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California Runs Out Of Money Again, Comes Begging To Wall Street As Moody's Threatens To Go Nuclear On Muni Market

Tyler Durden's picture




 

First New Jersey, now California. The cash-strapped state, which begged for, and got, a "bridge" loan from JP Morgan as recently as October 2010 (the same bank that recently bailed out Chris Christie), is asking for another bridge to the old bridge loan, ergo a "bridge bridge" loan. The excuse: the potential upcoming government shutdown, which would lock California out of the muni market. Surely the fact that it already has little to no cash left was not a part of the equation. BusinessWeek reports: "California is considering seeking a bridge loan from Wall Street ahead of an Aug. 2 deadline for raising the federal debt ceiling, in case talks fail and send the bond market into turmoil, Treasurer Bill Lockyer said. Proceeds from the loan would be used to help pay the state’s bills until Lockyer can sell an estimated $5 billion of so-called revenue-anticipation notes, or RANs, scheduled for late August. Without those notes, the state could run out of cash as it did in 2009, when it issued $2.6 billion of IOUs." Of course if the US is downgraded, Meredith Whitney's prediction will come true with a bang: as part of its warning yesterday, Moody's also threatened to downgrade 7000 municipal ratings which would halt RAN, and any other, issuance for an indefinite period of time. And while this is merely more M.A.D. posturing to help the debt ceiling dispute come to a speedy resolution, the fact that California is now forced to issue new bridge loans to "bridge" old ones is oddly troubling.

More:

“We are hoping to get our borrowing done before Aug. 2,” Lockyer told reporters following a speech yesterday in Sacramento.

A failure to raise the nation’s $14.3 trillion debt limit would lead to a “major crisis” and throw “shock waves” through the financial system, Federal Reserve Chairman Ben S. Bernanke said yesterday at a House Financial Services Committee hearing.

Moody’s Investors Service put the U.S. under review yesterday for a credit rating downgrade, adding to concern that political gridlock will lead to a default. The company warned it may lower 7,000 ratings on $130 billion in municipal debt backed by U.S. Treasury or other federal securities or repaid with federal money such as Medicaid grants and economic-stimulus aid if the U.S. loses its top rating.

Lockyer said he’s concerned about the possibility of federal delays in Medicare subsidies and other payments to California and about long-term reductions in U.S. aid to states. A default, he said, could prompt the federal government to prioritize payments to states that would affect California’s cash flow.

“The ripple effect on state and local finances is very substantial,” he said. “Depending on how long the delay was, you might have a cash-flow hit. Of course, the budget negotiations might result in reduced payments to the states. There’s two kinds of worry.”

What would happen in a best case scenario?

The new bridge loan would be repaid by the RANs, which the state would pay off when the bulk of taxes is collected later in the year.

Lockyer sold $10 billion of RANs in November, including $2.25 billion of notes that came due in May with a yield of 1.5 percent and $7.75 billion that matured in June at 1.75 percent.

Those May notes yielded 98 basis points, or 0.98 percentage point, more than top-rated one-year debt at the time and the June notes yielded 123 basis points more, Municipal Market Advisors data show. California sold $8.8 billion of such notes in September 2009 and $5 billion the year before.

On the other hand, if there is indeed a downgrade, California's cash lockout would be the least of anyone's worries.

 

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Thu, 07/14/2011 - 08:59 | 1455554 NuckingFuts
NuckingFuts's picture

Golden State

Bitchez

Thu, 07/14/2011 - 09:01 | 1455558 UGrev
UGrev's picture

More like "Gold Plated" state.

Thu, 07/14/2011 - 09:01 | 1455563 snowball777
snowball777's picture

The iron pyrite state.

Thu, 07/14/2011 - 09:02 | 1455569 66Sexy
66Sexy's picture

Silver just broke out of its trading range.

Look out above.

Thu, 07/14/2011 - 09:19 | 1455635 Cognitive Dissonance
Cognitive Dissonance's picture

Now that's a Silver Woodie if ever I saw one.

Thu, 07/14/2011 - 09:37 | 1455717 snowball777
snowball777's picture

Ben giveth. JPM taketh away.

Thu, 07/14/2011 - 09:51 | 1455741 cranky-old-geezer
cranky-old-geezer's picture

Yes, heading up thru 39.13 as I write this.

However I rather doubt TPTB will let the paper market go much higher. I fully expect another huge smack-down as it gets up around 40 or crosses 40.

They're just not going to let the paper silver market break out into a full natural runup.

...which is fine with me, more opportunity to buy it cheap ...physical that is.

Thu, 07/14/2011 - 10:05 | 1455799 Dr. Richard Head
Dr. Richard Head's picture

Considering JPM is sitting at 40.78, you could be right. That is if JPM indeed did collateralize their stock for their naked short position on the paper silver markets.

Thu, 07/14/2011 - 10:34 | 1455900 66Sexy
66Sexy's picture

Not sure about that. They have bigger fish to fry, than attempting to suppress silver in the face of massive asian and domestic buying... all to protect an institutional perception that is collapsing?

Once we get to 'abbandon ship, bankers and financiers first', and the suits and pig men trample over their grandmothers to get to the lifeboats, this whole menagerie could drop...

"TPTB" may have to prioritize their resources.

Thu, 07/14/2011 - 13:16 | 1456634 Hugh_Jorgan
Hugh_Jorgan's picture

The clock is definitely ticking on "buying it cheap" my friend. Local brokers are already scalping the physical Ag and many larger brokers are raising premiums as well.

Thu, 07/14/2011 - 09:29 | 1455678 NuckingFuts
NuckingFuts's picture

Nice, well done!

Thu, 07/14/2011 - 09:31 | 1455681 NuckingFuts
NuckingFuts's picture

dup

Thu, 07/14/2011 - 09:17 | 1455619 Clamdigger
Clamdigger's picture

...or the Golden Shower state.

Thu, 07/14/2011 - 11:24 | 1456146 Animal Cracker
Animal Cracker's picture

"It's time to eat our pee."

-Sacramento

Thu, 07/14/2011 - 09:36 | 1455708 Clamdigger
Clamdigger's picture

<double post, no additional charge>

Thu, 07/14/2011 - 09:16 | 1455613 hugovanderbubble
hugovanderbubble's picture

Please anyone could share a list of

 

ETF´s related to Munibonds, and tickers of Most Tradeable Equity;Funds, Munibonds?...

 

TO get short

 

Thanks,.

Thu, 07/14/2011 - 09:17 | 1455623 The Rock
The Rock's picture

The Golden State is so desperate for money that they stopped issuing 60 day notices for vehicle registration so they can collect on late fees.

Thu, 07/14/2011 - 09:25 | 1455659 Sudden Debt
Sudden Debt's picture

so you had a late fee...

why not blame the mailman?

 

Thu, 07/14/2011 - 09:18 | 1455628 The Rock
The Rock's picture

The Golden State is so desperate for money that they stopped issuing 60 day notices for vehicle registration so they can collect on late fees.

Thu, 07/14/2011 - 11:20 | 1456135 ThoughtCriminal
ThoughtCriminal's picture

time to make it state number 32 - for Mexico

Thu, 07/14/2011 - 11:47 | 1456261 caconhma
caconhma's picture

California situation is very easy to fix

  • First, declare a bankruptcy
  • Lay off 15-20% of all state employees
  • Cut all state employees pay by 10-15%
  • Stop paying all state benefits to illegals
  • Redo the state retirement law for its employees (make it similar to the private sector)
    • Early retirement age at 62.5 yrs
    • No pension benefit above 35% of the last 3 years base pay

In 1-2 years, CA will have a large state budget surplus

Thu, 07/14/2011 - 16:34 | 1457424 dolly madison
dolly madison's picture

Additionally, California is working to set up its own bank, so that it won't have to pay so much interest when it borrows.  Cut the banks out, and we all have more.

Thu, 07/14/2011 - 11:59 | 1456320 carbonmutant
carbonmutant's picture

Paging Meridith Whitney...

Thu, 07/14/2011 - 09:00 | 1455555 QuantumCat
QuantumCat's picture

More please...

Thu, 07/14/2011 - 09:01 | 1455561 snowball777
snowball777's picture

Don't worry, Bill...I've got your back. Is 10% good for you?

Thu, 07/14/2011 - 09:02 | 1455567 bonddude
bonddude's picture

Gotta love that Meredith and her macro calls. Like duh! Very bifurcated market. The good shit is

getting major bids while the rest hangs fire.

Thu, 07/14/2011 - 09:52 | 1455764 Cow
Cow's picture

It's all Meredith's fault

Thu, 07/14/2011 - 09:03 | 1455570 Blagio
Blagio's picture

JPM posted better than expected earnings. No worries.

Thu, 07/14/2011 - 09:08 | 1455581 SheepDog-One
SheepDog-One's picture

Rockin! Wheres the need for QE?

Thu, 07/14/2011 - 09:11 | 1455590 WestVillageIdiot
WestVillageIdiot's picture

Just decrease your loan loss allowances and, bingo, earnings look great.  Bonuses all around, bitches. 

Thu, 07/14/2011 - 11:17 | 1456115 karzai_luver
karzai_luver's picture

bridge to nowhere , bitchezzzz!

 

 

Thu, 07/14/2011 - 09:03 | 1455571 lolmao500
lolmao500's picture

While in the real news... SP : miss any payment on anything and you get downgraded.

http://www.chicagotribune.com/business/breaking/chi-sp-to-us-any-missed-...

Standard & Poor's has privately told U.S. lawmakers and top business groups that it might cut the U.S. credit rating if the government fails to make any of its expected payments -- including Social Security checks -- even if it makes all its debt payments, the Wall Street Journal reported citing people familiar with the matter.


Thu, 07/14/2011 - 09:07 | 1455580 SheepDog-One
SheepDog-One's picture

OH, checkmate to petulant Obama, 'You miss any payments, we downgrade you'.

I am glad to see the sleepy ratings agencies suddenly alert and frisky like a pitbull now downgrading everything in sight after completely MISSING everything up to this point.

Thu, 07/14/2011 - 09:13 | 1455608 The Rock
The Rock's picture

ALL ACTORS ON A STAGE...

Thu, 07/14/2011 - 09:33 | 1455699 WestVillageIdiot
WestVillageIdiot's picture

There is better acting in porn.

That is what I hear.

Thu, 07/14/2011 - 10:46 | 1455816 hedgeless_horseman
hedgeless_horseman's picture

[Doorbell rings, girl opens door]

Moody Steel:  Hello, miss, did you order a ratings downgrade?

Pet Chulent:  Why yes I did.  Come on in.

Moody Steel:  Do you want a long downgrade?

Pet Chulent: Ooooh!  Really, I just want a little one until my sugar daddy comes back with another big stimulus package.

Moody Steel:  Well, all I have is this AA.

Pet Chulent: Wow...it's so big and threatening.  It's perfect!

Moody Steel: I thought you might like it.

Pet Chulent: Can you just wave it around without actually..you know...finishing the job?

Moody Steel: Well, we run the risk of making a mess of things, but I can give it a shot.

Pet Chulent: Let me open the curtains...I want everyone to see it.

Moody Steel: Well, aren't you a naughty little bitch?

[Cue music http://www.youtube.com/watch?v=4fYfdlKIon4 ]

 

Thu, 07/14/2011 - 15:49 | 1457289 MsCreant
MsCreant's picture

Good work here! It ends up a bondage flick, doesn't it?

Thu, 07/14/2011 - 09:09 | 1455586 Urban Redneck
Urban Redneck's picture

That is SHOCKING coming from S&P.

Thu, 07/14/2011 - 09:17 | 1455624 nodhannum
nodhannum's picture

Looks like the rating agencies have come to Jesus!

Thu, 07/14/2011 - 09:37 | 1455714 WestVillageIdiot
WestVillageIdiot's picture

I would love to know what their ulterior motive is.  There has to be one.  There always is.  There is no way they are doing this to actually be honest ratings agencies.  As we all know, honesty doesn't pay very well in the world of the financial mafia.

Thu, 07/14/2011 - 10:02 | 1455791 cranky-old-geezer
cranky-old-geezer's picture

It's simple.  Wall Street wants to push Obummer over his reluctance to start looting 401k and other pension assets, so they have their (completely owned) rating agencies turn up the heat. 

Thu, 07/14/2011 - 11:19 | 1456126 karzai_luver
karzai_luver's picture

yep them and the banksters want it ALL NOW.

Never let a good cry go to waste.

 

Thu, 07/14/2011 - 09:18 | 1455627 lolmao500
lolmao500's picture

Indeed it is. Maybe the elite has finally decided to destroy it all.

Thu, 07/14/2011 - 09:03 | 1455572 Cognitive Dissonance
Cognitive Dissonance's picture

Don't send money, just more of the Governator.

Thu, 07/14/2011 - 09:31 | 1455693 MK ultra
MK ultra's picture

Hey.. isn't that Mickey Rourke ??

Thu, 07/14/2011 - 09:34 | 1455704 SheepDog-One
SheepDog-One's picture

Looks like Mickey Rourke, except not bizarre enough lookin. Like an 80's Harley Davidson and Marlboro Man Rourke.

Thu, 07/14/2011 - 11:21 | 1456132 karzai_luver
karzai_luver's picture

Next SecofTreas???

 

Thu, 07/14/2011 - 10:33 | 1455910 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Is that Harrison Ford?  The sign now makes sense!

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Thu, 07/14/2011 - 16:41 | 1457460 carbonmutant
carbonmutant's picture

He's probaly just going to spend it fuel...

Thu, 07/14/2011 - 09:04 | 1455574 SheepDog-One
SheepDog-One's picture

Are we at the point where the pirates turn on themselves and start killing and stealing each others loot because theres no one else left to plunder?

'We'll pay you back when we plunder the taxpayer more later in the year', yea right.

Thu, 07/14/2011 - 09:16 | 1455616 camoes
camoes's picture

GTA 6: Austerity Edition

Thu, 07/14/2011 - 11:29 | 1456172 Calculated_Risk
Calculated_Risk's picture

Not yet.. still have 401k, state pensions etc.. though the canabalism will begin soon enough.

Thu, 07/14/2011 - 09:04 | 1455575 Troy Ounce
Troy Ounce's picture

 

California dreaming?

Did they not present a balanced budget recently?

Thu, 07/14/2011 - 09:09 | 1455587 WestVillageIdiot
WestVillageIdiot's picture

I think the California dreamers just choked on a ham sandwich.

Thu, 07/14/2011 - 09:05 | 1455576 WestVillageIdiot
WestVillageIdiot's picture

Couldn't they get some silver from Mexico?  California should sue for recompense of all the money they have spent to house, feed and provide medical care for Mexico's citizens.  I know the Pelosis of the world would hate it.  That would make it even better. 

Thu, 07/14/2011 - 09:11 | 1455594 Hedgetard55
Hedgetard55's picture

The libturds that run Cali would let it go BK before cutting out welfare programs, especially for illegals. Liberalism, it's what's for breakfast. A mental disorder with a death wish attached.

Thu, 07/14/2011 - 09:40 | 1455726 Vergeltung
Vergeltung's picture

that statement of clarity certainly did not deserve a junk.

 

Thu, 07/14/2011 - 10:03 | 1455793 Confucious 222
Confucious 222's picture

Liberalism always comes with a price, which is generally the bankruptcy of the State; as well as the impoverishment of the children and grandchildren of the liberals who never saw a "problem" that couldn't be "fixed" with more deficit spending.

Let's just call it the NYTimes Syndrome.

This message brought to you by the PM of the Month Club.

 

 

Thu, 07/14/2011 - 10:20 | 1455857 Loose-Tools
Loose-Tools's picture

"Clarity" through heavily-filtered glasses?

Thu, 07/14/2011 - 15:09 | 1457168 SmittyinLA
SmittyinLA's picture

Mexico exports liabilities, not assets, they're hip.

Thu, 07/14/2011 - 09:37 | 1455582 The Limerick King
The Limerick King's picture

The sunshine ain't shining in Cali

Even with this Bernankenstein rally

Their future's been spent

All their wealth has been lent

Add CA to the Oligarch's tally

Thu, 07/14/2011 - 09:58 | 1455779 RafterManFMJ
RafterManFMJ's picture

Nice!

 

Kalifornia’s Position is funny

The future is no longer sunny

The problem you see,

It’s clear as can be,

They’ve run out of other people’s money.

Thu, 07/14/2011 - 10:08 | 1455808 cranky-old-geezer
cranky-old-geezer's picture

+ gold (poetry) star of the day.

Thu, 07/14/2011 - 11:00 | 1456031 The Limerick King
The Limerick King's picture

Bravo!!!

Thu, 07/14/2011 - 10:00 | 1455788 Bastiat
Bastiat's picture

Heh. Good work.

Thu, 07/14/2011 - 09:08 | 1455583 WestVillageIdiot
WestVillageIdiot's picture

If munis get downgraded to AA would all of the financial institutions have to sell them?  I am guessing they would change that rule pretty quickly.  It would be like the FASB 157 ruling.  The rule would be changed to allow them to buy AAA rated offerings or any offering that was previously AAA and expected to be returned to such rating.  If you aren't winning the game just change the rules until you are.

Thu, 07/14/2011 - 09:16 | 1455615 bonddude
bonddude's picture

Very few AAA bonds left. Insurers not even AAA anymore, so never mind about that.

Thu, 07/14/2011 - 09:23 | 1455651 John Law Lives
John Law Lives's picture

Check out Texas GO bonds.

Thu, 07/14/2011 - 12:01 | 1456321 jomama
jomama's picture

how many times are you going to plug that?

Thu, 07/14/2011 - 17:26 | 1457658 John Law Lives
John Law Lives's picture

I haven't been keeping count, but AAA munis can be had.

Thu, 07/14/2011 - 12:13 | 1456382 bonddude
bonddude's picture

Was that supposed to disprove my statement? It doesn't.

Thu, 07/14/2011 - 17:24 | 1457647 John Law Lives
John Law Lives's picture

<<<   Was that supposed to disprove my statement?   >>>

No.

<<<   It doesn't.   >>>

That is a matter of opinion.

Thu, 07/14/2011 - 09:09 | 1455584 dognamedabu
dognamedabu's picture

Well just about the time to parade out more Ministry Of Truth officials on CNBC. That'll fix it.

 

 

Thu, 07/14/2011 - 09:11 | 1455595 LawsofPhysics
LawsofPhysics's picture

And defaults for all.  Got physical?

Thu, 07/14/2011 - 09:11 | 1455596 lolmao500
lolmao500's picture

http://www.nationalreview.com/corner/271732/2-billion-daniel-foster

“How much does the Biden plan actually cut from next year’s discretionary spending budget?” the Kentucky Republican asked the room.

Obama’s Office of Management and Budget Director Jacob Lew told him, “$2 billion.”

Thu, 07/14/2011 - 09:13 | 1455607 SheepDog-One
SheepDog-One's picture

'$2 billion' that really is a lolmao!

Thu, 07/14/2011 - 09:17 | 1455621 equity_momo
equity_momo's picture

Serve me up a roofleburger

Thu, 07/14/2011 - 09:26 | 1455666 LawsofPhysics
LawsofPhysics's picture

Cut all the discretionary spending and it won't matter a damn bit.  Discretionary spending is less the 15 % of the budget.  Totally fucking stupid.  The big four have to be cut.  Aside from default, there is no other option.

Thu, 07/14/2011 - 09:44 | 1455735 earnulf
earnulf's picture

More like 35-40% of the budget is "discretionary" (which includes defense btw)

If you eliminated all the discretionary spending, you would see a surplus of 100 billion dollars.   Along with millions of hungry, pissed, out-of-work, folks who are no longer getting milk off the government teat.

Thu, 07/14/2011 - 09:12 | 1455601 SheepDog-One
SheepDog-One's picture

Bernank finds himself pushing the string on QE 'last gasp 3rd times a charm this time it'll work', wants to drive it forward but wheres any bad news? 

Thu, 07/14/2011 - 09:13 | 1455605 John Law Lives
John Law Lives's picture

Buy Texas GO bonds.  They are safer than US Treasuries.

Thu, 07/14/2011 - 09:24 | 1455655 John Law Lives
John Law Lives's picture

Junked for stating a fact?

Thu, 07/14/2011 - 09:25 | 1455661 anony
anony's picture

A junk here is a badge of honor.  Revel in it.

Thu, 07/14/2011 - 09:36 | 1455709 John Law Lives
John Law Lives's picture

I get lots of junks when I defend muni bonds.  The historical level of default on GO bonds in the US is exceptionally low.  Texas GO bonds are about as safe as it gets these days.

Thu, 07/14/2011 - 10:05 | 1455798 Bastiat
Bastiat's picture

Muni credits are specific, you are right.  For 20 years MBIA, FGIC and AMBAC created the illusion that wasn't true.  Buy side muni credit analysts went to sleep and disappeared.

Thu, 07/14/2011 - 10:19 | 1455854 snowball777
snowball777's picture

I can think of much safer investments than bonds backed by sales taxes as we head into another deep recession. Just sayin'

Thu, 07/14/2011 - 10:25 | 1455882 Bastiat
Bastiat's picture

How about water or sewer revenue bonds supported by a well-off community?

Thu, 07/14/2011 - 15:29 | 1457220 SmittyinLA
SmittyinLA's picture

*supported by a well off community

"Well off community" key words, the city of Bell CA did that, they're slated for default.

The Texas economy could be crushed several ways, here's a few.

  • Energy CO2 taxes
  • Air quality restrictions-coal plant closings=dramatic electricity increases.
  • Housing National building codes.
  • Enforcement of federal environmental laws
  • Mexican voter Socialism
  • Oil price collapse
  • Immigration enforcement
  • Obamacare
  • and last but not least civil war between Latinos and Americans.

If federal environmental laws, air quality and water quality laws were enforced to the same extent in TX as they are in CA most TX businesses would be shut down, and Obama has his double barreled shotgun of Socialism aimed directly at Texas' head.

Texas is basically low hanging fruit for Obamastan, they can shut it down anytime they please.

Thu, 07/14/2011 - 10:47 | 1455972 John Law Lives
John Law Lives's picture

If you choose your municipalites wisely, I would be surprised if your statement is true.  The default rate on GO bonds in the US since the Civil War is exceptionally low.

I have been investing in munis since the early 1980s.  The US has had three recessions since then (not including the 1981-82 recession), and I have never lost any $$$ in principal on munis.  One might argue that real inflation has run higher during certain periods than the net interest I earned, but I never lost any principal.

Thu, 07/14/2011 - 09:30 | 1455685 SheepDog-One
SheepDog-One's picture

Its probably Robo in a bad mood junking after getting poleaxed by Tyler last nite.

Thu, 07/14/2011 - 09:37 | 1455715 John Law Lives
John Law Lives's picture

RoboChump is for comic relief.  He/she was more entertaining when he/she posted saucy photos of women on this site.

Thu, 07/14/2011 - 13:39 | 1456739 anony
anony's picture

I miss those days.....might have been reprimanded for surfing excessively on company time....those posts had to be a real time suck.

Thu, 07/14/2011 - 09:16 | 1455609 Blithering ORSA
Blithering ORSA's picture

They've got Jerry Brown.  His aura smiles and never frowns.  THis won't be a problem.

Thu, 07/14/2011 - 09:22 | 1455644 Cui Bono
Cui Bono's picture

There's always room for Jello!

Thu, 07/14/2011 - 09:59 | 1455785 RafterManFMJ
RafterManFMJ's picture

Wait! Did you just quote the Dead Kennedy's?

Thu, 07/14/2011 - 09:16 | 1455611 grunk
grunk's picture

California: One big Donner Party.

Thu, 07/14/2011 - 09:31 | 1455695 toady
toady's picture

Nice!

When the SHTF I would't be surprised to hear about some canabalism.

Thu, 07/14/2011 - 10:17 | 1455849 Problem Is
Problem Is's picture

California is the Citibank of states...

  1. TBTF...
  2. Too big to manage...
  3. The management needs to be fired and jailed...
  4. And the state needs to be broken up for the good of all...
Thu, 07/14/2011 - 10:21 | 1455869 mick_richfield
mick_richfield's picture

I make reservations at restaurants under the name "Donner", and then don't show up.

I just like to think of them saying "Donner party?  Table for 6?  Donner party?"

Thu, 07/14/2011 - 09:17 | 1455618 Seasmoke
Seasmoke's picture

after reading about the pension lottery winner payouts , its not hard to understand that California is bankrupt

Thu, 07/14/2011 - 09:29 | 1455683 Sudden Debt
Sudden Debt's picture

at least sunshine is still free.

 

Thu, 07/14/2011 - 09:18 | 1455626 Blithering ORSA
Blithering ORSA's picture

They've got Jerry Brown.  His aura smiles and never frowns.  THis won't be a problem.

Thu, 07/14/2011 - 09:24 | 1455658 Marley
Marley's picture

It's another beautiful California day.

Thu, 07/14/2011 - 09:26 | 1455665 Pure Evil
Pure Evil's picture

Why bother with Wall Street?

Go straight to the source, China.

If the US can borrow from China, why not California?

Thu, 07/14/2011 - 09:49 | 1455756 francis_sawyer
francis_sawyer's picture

oh yeah, that would be great... we're then on the hook to ship all our food produce to Shanghai...

Thu, 07/14/2011 - 09:28 | 1455671 monopoly
monopoly's picture

This gets better every day. Gotta luv it.

Thu, 07/14/2011 - 09:32 | 1455697 SheepDog-One
SheepDog-One's picture

California, the 7th largest ECONOMY in the world bankrupt, why doesnt this send shock waves thru markets like tiny Greece did? What a puppet show!

Thu, 07/14/2011 - 09:59 | 1455780 Founders Keeper
Founders Keeper's picture

[What a puppet show!]---SheepDog-One

+1

The worse the puppet show gets, the worse the outcome.

The puppet show is finishing Act I.

 

 

 

Thu, 07/14/2011 - 09:36 | 1455710 P-K4
P-K4's picture

California should have tried asking China for the bridge loan after all, they (San Francisco) are buying a bridge from China. I wonder if China will receive IOU's as a down payment.

Thu, 07/14/2011 - 10:17 | 1455844 Anaxagoras
Anaxagoras's picture

Would that be a bridge bridge loan to nowhere?

Thu, 07/14/2011 - 11:27 | 1456158 karzai_luver
karzai_luver's picture

Hu KNOWS!

What the hell does China need with Tibet when they can own Kalifornia.

Home of the most commies this side of the great wall!

Thu, 07/14/2011 - 12:35 | 1456462 Mad Cow
Mad Cow's picture

"I wonder if China will receive IOU's as a down payment."

Sure why not, since all China has to offer is paper.

Thu, 07/14/2011 - 09:36 | 1455711 SoNH80
SoNH80's picture

California in the 20th century was the perfect allegory for the U.S.A.  1911-- clean air, wide-open spaces, oil galore, citrus trees everywhere, the perfect place for a fresh start.  Unfortunately, California in the 21st century is also the perfect allegory for America.  Outside of the outer edges (far north, San Diego's tony suburbs, Monterey, Big Sur etc.)-- 2011-- foul air, crazy criminal gangs, insane traffic, Broke/Big Government, dying middle class, etc. etc. etc.

Thu, 07/14/2011 - 09:59 | 1455782 Ying-Yang
Ying-Yang's picture

Heh heh... 2011, sounds like you are describing Detroit

Thu, 07/14/2011 - 10:07 | 1455803 SoNH80
SoNH80's picture

Or Baltimore, or Philadelphia, or Springfield, Mass., or..... WHAT WENT WRONG? 

Thu, 07/14/2011 - 11:32 | 1456181 karzai_luver
karzai_luver's picture

those criminal gangs are not crazy, they were just AHEAD of the curve.

I would much rather be in a crazy criminal gang than wandering the

sidewalks looking for a Starbucks when the shit finally blows.

 

One suckers crazy is very rational from the other suckers view.

In fact if and when it all goes to hell the new nation will be in large

part born of them just as this country was originally born of

a criminal gang.

 

Thu, 07/14/2011 - 11:36 | 1456209 SoNH80
SoNH80's picture

So, uh, MS-13 and the Nazi Berserker Biker Family or whomever will be our new Founding Fathers???  Hey, might be your cup of tea, but I'll take a pass, and stay on THIS side of the Great American Desert.....

Thu, 07/14/2011 - 09:39 | 1455722 Stuck on Zero
Stuck on Zero's picture

There's no off-ramp for this bridge loan. 

Thu, 07/14/2011 - 09:46 | 1455740 francis_sawyer
Thu, 07/14/2011 - 09:46 | 1455742 francis_sawyer
francis_sawyer's picture

gratuitous babe fotos on that link...

Thu, 07/14/2011 - 09:57 | 1455776 snowball777
snowball777's picture

The one that contributes ~$700 per capita and spends > $2000 per capita...hint: not SF or Marin (which contribute > $4000 per capita and spend ~$600 per capita).

Thu, 07/14/2011 - 09:58 | 1455777 SoNH80
SoNH80's picture

The Central Valley pulls its own weight, despite its poverty.  Ditto the western side of San Francisco Bay.  San Diego too.  I'd guess that Los Angeles County, the East Bay, and that Meth Belt area around Bakersfield-Riverside are what drag the state down.

Thu, 07/14/2011 - 09:47 | 1455747 earnulf
earnulf's picture

So did the first bridge loan have a gap that required a second bridge loan?   Just california dreamin..

Thu, 07/14/2011 - 09:51 | 1455760 snowball777
snowball777's picture

So amusing that a state with an SDP of $1.2T...where corporate profits have risen 400% since 2000...can't seem to balance the books, but at least we still have the incomes of individuals that have gone up 27% over the same period to plunder.

 

Thu, 07/14/2011 - 10:00 | 1455786 luigi
luigi's picture

Any news about Minnesota?

Thu, 07/14/2011 - 11:33 | 1456189 karzai_luver
karzai_luver's picture

Don't call them they will call you.

CLosed until further notice.

 

Thu, 07/14/2011 - 10:06 | 1455801 donpaulo
donpaulo's picture

california has ALWAYS been a boom or bust state. They might be down right now but I would not write them off ever returning to boom times. Its not a question of IF but rather when.

Thu, 07/14/2011 - 10:08 | 1455805 PulauHantu29
PulauHantu29's picture

I already called my Congressman (for whatever good that will do) and said if he votes to Bail out each state that cannot control their own spending then he will NOT get my vote.

 

If people will not pay for their debts why should the rest of America?

Thu, 07/14/2011 - 10:09 | 1455815 j0nx
j0nx's picture

The absolute LAST thing california will cut is benefits to illegals and state pensions which is ironic since those two items are 90% of what ails them. The sacred cow of turning the other cheek to the millions of illegals there will remain untouched even as their proverbial keel slips beneath the sea.

Thu, 07/14/2011 - 10:13 | 1455826 Problem Is
Problem Is's picture

It was classic California budget theater...

  1. Huge budget deficit...
  2. Can't think of any cuts...
  3. Massively overstate revenues...
  4. Declare a balanced budget and victory...
  5. Watch it blow up in their faces weeks later...

They've done it every year back to the days when Arnold was just a washed up actor grabbing titty...

Thu, 07/14/2011 - 10:14 | 1455831 cranky-old-geezer
cranky-old-geezer's picture

I just love the smell of burning muni-bulls in the morning.

Thu, 07/14/2011 - 10:16 | 1455837 Bicycle Repairman
Bicycle Repairman's picture

Shut.It.Down

Thu, 07/14/2011 - 10:20 | 1455862 Byronio
Byronio's picture

Permitting California, and the US, to become non-White, well it has consquences.

People are NOT fungible.

For comaprison: Rhodesia now Zimbabwe, the old South Africa versus the new.

Whether Asian or Latin nations, their progress has been through our technologies freely given or stolen, and the deliberate transfer of US jobs to those nations as well.

Then you have the Minority Mortgage Meltdown which Holder is adding to that fire by threatening banks the other day. Looking back you will say to yourself: how did I let that all happen?

Thu, 07/14/2011 - 11:36 | 1456207 karzai_luver
karzai_luver's picture

progress , like Haiti ....

but but um errrrrrrrrrrr you seem to be saying there has not been progress

among the darkies?

 

 

Thu, 07/14/2011 - 10:37 | 1455927 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

The office of Moody's CEO has gotta be an interesting place these days.

Thu, 07/14/2011 - 11:30 | 1456175 no2foreclosures
no2foreclosures's picture

"revenue-anticipation note" ~ is this the latest toilet paper Ponzi scheme from the land of the fruitcakes and nuts?

Thu, 07/14/2011 - 11:34 | 1456195 nah
nah's picture

the internet has alot of money... why cant we just give california some of that Amazon internet money

.

http://www.southparkstudios.com/clips/165192/how-do-we-make-money-on-the...

Thu, 07/14/2011 - 12:51 | 1456534 snarkolepsy
snarkolepsy's picture

128 comments and no mention that Moodies just upgraded us (California) three days ago!They said we were completely stable for two years. Yeah. They did.

You wouldn't want us to have a failed a bond auction. Would you?!

For those of you quick to inflame - this is dripping with sarcasm. They did upgrade us though.

Thu, 07/14/2011 - 13:11 | 1456612 luigi
luigi's picture

And, just for us to know: what's the rating Moody's gave to Minnesota?

Thu, 07/14/2011 - 12:59 | 1456566 White.Star.Line
White.Star.Line's picture

I think there are still 6 redwood trees left, and a couple ounces of unmined gold around Sutters that can be used as collateral for these debt inconveniences.

Thu, 07/14/2011 - 13:56 | 1456831 grunk
grunk's picture

California: One big Donner Party.

Thu, 07/14/2011 - 18:15 | 1457773 Wannabee
Wannabee's picture

This just in: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/07/14/BAL61KAHVQ.DTL&tsp=1

California economy fixed by those brave & bold politicos.

 

Thu, 07/14/2011 - 18:40 | 1457845 honestann
honestann's picture

Same as always.  Even staring at a speeding train now only 100 meters down the tracks, the predators refuse to CUT SPENDING.

Squash.

And good riddins.

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