Wall Street Journal: Investors buy $4.5 Billion in CA Bonds in 1 Day (Montclair: live, rated)

[OC Investor2]

You seem to be implying that the $4b paid represents some faith by investors in the economic prospects of the CA state gov't. Look at the maturity dates on the bonds - they are 8-9 month notes. They are basically used to finance the gov't operations until the annual tax reciepts arrive after 4/15/11. I think I read about this same type of auction a few years ago and most states do the same thing.

These are not some long term notes that purchasing requires an extensive amount of trust, they are just short term issues.

[Bulldogdad]

Originally Posted by 18Montclair

Here is the data from 1987-2005

California Federal Tax Dollars Spent OUTSIDE of California
1987 $8 Billion
1988 $15 Billion
1989 $20 Billion
1990 $18 Billion
1991 $9 Billion
1992 $3 Billion
1993 $3 Billion
1994 $1 Billion
1995 $1 Billion
1997 $35 Billion
1998 $52 Billion
1999 $67 Billion
2000 $101 Billion
2001 $77 Billion
2002 $35 Billion
2003 $14 Billion
2004 $18 Billion
2005 $47 Billion
1987-2005 $524 Billion
The Tax Foundation - Federal Taxes Paid vs. Federal Spending Received by State, 1981-2005

Assuming that 2006-2009 were similar to 2005 then that's another $200 Billion so I think I was wrong. Its not 1 Trillion,

But its closer to just $750 Billion.

Im sure spent on 'bridges to nowhere' in some podunk crack in the dustbowl or appalachia, but most likely on some Bureaucrat in DCs new BMW.

My point is, they aint bailing out nobody...they would simply be paying us back!

See that wasn't that hard. I've know about this long running financial joke since the 1980's. You are still comparing apples to oranges. But keep electing Boxer, Feinstein and all the other libs, they are doing a wonderful job.

[18Montclair]

Individual Investors have snapped up nearly $6 Billion-Institutional orders begin today!

California sells retail buyers $5.9 bln in notes - MarketWatch

[OC Investor2]

Originally Posted by 18Montclair

Individual Investors have snapped up nearly $6 Billion-Institutional orders begin today!

California sells retail buyers $5.9 bln in notes - MarketWatch

Did you even read the article? From the last line :

Still, the cash-strapped state is paying more than the average for six-month notes, of 0.6%. It plans to take institutional orders Wednesday

We had to pay twice the interest rate of other states Because investors are demanding a higher return to compensate them for the higher risk they percieve CA represents. BECAUSE INVESTORS DON'T TRUST CA.

: smack:

[18Montclair]

Well, yours like mine, is just an opinion.

Except money talks and $6 Billion is already snapped up. In ONE DAY.

There really is no counter that speaks more loudly than that.

[SacTown11]

Mish's Global Economic Trend Analysis: Full Year of Muni Gains Wiped Out in 2 Weeks; California in Shambles, Philadelphia Downgraded; Issuance Soars; Horrid Muni Risk-Reward Setup

It is foolish to go deeper into debt without a clear plan to dig yourself out of the hole. Eventually the can kicking will result in the can being kicked off the cliff.

Only fools do not understand this and no piece of paper stating it is illegal will avert this disaster.

[OC Investor2]

Originally Posted by 18Montclair

Well, yours like mine, is just an opinion.

Except money talks and $6 Billion is already snapped up. In ONE DAY.

There really is no counter that speaks more loudly than that.

No. I am talking FACTS.

Fact - Average interest rate paid by other states on recently issued 6 month notes: .6%
Fact - Interest paid on these CA 6 month notes: 1.25%
Fact - Borrowers can be forced to pay higher then market interest rates when investors demand a higher return to take on higher risk.

Again - these are for short term notes intended to provide cash to the state until the 2011 income taxes are recieved on 4/15. There is no confidence in the states fiscal health implied by the ability borrow thru selling 6 or 7 or$10B worth of this kind of bond.

OTOH There is a significant vote of no confidence if the state is being charged a 2x interest rate premuim to borrow for such a short time.

[18Montclair]

Originally Posted by SacTown11

Mish's Global Economic Trend Analysis: Full Year of Muni Gains Wiped Out in 2 Weeks; California in Shambles, Philadelphia Downgraded; Issuance Soars; Horrid Muni Risk-Reward Setup

It is foolish to go deeper into debt without a clear plan to dig yourself out of the hole. Eventually the can kicking will result in the can being kicked off the cliff.

Only fools do not understand this and no piece of paper stating it is illegal will avert this disaster.

And its almost criminal that they can make such RECKLESS statements like "California in Shambles" because they want to strike fear and panic on the market.

To say "California is in Shambles" implies a whole host of fasle assumptions.

Even worse, people out there actually buy it hook, line and sinker.

[18Montclair]

Originally Posted by OC Investor2

No. I am talking FACTS.

Fact - Average interest rate paid by other states on recently issued 6 month notes: .6%
Fact - Interest paid on these CA 6 month notes: 1.25%
Fact - Borrowers can be forced to pay higher then market interest rates when investors demand a higher return to take on higher risk.

Again - these are for short term notes intended to provide cash to the state until the 2011 income taxes are recieved on 4/15. There is no confidence in the states fiscal health implied by the ability borrow thru selling 6 or 7 or$10B worth of this kind of bond.

OTOH There is a significant vote of no confidence if the state is being charged a 2x interest rate premuim to borrow for such a short time.

Nope.

The markets demonstrate a faith(or patience) with California that they have not afforded some other places.

Markets won’t force California’s budget hand | Analysis & Opinion |

Didnt say it was total adoration, but for now, we could be much worse off.

[SacTown11]

Originally Posted by 18Montclair

And its almost criminal that they can make such RECKLESS statements like "California in Shambles" because they want to strike fear and panic on the market.

To say "California is in Shambles" implies a whole host of fasle assumptions.

Even worse, people out there actually buy it hook, line and sinker.

If you say so it must be true. If the bond market continues to collapse, people will be too frightened to snatch anyone's bonds up. The fear is not generated by some blog somewhere, it is generated by real defaults, real losses, real panic. California would feel the pain more than most because of how much our Legislators depend upon borrowing against the future to pay for the present.