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alstry (35.99)

11.10.9 California Taxpayers FEEL

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November 10, 2009 – Comments (8)

 California has stumbled badly in its latest foray into the municipal bond market -- a sign that investors are overloaded with the state’s debt.

Borrowing $1.9 billion Tuesday via bonds that mature in June 2013, the state was forced to pay a 4% annualized tax-free yield to lure investors to the deal.

Just last Friday the brokerages underwriting the deal, led by Goldman Sachs, had estimated that the bonds could be sold at a yield of 3%.

Individual investors put in orders for $621 million of the securities, or about 33% of the total. But that wasn’t enough to give the state much leverage with the institutional investors whose demands determined the final yield on the debt.

The bonds were issued by the California Statewide Communities Development Authority, but it’s the state itself that’s on the hook. The proceeds will repay cities and counties for the $2 billion in property tax revenue that the state is borrowing from them -- some would say, stealing from them -- under terms of the budget deal the Legislature and Gov. Arnold Schwarzenegger reached in July.

California has borrowed heavily in recent months for budget-related reasons and to fund long-term infrastructure projects, and Treasurer Bill Lockyer has been selling into a market that has demanded ever-higher yields on Golden State debt.

http://latimesblogs.latimes.com/money_co/2009/11/california-muni-bond-sale-statewide-communities-development-authority-goldman-sachs.html

33% Higher Yield Burden on Taxpayers against a backdrop of falling revenues and increasing deficits.

You can only borrow your way to prosperity for so long before investors figure out you may have trouble paying back the debt......at that point......pretending will come to an end.

Pay attention to a few black swans out there.....things are really heating up.

8 Comments – Post Your Own

#1) On November 10, 2009 at 5:54 PM, alstry (35.99) wrote:

More taxpayers lost in CA....

Adobe Systems said Tuesday it is cutting 680 full-time jobs, or about 9 percent of its work force, to align costs with its fiscal 2010 budget.

Adobe Systems Inc., the maker of Photoshop, Flash and Acrobat software products, said it will record pretax charges of $65 million to $71 million as a result of the cuts.

The job cuts relate only to Adobe employees before the company, based in San Jose, Calif., bought Omniture Inc. in October.

Adobe also cut 9 percent of Omniture's work force when that deal closed. That amounted to about 108 jobs.

Seems strange when so many economist are calling for a recovery when so many are cutting back and sales are declining.

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#2) On November 10, 2009 at 6:03 PM, alstry (35.99) wrote:

The problem now is that the largest employer in the nation is running out of money....government.  The layoffs associated with government are going to be felt by a greater percentage of society than the fallout from the housing crash or credit crisis.

The numbers potentially could be staggering factoring the mulitplier effect.  As a domestic consumer service economy....employment is the economy.....unless we restructure our economy.

Iowa State - Schools are at Risk For Layoffs

Adobe - 680

Adrian Michigan - Layoffs and Unpaid Furloughs are Needed

City of Muncie - More Layoffs?

Frontier Airlines - Moving 200 Jobs From Denver to Milwaukee 

Metro Parks & Recreation Board Ten. - Layoffs / Park Closures Possible

Ericsson - 17% of UK Workforce 

Kolbe & Kolbe Millwork Co. Inc- 334

W.A. Brown & Son Closing ,  98 Layoffs Resulting

Roseville Livestock Auction Closed Oct 31

Columbus Foundry Closing - 169 Layoffs

Dairyland Greyhound Park in Kenosha Wisconsin 

List of 12 Miami Dade Restaurant Recently Closes

Millbrook Custom Cabinetry in NY

Bentley and Donovan Fine Jewelry 

Strike Zone Sports Cards & Gaming Closing Store

Dish Network Plan to Close McKeesport Facility - 600 Jobs Lost

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#3) On November 10, 2009 at 6:03 PM, alstry (35.99) wrote:

The problem now is that the largest employer in the nation is running out of money....government.  The layoffs associated with government are going to be felt by a greater percentage of society than the fallout from the housing crash or credit crisis.

The numbers potentially could be staggering factoring the mulitplier effect.  As a domestic consumer service economy....employment is the economy.....unless we restructure our economy.

Iowa State - Schools are at Risk For Layoffs

Adobe - 680

Adrian Michigan - Layoffs and Unpaid Furloughs are Needed

City of Muncie - More Layoffs?

Frontier Airlines - Moving 200 Jobs From Denver to Milwaukee 

Metro Parks & Recreation Board Ten. - Layoffs / Park Closures Possible

Ericsson - 17% of UK Workforce 

Kolbe & Kolbe Millwork Co. Inc- 334

W.A. Brown & Son Closing ,  98 Layoffs Resulting

Roseville Livestock Auction Closed Oct 31

Columbus Foundry Closing - 169 Layoffs

Dairyland Greyhound Park in Kenosha Wisconsin 

List of 12 Miami Dade Restaurant Recently Closes

Millbrook Custom Cabinetry in NY

Bentley and Donovan Fine Jewelry 

Strike Zone Sports Cards & Gaming Closing Store

Dish Network Plan to Close McKeesport Facility - 600 Jobs Lost

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#4) On November 10, 2009 at 9:31 PM, ReadEmAnWeep (47.53) wrote:

its 11.10.9,

I am curious as to what happened today. Will you share? 

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#5) On November 10, 2009 at 9:38 PM, Rasbold (91.46) wrote:

Yeah, share. I'll called you out on my blog.

 We obviously need guidance!

 

By the way, I am a California tax payer, and I don't feel it yet, except that my property taxes went down about 30 percent last December.

Also, consider this: California is the most influential state in the most powerful union. You don't get there by being stupid. I'll bet we can handle the bonds.

May Your Dow Never Jones!

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#6) On November 10, 2009 at 9:57 PM, topsecret09 (39.96) wrote:

   I got the hell out of CalEEEEEEEEE fornia. The State has been lost to Illegals. Gangs,graffiti,drunk driving hit and runs,third world neighborhoods, billboards In spanish going up EVERYWHERE,spanish spoken EVERYWHERE. Good luck to all that try to stick It out. You'll need It.......  TS

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#7) On November 10, 2009 at 10:05 PM, AlexanderAkhavan (< 20) wrote:

I find it interesting that so many people complain about the illegal immigrants in California.  They are only illegal because the law says so.  Change the law so that they are all there legally.  Problem solved.

Dont't forget that most of the illegal immigrants are from Mexico and oh btw......California used to be part of Mexico.

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#8) On November 10, 2009 at 10:57 PM, topsecret09 (39.96) wrote:

#7) On November 10, 2009 at 10:05 PM, AlexanderAkhavan (< 20) wrote:    ......California used to be part of Mexico.            Now read your history book.......         http://www.pbs.org/kera/usmexicanwar/timeline_flash.html

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