Wall Street gears up to trade California IOUs

Financial Times ^ | July 5 2009 | Nicole Bullock

[ForeignDude]

This is dumb, dumb, dumb...

Let’s say you buy a whole bunch of these IOUs for half the face value. You think you’ve made a great deal, but you’re just stuck with a promise.

What, exactly, will prevent California from passing a law stating that IOUs will only be honored for the original owners of the notes? That IOUs sold or traded are invalid?

After what Obama has taught us — that inconvenient contracts can be swept aside3 — why shouldn’t California also abrogate it’s promise to pay these IOUs?

[Red Dog #1]

Frankly I wouldn't be too hard on the speculators. They're providing a valuable service, turning paper in to cash and help to determine to at least some extend what the IOUs are worth. The real culprits are politicians and the common man that buys their BS (It's well past time to call a spade a spade).

BTW, Does anyone else kind of feel like Grey Davis was victimized? LOL

[litehaus]

Let’s say you buy a whole bunch of these IOUs for half the face value. You think you’ve made a great deal, but you’re just stuck with a promise. What, exactly, will prevent California from passing a law stating that IOUs will only be honored for the original owners of the notes? That IOUs sold or traded are invalid? After what Obama has taught us — that inconvenient contracts can be swept aside3 — why shouldn’t California also abrogate it’s promise to pay these IOUs?

..

BUY THE PUTS !!!!

[cowtowney]

www.zerohedge.com broke that story over the weekend.

[Drago]

There won’t be any buying for “pennies on the dollar”...lots of banks/credit unions are accepting them at face value. California “Registered Warrants” (as opposed to the regular payment “Warrants”) are IOU’s/bonds and pay 3.75% APR. This batch is scheduled to be paid on Oct. 2nd, providing the budget mess is fixed by then.

http://www.sco.ca.gov/5935.html
http://centralvalleybusinesstimes.com/stories/001/?ID=12421