Morfin
07-03-2009, 10:22 AM
I do not think that this is a coincidence that California is beginning to pay out in IOUs and that there was an earthquake today near California.
Coffers Empty, California Pays With I.O.U.’s
LOS ANGELES — An ever-widening budget gap joined with intractable political paralysis to deliver California its biggest fiscal blow in decades on Thursday, when the state’s controller began printing i.o.u.’s in lieu of cash to pay taxpayers, vendors and local governments.
It was only the second time the state had adopted the emergency payment method since the Great Depression. The National Conference of State Legislatures had no record of any other state’s ever using them.
It was unclear whether the i.o.u.’s, known as warrants, would be accepted by all of the banks in California, which were caught off guard by the move and seemed hesitant to entrust the state to repay the them — at an interest rate of 3.75 percent — in October, as promised.
The controller, John Chiang, issued 28,742 warrants totaling $53.3 million. If state lawmakers fail to reach a budget agreement by the end of August, the amount would grow to $4.8 billion.
While the emergency move resulted from California’s combination of outsized budget gaps, unusual budget rules and a morass of financial obligations approved at the polls, the action was seen as a warning flag to other states that have failed to close their budgets this fiscal year because of the economic downturn. Link
(http://www.nytimes.com/2009/07/03/us/03calif.html?_r=1&hp)
If I lived in California, I would offer to buy the warrants from people. No doubt people would take a discount to get the cash, and I have little doubt that California will honor them, plus the interest.
Coffers Empty, California Pays With I.O.U.’s
LOS ANGELES — An ever-widening budget gap joined with intractable political paralysis to deliver California its biggest fiscal blow in decades on Thursday, when the state’s controller began printing i.o.u.’s in lieu of cash to pay taxpayers, vendors and local governments.
It was only the second time the state had adopted the emergency payment method since the Great Depression. The National Conference of State Legislatures had no record of any other state’s ever using them.
It was unclear whether the i.o.u.’s, known as warrants, would be accepted by all of the banks in California, which were caught off guard by the move and seemed hesitant to entrust the state to repay the them — at an interest rate of 3.75 percent — in October, as promised.
The controller, John Chiang, issued 28,742 warrants totaling $53.3 million. If state lawmakers fail to reach a budget agreement by the end of August, the amount would grow to $4.8 billion.
While the emergency move resulted from California’s combination of outsized budget gaps, unusual budget rules and a morass of financial obligations approved at the polls, the action was seen as a warning flag to other states that have failed to close their budgets this fiscal year because of the economic downturn. Link
(http://www.nytimes.com/2009/07/03/us/03calif.html?_r=1&hp)
If I lived in California, I would offer to buy the warrants from people. No doubt people would take a discount to get the cash, and I have little doubt that California will honor them, plus the interest.