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Under normal circumstances I'd be applauding the banks for refusing these IOUs but the banks took bailout money and they do owe something to the people of Calif

Under normal circumstances I'd be applauding the banks for refusing these IOUs but the banks took bailout money and they do owe something to the people of California morally if not legally. People in California helped bail them out and if they're asking for your help it seems only fair to give it to them. I seriously doubt that Obama would allow these IOUs to actually be worthless so what's the risk exactly? I didn't think the banks could get less popular but apparently they're trying to surprise us all on that front. California is a mess and this latest development certainly hasn't helped.

patio11 17y ago
I seriously doubt that Obama would allow these IOUs to actually be worthless so what's the risk exactly? Well, hop on Craigslist and start picking up a few of the smaller denominations that got issued to individual vendors. You'll be doing your part to help Californians in a cash crunch and earning free money at the same time -- what could possibly go wrong.
cameldrv 17y ago
The banks got in trouble by giving credit to people who were not creditworthy. It is not clear that California is creditworthy at this point, and they are only offering a 3.75% coupon. These bonds mature in three months. In order to believe that these are as good as cash, you have to believe that there is a 99% chance that California will be good for the money. That is clearly unreasonable given what has happened with the budget so far.
Dilpil 17y ago
I wonder how cheaply one could acquire these IOUs? It does seem doubtful that they will lose their value before the dollar loses its.
ghshephard 17y ago
From: http://www.sco.ca.gov/5935.html http://www.sco.ca.gov/5935.html "Redeemable by the State Treasury only when the General Fund has sufficient money." A rational, conservative, cautious Bank that is trying to protect its assets would be well advised to be careful about accepting these warrants. One Bail out is enough.
anamax 17y ago
> but the banks took bailout money "took" suggests that they all wanted it. We know that some of them were "encouraged". The feds basically destroyed BofA with the forced merger. > People in California helped bail them out Actually, most of the bail out money came from outside CA. Do you really think that those folks want their "investment" pissed away in CA? > if they're asking for your help it seems only fair to give it to them. Actually, "the people of CA" aren't doing any such thing. The state govt is passing out script while it flails around, hoping that the money unicorn will poop some golden bricks. > I seriously doubt that Obama would allow these IOUs to actually be worthless so what's the risk exactly? I'm sure that folks outside CA are happy to read that.
- jswinghammer 17y ago
  Most of it did come from outside of CA but a decent amount of it did come from CA. I'm not saying this is a great idea under normal circumstances-just these circumstances.
  - anamax 17y ago
    > I'm not saying this is a great idea under normal circumstances-just these circumstances. What, exactly, is this "great idea", what are the circumstances that make that idea "great", and "great" for whom? I think that loaning money to the state of CA is like giving booze to a drunk. That would be bad (for the drunk) if Bill Gates did it, but taking money from folks who are hard pressed (general taxpayers and folks dependent on govt) is even worse. However, you clearly disagree, so let's see the details.
padmanabhan01 17y ago
So US Govt was so foolish to give money to these banks when some state Govts didn't have enough?
jerf 17y ago
"The banks" are not a monolithic entity. My credit union, which is my only bank, has not been "bailed out", so you're OK with them not taking IOUs like that, right?

patio11 17y ago

I seriously doubt that Obama would allow these IOUs to actually be worthless so what's the risk exactly? Well, hop on Craigslist and start picking up a few of the smaller denominations that got issued to individual vendors. You'll be doing your part to help Californians in a cash crunch and earning free money at the same time -- what could possibly go wrong.

cameldrv 17y ago

The banks got in trouble by giving credit to people who were not creditworthy. It is not clear that California is creditworthy at this point, and they are only offering a 3.75% coupon. These bonds mature in three months. In order to believe that these are as good as cash, you have to believe that there is a 99% chance that California will be good for the money. That is clearly unreasonable given what has happened with the budget so far.

Dilpil 17y ago

I wonder how cheaply one could acquire these IOUs? It does seem doubtful that they will lose their value before the dollar loses its.

ghshephard 17y ago

From: http://www.sco.ca.gov/5935.html http://www.sco.ca.gov/5935.html "Redeemable by the State Treasury only when the General Fund has sufficient money." A rational, conservative, cautious Bank that is trying to protect its assets would be well advised to be careful about accepting these warrants. One Bail out is enough.

anamax 17y ago

> but the banks took bailout money "took" suggests that they all wanted it. We know that some of them were "encouraged". The feds basically destroyed BofA with the forced merger. > People in California helped bail them out Actually, most of the bail out money came from outside CA. Do you really think that those folks want their "investment" pissed away in CA? > if they're asking for your help it seems only fair to give it to them. Actually, "the people of CA" aren't doing any such thing. The state govt is passing out script while it flails around, hoping that the money unicorn will poop some golden bricks. > I seriously doubt that Obama would allow these IOUs to actually be worthless so what's the risk exactly? I'm sure that folks outside CA are happy to read that.

jswinghammer 17y ago
Most of it did come from outside of CA but a decent amount of it did come from CA. I'm not saying this is a great idea under normal circumstances-just these circumstances.
- anamax 17y ago
  > I'm not saying this is a great idea under normal circumstances-just these circumstances. What, exactly, is this "great idea", what are the circumstances that make that idea "great", and "great" for whom? I think that loaning money to the state of CA is like giving booze to a drunk. That would be bad (for the drunk) if Bill Gates did it, but taking money from folks who are hard pressed (general taxpayers and folks dependent on govt) is even worse. However, you clearly disagree, so let's see the details.

padmanabhan01 17y ago

So US Govt was so foolish to give money to these banks when some state Govts didn't have enough?

jerf 17y ago

"The banks" are not a monolithic entity. My credit union, which is my only bank, has not been "bailed out", so you're OK with them not taking IOUs like that, right?