California: Wall Street hands state a stunner - -

The Orange County Register ^ | Thursday, January 16, 2003 | JONATHAN LANSNER The Orange County Register

[Ernest_at_the_Beach]

California came to Wall Street with a tin cup Wednesday, looking to fill a small hole in its fast-leaking fiscal bucket. Traders demanded a fat ransom for a minor patch.

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.

[JohnGalt]

Thanks, I realized I misread his post, but selling growth stocks will have the opposite effect of growing the economy.

[RightWhale]

if Cal bureaucrats parks all their vehicles there will be no market for Alaska crude

That's okay. Alaska is running low on oil reserves anyway, and what little is produced can be sold in Asia no problem. Besides, the last cars running on the highways will belong to the bureaucrats, while ordinary people will drag their daily rations home on handcarts.

[Bonaparte]

"... in exchange for a couple fields of habaneros peppers."

The best habaneros (IMO) are grown in southern California, although I'll admit that the 2 fields are a very generous trade for California.

[captnorb]

They will fail! As has been discussed for years..Tobacco tax is for revenue, not stop people smoking. However, one hand says buy smokes(revenue) while the other hand says no smoking in CA. In the future will CA have tobacco monies to repay bond holders? Maybe short term fix. Then what?

[Pontiac]

California is insolvent and run by incompentent socialist toads.

Oh give me a break!

All politician spend like drunken sailors after a year out to sea.

Every state in the Union (with the possible exception of Colorado) is facing crippling deficits this year.

In my home state of Ohio the GOP has had control of both house for I believe 6 years and the Governor for 12 years and is forecasting a 3 billion dollar deficit.

Both parties when given a windfall of tax income can’t resist the chance to go on a spending spree and can’t distinguish between a long term increase in income and a one time fluke that will disappear like a dust devil on a windy day.

I am certainly not defending the Californica Dimicrats but when it comes to fiscal responsibility, both sides lack good judgment when it comes to spending.

Both will take the money and spend to placate the special interests that flatter their vanity and donate to their reelection campaigns.

[Jim Noble]

>>Both will take the money and spend to placate the special interests that flatter their vanity and donate to their reelection campaigns<<

Please sir, you do me a disservice.

I didn't say, "incompetent Democrat toads, I said, "Incompetent socialist toads.

You are quite right that the Republican socialist toads are quite as bad as their Democrat bretheren, and I said nothing to contradict you.

[Pontiac]

My apologies. I stand corrected

I always equate socialist with Dimocrat.

In my mind they have become synonyms.

[RonF]

Digging a ditch does not quite do the same thing for an economy like a more powerful microchip or a faster fiber optic.

No, but it still has great value. I don't think that we have a case of one or the other. We need to do both.

The good thing about ditch digging is that you know that the benefit is local. Where are those more powerful microchips made? Indonesia? I manage networks for a living, so I understand the contribution that such things make, but our country's economy has consumer spending as a huge component. The benefits of spending on infrastructure tends to stay much more in the U.S. than spending on other things does.

And if that ditch doesn't get dug and good roads get built, then the company has a harder time getting goods, materials, and people in and out of it's facilities, and they end up wasting money thereby. The public benefit of this is why cities and states build roads, instead of forcing individuals and corporations to build their own.

[RonF]

Here in Illinois we've had GOP control of the Governor's office for 26 consecutive years, and at least one house of the legislature for at least that long. Illinois now has a 4 or 5 billion dollar deficit. They also now have a Democratic House, Senate, Governor, Lieutenant Governor, Attorney General, Secretary of State, etc., etc, except for Treasurer.

Of course, plenty of people on FR would label all of those Governors as RINOs, but 26 years is a long stretch.

[Petronski]

The efficient information-seeking behavior of millions of investors makes Wall Street a blunt and frank world where spin is quickly dispelled. The truth can sometimes be brutal.

[JohnGalt]

But you cannot see what otherwise would have been built when the states pay for somebody to dig the ditch.

Nevertheless, spending does not grow an economy. Inovation that leads to greater productivity grows economys, and innovation is paid for with risk capital. If you sell government debt at 7%, you are taking away available dollars for risk.

Spending does not grow an economy except in Keynsian fantasies.

[Jimbaugh]

Time to reboot Kalifornia. Crash the system and start over.

[RonF]

I wouldn't say that spending can't grow an economy. After all, someone has to spend on R&D, tooling, etc. to invent the chip and start making them. But your main point is entirely correct. Spending to no purpose but to keep people busy is unproductive and harms the economy. Wasting money on roads to nowhere or for unnecessary incremental additions to the infrastructure is harmful; such money would better be left in private hands. I would point out, however, that the basic infrastructure in many states is in very sad shape. Water pipes leak away huge amounts of water that large sums of tax money were spent on to purify and deliver. Bad roads cause private vehicle maintenance costs to skyrocket, money that could be better spent on innovation. One of the major airports in the nation, Chicago's O'Hare, is choked and limited because it needs more runways and better ground access. I don't advocate spending as a cure-all. You cannot use public spending to stimulate an economy independent of productivity effects. I'm saying that there are a number of places where public spending on infrastructure would have an effect on productivity, and thus would have effects beyond simply pumping money into the pockets of construction workers.

[Poohbah]

All the same, there ARE some places where California needs to work on its infrastructure.

As someone who regularly drives from San Diego to Tahoe and back, I found out something amazing this past year: taking the US 395, with its stop-and-go, get-stuck-behind-some-1950s-vintage-tractor traffic, is actually TWO HOURS FASTER than taking the I-5 through Central Valley and Los Angeles. The I-5 is simply too small for the amount of traffic it carries.

[habs4ever]

Nonsense.What do you think the excludable distribution account is but a quasi capital gains tax cut? Brush up on the tax plan before you attempt to disparge it. the non sequitors in your post are absurd.

[RightWingMama]

Wall Street to California, "Drop dead."

Davis to taxpayers, "Screw You."

[JohnGalt]

excludable distribution account --- wow that is inspiring supply-side rhetoric!

Do you believe that Bush is a friend to supply-siders?

[GSWarrior]

In a related story, it has just been announced the Davis Administration plans to merge the California Highway Patrol and the California Department of Fish & Game into a single entity called the California Department of Fish & Chips.

[JohnGalt]

Spending money to repair stuff or fix problems that the government created when they built it in the first place will not help the economy.

[Ernest_at_the_Beach]

LOL!