Wolf in Sheep's Clothing - Washington bill for FED to guarantee ALL state muni bonds
If passed, this would officially make the federal taxpayers in every state responsible for bailing out CA, NY, NJ etc.
Also, like the fine print of the stimulus package, such bond guarantees would provide the federal gov't with all the leverage it needs to see to it that future state laws / spending policies go along with federal wishes.
Re: Wolf in Sheep's Clothing - Washington bill for FED to guarantee ALL state muni bo
interesting observation from the same link ...
(snip)
Cost of Auto Bailout $90B
Cost of Freddie/Fannie bailout $400B
Cost of Bank Bailout $500B ($700B TARP fund - $90B for Cars and $100B still left in Fund).
Guarantee's by Federal Reserve, Federal Government, and Treasury $11.5T (this includes the $5.3T of mortgages owned or guaranteed by fannie and freddie)
Soverign Default by the USA, Priceless. (snip)
Re: Wolf in Sheep's Clothing - Washington bill for FED to guarantee ALL state muni bo
Well. We can look at California and see what trouble the country as a whole will be in a few years.
2012 baby 2012!
Re: Wolf in Sheep's Clothing - Washington bill for FED to guarantee ALL state muni bo
Smells like separatism will be on the rise...:argue:
Re: Wolf in Sheep's Clothing - Washington bill for FED to guarantee ALL state muni bo
^^^ a number of 'red states' are already passing legislation reaffirming their state sovereignty, led by Texas. Conspiracy theorists would tell you that proposed actions by the federal gov't which mandate state social welfare / unemployment benefit levels be harmonized to a federal standard, and which implement a de-facto transfer of federal income tax money from 'red states' to 'blue states', may indeed increase the possibility of a future redrawing of the 'Mason-Dixon' line.
Re: Wolf in Sheep's Clothing - Washington bill for FED to guarantee ALL state muni bo
latest development ....
(snip)"Of course a quick read of Article 1 Section 10 of the Constitution shows that California had no right to emit bills of credit. Therfore, Mr. Lockyer and all the other officers of the state are guilty of securities fraud. However, did the Feds ever indict any state for this violation? Nope, but this is a serious problem because it is exactly the defect in the Articles of Confederation for which they were scrapped in favor of the Constitution.
The US is now dissolved if they back these bonds with US money, even if that money is Federal Reserve Notes. California would do better by declaring it's debts worthless or payable only in scrip issued by the Republic of California after seceding from the Union. I sure don't feel the desire to pay their debts.
California formally asks Geithner for TARP assistance
By John Letzing, MarketWatch
SAN FRANCISCO (MarketWatch) -- California Treasurer Bill Lockyer asked U.S. Treasury Secretary Timothy Geithner on Wednesday to authorize assistance for his state from the federal Troubled Asset Relief Program, warning that depressed tax revenues may cut into basic services and halt the building of infrastructure.
In a letter, Lockyer asked Geithner for TARP assistance for California and "other financially strapped states and local governments which face a severe cash flow crunch."
"If we cannot obtain our usual short-term cash-flow borrowings, there could be devastating impacts on the ability of the State or other governments to provide essential services to their citizens," Lockyer wrote.
In particular, Lockyer cited fire and police protection, education and social services.
No credit
In addition, Lockyer warned in the letter that California's cash flow problems may lead to trouble accessing the long-term bond market, which could "eventually even halt our infrastructure construction programs."
Lockyer estimated that California's cash flow shortfall in fiscal 2009-2010 will be more than $13 billion.
But weakness in the credit markets will cause difficulties in short-term borrowing to make up that difference, Lockyer wrote, necessitating the use of TARP money to help make funds more easily available through banks.
Under a plan outlined by Lockyer in his letter, if a government is unable to repay loans made using TARP funds, the Treasury would use TARP money to "purchase the non-performing assets."
Under that scenario, the state or local government would then directly repay the Treasury under the terms it had with the bank, according to Lockyer's plan.
Lockyer has stated previously that he believes the Obama administration has the authority to use TARP to guarantee state-government borrowing. "(snip)
from via an investor BBS