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California: Wall Street hands state a stunner - -
The Orange County Register ^ | Thursday, January 16, 2003 | JONATHAN LANSNER The Orange County Register

Posted on 01/16/2003 10:54:03 AM PST by Ernest_at_the_Beach

Edited on 04/14/2004 10:05:43 PM PDT by Jim Robinson. [history]

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1 posted on 01/16/2003 10:54:03 AM PST by Ernest_at_the_Beach
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2 posted on 01/16/2003 10:54:42 AM PST by Ernest_at_the_Beach (Impeach Gray Davis!)
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3 posted on 01/16/2003 10:55:58 AM PST by Support Free Republic (Your support keeps Free Republic going strong!)
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To: Ernest_at_the_Beach
Wall Street to California, "Drop dead."
4 posted on 01/16/2003 10:56:14 AM PST by dfwgator
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To: Ernest_at_the_Beach
Well the Democrats have had firm control of the state Legislature for decades. California is what Decmocrat leadership will give you. Take that to the bank California, for all it will get you.
5 posted on 01/16/2003 10:58:21 AM PST by DoughtyOne (California was a nice state before the Democrats ______ it up!)
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To: Ernest_at_the_Beach
Why is this a "stunner"?

California is insolvent and run by incompentent socialist toads. Why should this produce a warm reception down at Broad and Wall?

6 posted on 01/16/2003 10:58:53 AM PST by Jim Noble
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To: Ernest_at_the_Beach
Here's the plan: once California is as bankrupt as Mexico, then it will be transferred to Mexico in exchange for a couple fields of habaneros peppers.
7 posted on 01/16/2003 10:59:14 AM PST by RightWhale
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To: Jim Noble
BUMP!
8 posted on 01/16/2003 10:59:46 AM PST by Publius6961
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To: Ernest_at_the_Beach
The state sold $3 billion of some peculiar bonds at interest rates that look a lot like the interest rates lenders charge failing enterprises these days.

Well, if the shoe fits...

9 posted on 01/16/2003 11:03:11 AM PST by meyer
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To: Ernest_at_the_Beach
If investors continue to treat California like junk, curing the budget crater will be extra taxing to the citizenry.

Interesting - the story falls just shy of blaming Wall Street Investors for the state's cost-of-capital. Which state would you buy bonds in - California, or Idaho?

10 posted on 01/16/2003 11:04:49 AM PST by meyer
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To: Ernest_at_the_Beach
This illustrates why Bush's tax cut will not stimulate growth when government debt draws most of the dollars. (40 years at 7% is approaching life insurance returns!)

Without a capital gains tax cut that rewards investment, there is nothing in the short term to spark growth.
11 posted on 01/16/2003 11:13:38 AM PST by JohnGalt
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Double Ouch!!!
12 posted on 01/16/2003 11:17:31 AM PST by NormsRevenge (Semper Fi ... FReep the Nation This Week-End! ... Donate or Become a Monthly Member Now)
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To: JohnGalt
Without a capital gains tax cut that rewards investment, there is nothing in the short term to spark growth.

Amen, brother...

13 posted on 01/16/2003 11:17:56 AM PST by demsux
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To: JohnGalt
Why would anybody invest in a profit making enterprise when he can get 7% tax-free from California? That's money right out of the productive market.

There's no such thing as a free lunch. Eventually, the piper will need to be paid. California can play the shell game for a while, but the tobacco settlement money is a one-shot deal.

BTW, wasn't that money supposed to be going to medical costs or for anti-smoking efforts, and stuff like that?
14 posted on 01/16/2003 11:50:10 AM PST by gridlock (Blocking the box since 1999)
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To: JohnGalt
This year's tax cut on dividends is designed to generate capital gains tax revenues by encouraging the sale of growth stocks. Next year's cut in the capital gains tax rate will wring even more unrealized gains out of the market. Once the government is done collecting, a real fix to the capital gains tax may actually happen.

Oh, and on the California, drop dead front . . . guess what state has high State income tax rates and a ton of individuals who are going to get pushed into the Alternative Minimum Tax as a result of the current tax reform proposal. Unintended consequences my *ss, its drop dead time.
15 posted on 01/16/2003 11:58:24 AM PST by Kaisersrsic
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To: Kaisersrsic
I am not familiar with any plans to cut the capital gains tax and, secondly, dividend paying companies tend to be established companies, not growth/start-ups.

While I applaud tax cuts anywhere anytime, a non-pro-growth tax cut coupled with higher yield sales of government debt will mean that little growth impact will be felt.
16 posted on 01/16/2003 12:03:06 PM PST by JohnGalt
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To: gridlock
Why would anybody invest in a profit making enterprise when he can get 7% tax-free from California? That's money right out of the productive market.

Doesn't the article say that the money will go to fund public works? That means that numerous profit-making construction companies, etc., will put employees to work putting up buildings, roads, sewers, etc. It would be preferable for this kind of money to be invested directly in such companies, but then again companies do need infrastructure.

17 posted on 01/16/2003 12:06:24 PM PST by RonF
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To: RonF

Digging a ditch does not quite do the same thing for an economy like a more powerful microchip or a faster fiber optic.
18 posted on 01/16/2003 12:38:04 PM PST by JohnGalt
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To: JohnGalt
The idea is investors sell growth stocks to buy dividend stocks.
19 posted on 01/16/2003 12:55:35 PM PST by cryptical
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To: RightWhale
Here's the plan: once California is as bankrupt as Mexico, then it will be transferred to Mexico in exchange for a couple fields of habaneros peppers.

Remember...if Cal bureaucrats parks all their vehicles there will be no market for Alaska crude. :-)

20 posted on 01/16/2003 12:57:02 PM PST by tubebender (I gave at the secure server...)
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