. What absurdity. You really want dollars. Take a look at a newspaper from 1950 and check out the food ads. Tell me how little your same dollars are worth.
1950? Try 1982 when a chuck roast still had the Spencer steak in it.
lol, good one mynhair
It's amusing watching the federal govt slowly bankrupt the states via unfunded mandates.
No, there won't be a revolution. 50 state governors can't even gang up and stop the unfunded mandate stuff.
We will eventually reach a point where people will riot in the street like in Greece. And this is coming sooner than most think.
And it will accomplish nothing ...except getting rioters gassed / shot / jailed / etc.
NJ has about as many people as Greece. Geez, not wonder when you pack people in like rats, they act like rats.
Then we go in and kill them. How naive are you?
I love it, that fat ass Christie runs his mouth, does all he can to destroy the middle class, sells the state of NJ for a couple billion bucks to one of the TBTF financiers and the tea baggers still think he hung the moon. Maybe the Christie lovers could send a grand or two per NJ's way and help their bud out.
I support anyone willing to shoot public unions in the face.
Baby steps, Hacksaw.
Yep, let's root those commie bastards out. Don't look behind the curtain, the fascists are carrying off all your money, wives, and children. Maybe you'll be lucky and they'll let you keep your dog.
It is a matter of degree.
Commies are just stupid fascists.
...and smart fascists are... capitalists?
Crony capitalists. That is the smart move when government is for sale.
I'm from NJ. Solution is simple. Stop giving these inferior knuckledraggers all of our money. For one, they will never stop taking, and they are incapable of pulling themselves up. Whether they claim they want to or not. Enough. Two, we hit a long depression. You think these animals will take a cut in their free cheese? Enough. There are two groups of parasites destroying NJ. One only needs to look at a Pharaohs sandals to see who they are. One may be more sophisticated than the other, but the both destroy society by sucking us dry. Now NJ is fubar. You think your state is not next? Will the parasites agree to a "pay cut" I.E. less free fucking money. We are all screwed. In NO way should we be taking a loan to hand IT OUT. This must end, Now.
It can't end. Once the proles get hooked on "free shit" there is only one end.
Yup. We're locked in our seats, there's a maniac at the wheel, and brick on the accelerator pedal. Enjoy the ride.
>Will the parasites agree to a "pay cut" I.E. less free fucking money.
In a democracy, what incentive do they have to agree?
Once one grabs hold of the government's levers of crime there is no incentive to stop pulling them.
>In NO way should we be taking a loan to hand IT OUT. This must end, Now.
Too late. Government bonds involve two parties making a legal contract that puts a third party into slavery. You and your unborn grandchildren are already enslaved by these bonds, a.k.a. slavery futures.
Not really. I just tell my landlady she can have the house back and I am free to leave anytime. As for the poor slobs who own the McMansions, dude your taxes are going up.
You sound like one of those kraut bastards talking about the Greeks. Oh, and I don't have a state but if I did I'd run out every fascist I could find.
>Oh, and I don't have a state but if I did I'd run out every fascist I could find.
You wouldn't run them out when you depend on them as a source of funds to get re-elected.
Actually, with your attitude, you wouldn't "have" the state in the first place.
Actually, with your attitude, you wouldn't "have" the state in the first place.
Don't begrudge me the glee I get watching these tea bag idiots trying to spin their way out of their hero selling NJ to JPM. Who's next? When does Walker sell out Wisconsin to Goldman? If it weren't so sad it would be funny watching all this take place. These tea bag morons and the German ass clowns just aren't bright enough to finger it out I guess. The self righteous crowd can't exist without some slackers to make them feel superior. Get rid of, what did he call them, oh yes,"knuckle dragging inferiors" and the superior jack wagons wouldn't be special in their own minds anymore.
the sacrosancttoobigtofail banks borrow for NOTHING since the privately owned Federal Reserve runs all policy in our country, but states are going to pay the agents of the Federal Reserve cartel 9%...how sweet.
When are we going to demand the end of the Federal Reserve? Oh, by the way, the almost three TRILLION dollars on the ever expanding balance of federal reserve excess reserves, earns an extra 0.25% for their trouble of not getting enough from all of us already, on top of the 6% earned on 1% of all reserves as an expense (that is not to be reimburesed to the treasury)
Let's cut that when we start cutting out government waste...Congress needs to revoke the Federal Reserve Act.
The Federal Reserve, is a privately owned 1.5 trillion dollar corporation and the owners have been getting enriched at the expense of the US citizens since 1913--our country was created to get away from central bankers and then they wormed their way back in, and now they own most (all?) elected officials--time to take away their power, the same way our founding fathers made possible.
So JP Morgan is going to lend money to New Jersey @ 9%.
Eh...............
One problem with that.
Where did JP Morgan get the money and how much are they paying for it?
They print money out of thin air. Money is created by the banks in our fractional reserve monetary system. They lend money that never existed at 9% and get tax payers on the hook, or better said, they use that dirty trick to enslave us into a perpetual debt repayment obligation.
And just in case you don't believe me, have a look at these videos. They explain our current fractional reserve private banking system and the profound implication that system is having on just about everything on this planet.
The Money Masters: http://video.google.com/videoplay?docid=-515319560256183936# Money as Debt: http://www.youtube.com/watch?v=vVkFb26u9g8 Wake up call http://www.youtube.com/watch?v=yT1GavDtiwM
You strip the power from a state the same way you strip the power from a country... and it starts with a loan you can't repay.
I'm not sure this is a bad thing - bankers basically owning the state.
Unlike democratically elected leaders, who have a short time horizon (until the next election / term limit) making them corrupt wastrels, feudal lords have a long-term interest in the viability of their fiefdoms.
Refreshing perspective on the emerging possibilities.
One drawback is that it does put a visible damper on the democracy concept. Instead of one man, one vote:
It will be one pleb, zero votes,
one banker, X # of shares as votes.
Still, perhaps this is an inevitable cycle, the twilight of democracy in favor of privileged elites. In fact, I am convinced it has been this way for some time, only carefully managed to give an illusion of the constitutional ideal.
There are two groups of people I know of, who can boast of ~5000 year histories. One is the biggest population on earth, the other one of the smallest. The first live in Asia, the second are concentrated in the West, especially the US.
>There are two groups of people I know of, who can boast of ~5000 year histories.
I'm not sure why this matters. In any case, the more people there are, the greater the division of labor that can be achieved. There are always more material factors of production waiting to be transformed into goods.
That is absolutely true. And in our current monetary system, money is all made out of debt. Without debt, there would be no money. Debt can never be repaid. Repaying the debt would mean shrinking the total money supply. Therefore debt repayment is contradictory to economic expansion, which needs a money supply expansion, which is equal to debt expansion. In our current system, debt needs to be in a state of perpetual expansion otherwise, the system collapses.
The whole system is corrupt from its foundations and was built to benefits the few at the top of the pyramid that we see on the dollar bills.
Yep, they kicked the can down the road another six months. But thats another six months closer to the 2012 election for president and congressmen and some senators. QE3 for the states will come into being either around christmas or in January of 2012.
It will probably float with silver futures prices on the comex after 2 weeks and all interest payments will be required in bullion sent directly to Blythe Masters.
Seriously, though, how difficult would it be for the state of NJ to arrange a borrowing scheme that keeps the financing costs for at least some of the money inside the state and out of the hands of the TBTF banks? For example, let any resident homeowner lend money on a volunteer basis to the state in exchange for credits off their property taxes, equal to principle and interest on the loan. I’m sure there are other solutions too, all of which could be set up and administered as easily as a special property tax rebate. Maybe if Chris Christie wasn’t so busy screwing retired state employees out of their pensions or campaigning for a national level position (God knows what) on The Today Show with Matt Lauer, he and his fellow masterminds in Trenton could come up with some things that actually help his constituency.
9%
I thought them yankees were smart, but cheese and crackers! Wait til the good folks at Jp sabotage their auctions. (bump up that rate)
They'll be standing there all f***ed, hair dishevelled, sore and nasty.
9% bitchezzz! 200+ mil a year.
1 and half years of BS talk.......its time for christie to cut the fat (and not around his belly)
july 1st is time to let 30% of state workers go home for good
They will ...eventually ...no pension either.
9% actually strikes me as a little low for NJ. I would demand much more than that, seeing how I live in this state and see how dysfunctional it is.
NJ should consider this a bargain.
The solution to debt is more debt.
And the solution to insanity is more...
Ok, everything is clear now.
Bridge Loan
Bridge-to-nowhere loan.
Kick-the-can-a-little-further loan.
@
Cognitive DissonanceIt was a joke you arrogant worm.
"the total state budget for fiscal year 2011 is set at $28.3 billion"
The fiscal year starts Friday and $2.25b is almost 10% of the entire budget and they just now figured out they're short?
It always amazed me that they know they need 2,250 millions, but no idea they needed it yesterday.
testing
... Nice,
Isn't this like New Jersey paying the JP Morgue 9% to screw their corpse? ....again....Dirty filthy?
9%!
When debt service is too great get ready for Default...the State may need to renegotiate all those Pensions before they go bankrupt....or they will be renegotiated after NJ goes bankrupt.,.....but they ar ein good company..LA Dodgers....Tribune...Lehman's...Bear...Merrill.......
How will Illinois handle its $108 Billion deficit?
Mark-My-Words, if the State of New Jersey does this, and borrows from the banks/brokerage firms, right now in this environment, it will be a total disaster for the people of the state.
Most anything else is preferable.
The lenders will want to privatize every valuable asset to get to the states income and assets (they will want water, electricity, phone contracts and toll roads, casino's, airports and transport hubs and ports, just to mention a few) that enable them to get a vast income stream in order to use it in other states, for the same purposes. Later you will be selling off the states jewels just to cover the juice.
Be forewarned.
NJ could figure as the physical beachhead of the offensive by the monied interests on the political sovereignty of the nation, much as could take place with Greece in the EU. Will be interesting to see how far they can advance before the Volk senses danger and stirs from massaged complacence.
on Mon, 06/27/2011 - 21:58
#1407412
I believe that banking institutions are more dangerous than standing armies… If the American ever allow private banks to control the issue of currency… the banks and corporations that will grow around them will deprive the people from their property until their children wake up homeless on the continent their fathers conquered.
Thomas Jefferson.
...................REPEAT 3 TIMES.......
x
Since North Dakota already has it's own bank & 9 other states are working to have their own banks, I suspect JP morgan won't get to feed on too many states this way.
Sorry to the the Debbie -downer to so much fun being made of Jersey here, but the loan structure is not as usurious as the WSJ has lead you to believe. Ever since the demise of municipal structured product like VRDNs and auction rate securities, and since the cost of standby letters of credit has soared as banks refuse to "rent" their balance sheets like they used to; this step-up structure is really just a form of self funded standby letter. The European banks like Dexia had bought their way into this standby market and compressed pricing to where the issuers were spoiled by the low cost of short term financing. Obviously the Dexias of the world are no longer investor accepted. Now that the isssuers are spoiled they beg the bankers for creative alternatives. The step coupon structure is just what Wall Street is ready to sell. The first time one of these step coupons is not called is the last time one will be sold as the short term investor is not into uncertainty at any penalty rate.
Can you say, "fraudulent conveyance" five times really fast?
The best comment I've seen so far is that 'Banks can borrow at next to nothing rates....but States cannot.' Any questions about the more important entity.
Subjecting sovereign states to the whims (not to mention obscene profits) of bankers is institutionalizing immorality on a scale that no democratic system can long hold up to. No matter what else is said or done from now on what was our great country is now just a meme in the history books.