NY Gov. Paterson: "For The First Time Ever, At The End Of December New York State Will Have A Negative Cash Balance"

Tyler Durden's picture

David Paterson speaks on CNBC. Not good news for New York inhabitants, or NY CDS shorts. Or not... NY State CDS hit an all time wide of 357 bps in December. They are now around 140. Any escalation of NY's fiscal crisis may simply imply more and more taxpayer bailouts. Swaption time.

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10044's picture

Don't worry, Shalom will print the money and give it to him in no time

Mako's picture

NY better get use to it.... Federal government is the only player left at the table.

 

Everything is temporary contained.  Fed Reserve Z1 report still not looking pretty.

Q3 2009 52617.3T

Q2 2009 52730.3T

Q1 2009 52899.4T

The credit market is still expanding at a negative rate of -$113B, without federal government creation it would been down -$492B for Q3.  

The system is dying, eventually no matter what the government does it will collapse into a fireball.  
http://www.federalreserve.gov/releases/z1/Current/z1.pdf

The credit market was expanding at a $4.7T rate in 2007, it's over folks... the compounding equation is rolling over on itself.

 

chunkylover42's picture

It's over?!?!  Was it over when the Germans bombed Pearl Harbor? 

 

 

Uncle Remus's picture

*snort*

Or when the Saudis attacked the WTC? Oh, wait...

Mad Max's picture

Yeah, try not to mix the truth in it.  Shoulda said "when the Iraqis bombed the WTC."

Mako's picture

Yes, it is over... the rest of what you see is everyone going through the motions.

Cognitive Dissonance's picture

I would love to see Gov Paterson standing outside Macy’s with a red bucket and a cup, begging for donations to NY State. Of course, it's easier to simply send a fax to Washington via CNBC. "Send money or I kill the hostage."

Hell, it worked for the bankers. Who would've thought high finance only required a third grade education?

curbyourrisk's picture

If my scool taxes go up 1 more time.....or my property taxes....  Patterson will have more problems than just the fucking idiots in his state legislature.

nedwardkelly's picture

Amen brother.

It's bad enough having to put up with shit awful weather, but getting taxed out the wazoo for the privilidge is testing my willingness to remain a resident of sunny NY.

virgilcaine's picture

Gov. David Paterson announced Sunday that he will withhold $750 million in aid to schools, local governments and other agencies throughout New York because the state doesn't have enough money to pay its bills this month.

Poughkeepsie will see a $424,587 reduction, and Beacon will lose $152,535.

City of Poughkeepsie Mayor John Tkazyik said he met with city department heads after Paterson first announced he might delay aid payments. Although the delay in payments will make things tough, Tkazyik said city officials are prepared for it.

"We had to put measures in place," Tkazyik said. "We put cuts across the board, and we'll be monitoring overtime the best that we can so that we'll be able to make it through the end of the year. We'll be fiscally responsible and put in measures that'll prepare us in the event that the funding does not come."

Joseph Phelan, the superintendent of Rhinebeck schools, said his school district had anticipated a payment of about $225,000 in state aid this month.

"That's $225,000 that we'd prefer to have, but given the small amount of state aid we get — and we're only talking about 12.7 percent of our revenue — it's something that we'll be able to deal with," Phelan said. "But I imagine that it will have more of an impact on other school districts that rely more on state aid."

A full list of reductions to schools will not be available until later this week, Paterson's aides said.

Advocacy groups said the governor's decision will cripple governments and likely lead to a lawsuit over whether the governor has the right to delay payments. The money was designated in April as part of the 2009-10 budget, which was adopted by Paterson and state lawmakers.

Paterson said he will unilaterally delay about 10 percent of anticipated payments to schools and cities so the state doesn't become insolvent.

Reimbursements to schools to fund the school-property-tax rebate program called STAR, along with payments for human-service programs and insurance carriers, will be reduced by 19 percent.

Careless Whisper's picture

Cut salaries and benefits. They are out of control.

Neo-zero's picture

What kind of heartless capitalist are you...

I bet your against the 11.5 % raise for the MTA after the last state bailout,

We can always add a new sutax to the suburbs property assesment, its time those people who don't rides the rails to pay for it Dammit!!!

What we already did that oh well we will just take more its time they stepped up and paid there fair share.

Besides we can't have the Union Thugs, I mean leadership not have an increase of thier dues how will they re-elect our Dear Leader after the solid B+ job he's doing.

 

nedwardkelly's picture

"We'll be fiscally responsible" Tkazyik said

Is he suggesting they weren't being fiscally responsible before the 'crisis' hit? (no need to answer that one).

The problem with school budgets, like just about every other government budget fed organization is that the motivation every year is to meet or exceed what has been budgeted. How else are you going to convince them that you 'need' more next year?

Anonymous's picture

Michigan is in the same boat. Cuts in school and municipal aid on top of earlier cuts in services, support of parks system, everywhere possible.

Tax revenues are down. The state of the auto industry is well circulated news. Individuals must support the system. Deficit operation in the state is is illegal.

At least instate vacations are economical.

hbjork1's picture

Michigan has already gone through this stage.  Cuts to schools, park system, municipal support, state police, road maintence and ...and...

Deficit operation in this state is technically illegal.  Last years tax revenues precipitated big reductions in services and this year is going to be even tighter. 

Ed Whitaker has galloped in to save GM and has reduced costs there by firing Waggoner, Henderson and replacing the heads of the GMC, Buick and Chevrolet.  

Moving Reuss up is considered to be positive step.  Otherwise?   

Whitaker says he doesn't want to head GM.  Obama says the government is not going to run GM.

Really?

I have been buying the larger Buicks for about 20 years now because they had the features I wanted and have been very reliable - trouble free.  I was ready for a new one. 

My brother-in-law's Lexus had a ruptured break hose while he was driving in downtown Chicago.  His drive in traffic using the emergency brake was interesting story.  Once upon a time (long years ago)  I had a broken ball joint on a Chrysler product.  Never bought another Chrysler.

I have to wonder how well Whitaker understands the importance of reliability in automotive marketing 

 

 

 

 

 

deadhead's picture

No problem Gov Patterson, not to worry.

Larry Summers said yesterday that "everybody" agrees that the recession is over and he is well known as the smartest guy in the room.

All's good.

Cursive's picture

I think they should invest the state treasury 50% in the /ES futures contract and 50% in EEM.  That would solve ALL of their money problems.  These things ALWAYS go up and they make you money.  In fact, everyone should do it.  The U.S. Treasury should do it, oh wait....  ;-)

Anonymous's picture

Word 'round the campfire is that Iceman Miskin has been dispatched to solve New York's pesky revenue problem. Have no fear, New Yorkers...there is no fiscal problem that the Iceman's blue pills can't solve.

Anonymous's picture

Tyler,

Different topic than current post.....

Morningstar is reporting huge inflows to funds and etfs in Nov, the "9th consecutive month" for the etf inflows. I've understood from reading here that there has been something like 14 consecutive weeks of fund OUT flows from funds. I find this site to usually be much more credible that industry mouthpieces like the MSM or services like Morningstar. But is there anything you could do to clear up the apparent discrepancy? Thanks, krb

Anonymous's picture

The Gov. is a blind guy who can't read Braille. Way to go NY!
I don't remember anything like this, even back in Russia.

lance_manion's picture

 

In Soviet Union, Braille reads you!

Anonymous's picture

As someone who doesn't live in or near NY I have to ask if the reason "salaries and benefits are out of control" is due to the cost of living being out of control?

Anonymous's picture

I would say that it is a downward out of control self-reinforcing death spiral. Jobs are sent oversees because of wage inflation and wage inflation is driven by many factors. NY and CA have boxed themselves into a corner they won't get out of without alot of pain.

crzyhun's picture

Ny and CA are our future...Suggested reading, Doug Kass in Barrons over weekend....states are in deep do do. And, it is not getting better. Keep piling on the debt, as far as the eyes can see. Washington is totally tone deaf!

Rainman's picture

Amen. Paterson mentioned " CALIFORNIA " five times in the CNBC clip. Even called them a neighbor..... WTF ?? Mass is a neighbor. Cali is a foreign pen pal.

No matter. There is no recovery coming with CA and NY in the financial crapper. Layoffs will have to come in those two States......long term a good thing, short term more pain from unemployment.

Gimp's picture

Print, print, and print. No problem.

Astute Investor's picture

I wonder what this means for my pending tax refund?  I guess I'll just be another unsecured creditor....

carbonmutant's picture

Hey, give Arnie a call. He's been running with a negative cash balance for years.

Anonymous's picture

Less bad is good - they are better than California. Things will work out obviously.

Anonymous's picture

Oh please tell me Mr. Blind guy in more ways than one - what is the difference between a handout and a handback - please tell us oh educated one! You don't oppose handouts so now that you have pissed away your money you want a new invented word "handback" How pathetic can you get a blind guy begging for handout - really!?

Anonymous's picture

Guess this is what happens when you pay RETIRED POLICEMEN over 200k a year