The Consequences of QE II in California

Randy's Right ^ | Today | NC Freedom

[RandysRight]

California’s fiscal crisis is mounting. Instead of dealing with the high cost of social engineering and illegal immigration, they have issued $10 billion in short term debt. Unfortunately, they are forced to deal with the consequences of QE II: they had to pay a higher interest rate in order to sell their bonds. As most state, local and federal debt is being refinanced over the next three years, the higher interest rates that will be required to offset hyperinflation and their lowered bond credit rating will accelerate the “decline of the dollar”. Redistribution of wealth will be exposed as a method to level the classes in our country into one poverty class. The following article from the Los Angeles Times is a snapshot of our nation’s future. California is considered a bellweather state as outlined in the book Megatrends.

David DeGerolamo

NC Freedom

Bond market turmoil hits California in the pocketbook California was forced to boost interest rates on $10 billion in short-term debt it sold Thursday, another sign of the turmoil racking the municipal bond market.

Although investor demand for longer-term munis showed signs of rebounding after plunging in the last few days, some potential buyers said they feared another wave of selling — led by individual investors shocked by their recent losses in muni bond mutual funds.

But for now, the surge in yields on many tax-free bonds “is definitely turning heads” of buyers, said Joe Lee, a muni trader at De La Rosa & Co. in Los Angeles.

The commotion over munis is part of a broader bond market upheaval triggered by investors’ sudden demand for sharply higher interest rates to buy debt of all sorts.

Analysts have blamed a confluence of factors, including a sense that interest rates had simply fallen too low. The decline had been egged on in September and October by expectations that the Federal Reserve would try to keep longer-term rates suppressed by ramping up its buying of Treasury bonds.

When the Fed finally announced a $600-billion purchase plan on Nov. 3, some investors took it as a cue to sell bonds, a shift that has fed on itself.

Buyers pulled back just as the muni market faced a huge supply of new bonds from issuers nationwide.

Complete Article…

[Frantzie]

Moonbeam muni bonds - yeah I want some of those.

[jazzlite]

Watch this for a very entertaining and good explanation of the Fed and QE2:

http://www.youtube.com/watch?v=PTUY16CkS-k