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Be sure to check out the commentary today from Paul Brodsky and Lee Quaintance in the Think Tank: A Dubious Foundation
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Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
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"The Greek offer is not sufficient and they have to go away to come up with a revised plan," said a spokesman for the German Finance Ministry. The Greeks must first have a plan that satisfies the Germans which this comment states they clearly don't yet and then the Greek Parliament will vote on it this weekend. This said, whatever package gets voted on in Greece is basically an up or down vote on euro membership so we are entering another uncertain weekend for global markets. A failed vote will likely lead to a hard default which may be what...
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July 9th, 2009 at 2:53 pm
http://finance.yahoo.com/news/SEC-to-call-for-Calif-IOUs-apf-3256311581.html?x=0&sec=topStories&pos=4&asset=&ccode=
This story is about the SEC and how they are now considering California IOU’s as securities… I am just someone trying to learn here. If these IOU’s are instantly going to be given the status of municipal securities…how are you guys looking at this?
Why couldn’t Birmingham, Alabama start issuing IOU’s tomorrow, and instead of calling them municipal bonds, just tell the IOU recipients that they are “de facto” municipal bonds?
When the SEC says there must be a market to give fair value to the IOU’s…does this mean in reality that the value will be something less than 100% of the IOU? To trade it I mean? And does it mean for certain that if held to the “due date” you will get 100% of the value of the IOU? What guarantees this? Does the SEC give implicit support to the value of the IOU?
Would buying California IOU’s be a better idea that New York bonds? How do we determine this valuation compared with other areas?
July 9th, 2009 at 3:01 pm
BR- thanks for the heads up- good article- some discussion taking place on that thread re buying into the author’s arguments
B in T- re CA IOU’s-
The IOU’s are registered warrants- they carry a 3.75 percent interest rate and are payable October 2.”
July 9th, 2009 at 3:12 pm
ahab:
Then how can you trade them if the contract is just between you and the state of California? Do you see my question? Either it is an IOU or it is a bond…but not both…right?
July 9th, 2009 at 3:15 pm
I guess I just am looking at this more like a poker game, rather than an honorable contract with a state government…
July 9th, 2009 at 3:16 pm
Debt is money, too.
When someone states ‘the money supply has grown’, they have to explain. Are they using a more limited definition? A credit collapse typically would not allow growth of money unless governments printed at a rate exceeding debt destruction – and even if they did, they would also have to drop it from helicopters as Bernanke once stated. They are not and they are not.
The Bernanke ‘helicopter drop’ was not that at all… it was a much more selective greasing of palms. The money went out… but it is not ‘out there’.
July 9th, 2009 at 3:38 pm
The Bernanke ‘helicopter drop’ was not that at all… it was a much more selective greasing of palms. The money went out… but it is not ‘out there’.
————-
Things don’t happen just by snapping your fingers.
If the fed switches bad loans for newly freshly printed dollars… the money won’t be lent to the private side in the short term it will be used to buy treasuries. And government will be spending, maybe not tomorrow, but soon enough…
-social security
-infrastructure
-health care
-etc
July 9th, 2009 at 3:42 pm
Call Me Ahab and Danm are correct. The premise of the article is false.
July 9th, 2009 at 3:51 pm
B in T- per Yahoo Finance article-
“A regulated market for the IOUs “makes it even more advantageous” for individuals holding them, who could sell them at a fair price, Maco said. The price they receive may be discounted in accordance with the market’s perception of the risk of the state repaying the notes, but it would be an orderly market price, he said.”
it appears that if you don’t want to wait for the State to pay face value + interest- then you would sell the warrant at a discount- similar to a savings bond-
however- if cash flow is necessary- then the seller of the warrant is getting “short changed” by selling at a discount
July 9th, 2009 at 5:15 pm
I can seeit now, Barry’s next book: “IOU Nation”.
July 9th, 2009 at 5:32 pm
The problem I have too, with the IOU is a bond thingy, is that a municipality puts the bond up for sale, and you buy it for what you think it is worth…The California IOU is forced on you by only one party of what should be a two party deal…
somehow this “bond” idea just doesn’t smell right to me…SEC or no…