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showboat
Posts:67
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| 10/02/2008 12:25 PM |
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http://www.signonsandiego.com/uniontrib/20081002/news_1n2bonds.html
Officials implore federal lawmakers to compromise
By Michael Gardner and Craig Gustafson
STAFF WRITERS
October 2, 2008
SACRAMENTO – The state of California has joined the ranks of retailers and new-car buyers struggling to borrow in the tight credit market.
The squeeze threatens to delay payments for essential state services and could stall plans to build new highways, schools, housing and water projects.
The crisis is so threatening that Gov. Arnold Schwarzenegger, state Treasurer Bill Lockyer and Controller John Chiang yesterday separately issued urgent pleas to Congress and President Bush to approve compromise legislation aimed at easing the financial crisis gripping the country.
Bush agreed that legislation is needed, saying yesterday that “it's important to get credit flowing again so that small businesses in our communities will be able to finance their operations, so that local municipalities will be able to get the money they need to take care of the needs of local citizens, so that states will be able to meet their needs.”
Cities and counties wonder whether capital will be available – and at what price.
San Diego County planned to sell about $225 million in bonds by Oct. 15 to begin construction later this month on the largest public-works project in its history – a $531 million overhaul of its operations center in Kearny Mesa.
Chief Financial Officer Don Steuer said the county might hold off if interest rates remain high. However, the county is fortunate to have $75 million in cash set aside for the project, so even if the markets don't calm down, the county could still start building, he said.
The city of San Diego, which just had its credit restored, doesn't plan to borrow money for refinancing debt until late December or early January, so there probably will be no effect on its deals, said Jay Goldstone, the city's chief operating officer.
Lockyer started the chain of dire warnings, issuing a grim outlook in his annual analysis of the state's debt affordability.
“The credit market is frozen because financial institutions are afraid to commit capital amid uncertainty,” said Lockyer, a Democrat.
He said that “for 10 days, state and local governments have been closed out of credit markets.” Unless there is a thaw, the state won't be able to sell voter-approved bonds to launch public-works projects, Lockyer added.
He said inaction would force the state to exhaust reserves by the end of October, setting the stage for a freeze on most spending.
Picking up that point, Schwarzenegger, a Republican, told Congress: “This means that California may soon be forced to delay payments for critical services, such as teachers, law enforcement and nursing homes. The same thing would happen to California's cities and counties.”
Chiang estimated that cash-strapped California will need to borrow $7 billion through this fiscal year – credit that's growing harder to find and more expensive. |
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philtheconqueror
Posts:36
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| 10/02/2008 1:26 PM |
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This is the problem that people don't seem to understand. People think that a bailout is just making other people rich or leading us towards higher inflation. The simple fact is that they don't understand the chain of events that comes with no ability to borrow.
Simply put, America is great today because it invested in itself long ago. It is the ability to borrow money at one given rate to invest in an area of innovation, higher growth, opportunity, etc... which allowed America to create so many great things. I'm not saying that all purposes of borrowing are good or valid but the simple fact that if credit is not available at all, then we will surely fall into a long period of negative growth or recession by decreasing the number of these opportunities.
I'm not for all parts of the bail out but logically, if the government can buy mortgages for $0.25 on every dollar borrowed, isn't it likely that most homes out there do not lose 75% of their value in the long run and turn out to be a good investment by the government? Maybe this is one step towards balancing the budget. |
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Brian
Posts:2210
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| 10/02/2008 3:58 PM |
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I don't see how driving a 4-year old car vs. driving a brand new car is bad.
Everyone who needs a car today has one. By not being able to get car loans, people are being saved from getting into further debt. I'm absolutely against car loans/leases unless you have a way to get a tax deduction for buying a car. Otherwise, save money to pay cash. If you can't pay cash, then you can't afford that car.
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wilson
Posts:541
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| 10/02/2008 6:03 PM |
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duhhhhhhhhhhhhhhh!
When you are ready to buy a car, will a company spring up and make one for you? |
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jpinpb
Posts:1450
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| 10/02/2008 6:18 PM |
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Never thought I'd be saying this.
THE SKY IS FALLING!! |
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twocents
Posts:78
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| 10/02/2008 6:30 PM |
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| if someone can explain to me how buying bad retail mortgages will free up the commercial paper markets, then maybe i'll support it. until then my answer is no (and i work in the stockmarket!) |
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wilson
Posts:541
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| 10/02/2008 8:50 PM |
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| Econ 101: it will improve the velocity of money (but I doubt you will understand) |
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PolarBearKing
Posts:161
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| 10/02/2008 9:51 PM |
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What a bunch of crap.
Anyone who can afford and wants credit can still get a loan. Had a friend close escrow on a house today. 10% down 6.19% fixed for 30 years.
If you can't afford a loan, you shouldn't get one. Duh...California in no different.
I swear, the politicians are the worst culprits (sp?). It's time to tighten the belts. Quit spending money that they/we don't have for non essentials servies. Some of the public sponsered "art work" that I have seen over the years would be a good place to start. Next they could "kill two birds with one stone" by making welfare recipients pick up trash before they get paid. Mowing the grass or afterschool programs at the parks is another great place to put them to work. I bet we could think of a hundred places to let them earn their checks.
Not being able to get credit isn't the problem ~ too much credit is. That money isn't free. All the Baby Boomers that have out lived thier means, it's time to pay the piper. Oh well, the last ten years of your life is supposed to suck. I rather suck it up now then have my grandkids have to live through the next depression.
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I guess what really bums me out is that this crisis is inevitable. At some point we are going to have to deal with it. The irrisponsible action is to continue to put it off fot the next administration and/or generation to deal with it. |
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Jack**
Posts:74
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| 10/02/2008 10:04 PM |
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Econ 101 is a prerequisite for Manners 101
Wikipedia describes a simple explanation of the velocity of money.
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Brian
Posts:2210
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| 10/02/2008 10:34 PM |
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Lurknomore is the one who brought up the concept of velocity of money.
He expects us to know the concept of velocity of money so we can support this bailout, errr.. rip-off; but he doesn't think that buyers need to be able to compute interest on a mortgage.
If buyers don't understand their own mortgages, then how can they understand macro-economics, much less avoid being hoodwinked by the politicians who are pushing for this bailout.
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jasonj
Posts:55
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| 10/02/2008 11:13 PM |
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Most of the time I am in the "agrees with Brian" group. I hate the bailout as much as the next guy, but it seems that we must do something to keep the credit markets afloat. I work for a business that gets large chunks of money every six months and in the mean time runs a deficit. While we would like to be profitable year round, this is not the nature of the industry, given the state of a slowing economy. While we are profitable yearly, we can run into issues keeping a solid cash flow for payroll, etc. If the credit markets shut down, companies like ours -- small businesses like ours (70-80 employess -- no one making over 150k/year) would be in dire straits.
The picture of how this meltdown happened is becoming clearer and, I think, we can work to fix the causes moving forward -- assuming we kick out the Senate Banking Committee, all the presidential candidates, the current President, and the chairs on Fannie, Freddie, etc... |
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twocents
Posts:78
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| 10/03/2008 5:30 AM |
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| Lurk and Wilson, you don't get it. Giving the Treasury a 700b blank check is not going to fix the commercial paper problem. You can search wiki til your eyes fall out but reading an entry doesn't constitute understanding. The problem with the markets right now is the uncertainty. Say it again and say it often. The Treasury has not shown consistency or direction since this debacle began a year ago. Bail out Bear, but let Lehman fail even though Lehman was bigger than Bear was. Bail out AIG but let Indymac and WaMu go under. If the Treasury wanted to be useful, they would say the 700b would back gov't loans at the ten year note rate plus a point or two and set out guidelines on how to qualify and the payback schedule. Instead, the Treasury and the Fed say they 'may' lower interest rates---introducing MORE uncertainty to the market (and a subsequent sell-off)! The Treasury wants to be able to buy whatever they want to buy, and there is pretty much zero guarantee that they will make intelligent purchases b/c the gov't is not intelligent. Go ahead and cross your fingers and close your eyes and pray that Paulson is going to free up the credit markets by buying bad retail mortgages, but I'm going to be like Brian here and in a year say I told you so. My prayers are that the bill doesn't pass, that we get through the election -then the rush to do something goes away- and we'll all see that the market is efficient and will determine its own plan of action. Hey Wilson, why don't you wikki that topic and try to get your big brain around it! |
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twocents
Posts:78
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| 10/03/2008 5:34 AM |
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| Oh, and I was going to point out that velocity of money is only a part of the overall money supply. You can't look at just one factor and ignore the rest of the equation. |
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tpc
Posts:498
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| 10/03/2008 5:50 AM |
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[quote] prayers are that the bill doesn't pass,[/quote]
$.02-If this bill doesn't pass, you will be praying a lot more in 6 months. |
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tpc
Posts:498
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| 10/03/2008 5:52 AM |
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[quote]If buyers don't understand their own mortgages, then how can they understand macro-economics, much less avoid being hoodwinked by the politicians who are pushing for this bailout.[/quote]
Brian-looks like you discovered the source of the problem. |
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tpc
Posts:498
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| 10/03/2008 5:54 AM |
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[quote]That money isn't free. All the Baby Boomers that have out lived thier means, it's time to pay the piper.[/quote]
King-lets give them all a shopping cart and move them to your neighborhood. |
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tpc
Posts:498
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| 10/03/2008 6:00 AM |
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[quote]If you can't afford a loan, you shouldn't get one. Duh...California in no different[/quote]
Lets put a moratorium on paying the salaries of public employees for 6 months until we are able to sort this thing out. If these public SERVANTS will forgo 6 months of salary, then their sacrifice will be worth it. They can save CA and they can save the USA. |
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jakob
Posts:473
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| 10/03/2008 6:58 AM |
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| Frankly California can use this harsh dose of reality, so we're finally forced to get back to sound fiscal principles. How low did we expect to fund state spending by borrowing and borrowing? |
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lurknomore
Posts:270
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| 10/03/2008 7:18 AM |
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Posted By Brian on 10/02/2008 10:34 PM
Lurknomore is the one who brought up the concept of velocity of money.
He expects us to know the concept of velocity of money so we can support this bailout, errr.. rip-off; but he doesn't think that buyers need to be able to compute interest on a mortgage.
If buyers don't understand their own mortgages, then how can they understand macro-economics, much less avoid being hoodwinked by the politicians who are pushing for this bailout.
Egocentric Brian has missed it again. No one needs to know how to "COMPUTE INTEREST ON A MORTGAGE" because there are dozens of on-line tools that let you LOOK IT UP. His cognitive impairment makes him jump from not "able to compute" to "don't understand their own mortgages." PLEASE, PLEASE, PLEASE watch this person's beguiling posts very carefully. All he cares about is "proving" that he is right about everything, and he apparently doesn't care who he misrepresents in the process.
BTW, several of you have mentioned WHERE you are renting. Are ALL of you who contacted Susan Davis with your "demands" about her vote actually constituents who live in her district? If not, what right do you have for chastising her for "not doing what her constituents want"? Conservative talk radio bullying should not work, and I think Susan (whom I actually have supported by campaign contributions; she IS my representative) will resist it because she knows what is the right thing to do.
Representative democracy means we elect the people we want to represent us, and they use their judgment. This is not a direct democracy, and our elected legislators have no need to put their prospective actions to a "mock" vote. If you don't want to be represented by her, assuming you actually live in her district, vote against her, contribute to her opponent, and/or RENT SOMEWHERE ELSE.
Back to the peace and quiet of lurking!! |
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jakob
Posts:473
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| 10/03/2008 7:30 AM |
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| If you are referring to me, I rent in PB, in the heart of Susan's district. I've mentioned several times I'm in escrow for a place in Lakeside. Red blooded conservative country. I'll miss the beach, but I won't miss Ms. Davis. |
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