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SEC Destroys California
The Market Ticker ^ | 7.10.09 | Karl Denninger

Posted on 07/10/2009 7:37:39 AM PDT by rvoitier

Well now they've gone and done it:

"The staff of the SEC has expressed its belief that California's recently issued IOUs are 'securities' under federal securities law. As such, holders of these IOUs and those who may purchase them are protected by the provisions of the federal securities laws that prohibit fraud in the purchase or sale of securities," the agency said.

That was a mistake.

Here's why.

(Excerpt) Read more at market-ticker.denninger.net ...


TOPICS: Business/Economy; Government; US: California
KEYWORDS: ca2009; iou; sec

1 posted on 07/10/2009 7:37:39 AM PDT by rvoitier
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To: rvoitier

The SEC did not destroy California. California committed suicide.


2 posted on 07/10/2009 7:40:14 AM PDT by P-Marlowe (LPFOKETT GAHCOEEP-w/o*)
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To: rvoitier

It is not at all difficult to see why this is happening.

The ELECTORAL VOTES of Taxifornia are critical to the Socialist Party.


3 posted on 07/10/2009 7:40:33 AM PDT by EagleUSA (if)
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To: rvoitier

California was destroyed by liberals far before the SEC.


4 posted on 07/10/2009 7:40:48 AM PDT by DCBryan1 ( Arm Pilots&Teachers. Build the Wall. Export Illegals. Profile Muslims. Execute child molesters RFN!)
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To: rvoitier
No The Democrats destroyed California by pandering to illegal aliens.

Deport them all now

5 posted on 07/10/2009 7:41:19 AM PDT by troy McClure
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To: rvoitier
If a state owes you a tax refund and does not pay it, can you withhold any future tax payments up to the amount that is owed plus interest...and penalties?
6 posted on 07/10/2009 7:42:00 AM PDT by Dr.Syn
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To: rvoitier; Grampa Dave

Ping...


7 posted on 07/10/2009 7:42:14 AM PDT by tubebender (I just discovered where all my lost tag lines went...)
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To: rvoitier
California's new state bird.

8 posted on 07/10/2009 7:45:16 AM PDT by TSgt (Extreme vitriol and rancorous replies served daily. - Mike W USAF)
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To: P-Marlowe

Without getting into the unnecessary “they did it to themselves” argument I really did wonder about these CA IOU’s.

If they were issued as 90 day type bearer bond notes with 3.75% interest how were they NOT subject to SEC regulation?


9 posted on 07/10/2009 7:47:11 AM PDT by PittsburghAfterDark
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To: rvoitier

I saw some previews on TV. I was excited to see it, it was a 1/2 hour program deal and I’d never seen Borat.

This Bruno stuff was boring. I stopped watching after about 5 minutes.


10 posted on 07/10/2009 7:49:30 AM PDT by Woebama (Paying for my neighbor's mortgage and Wall Street's bonuses sure is hard.)
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To: troy McClure
No The Democrats destroyed California by pandering to illegal aliens.

Deport them all now

Then let's get started doing something about the illegal aliens...

11 posted on 07/10/2009 7:57:24 AM PDT by Onelifetogive (See www.buyingapuppy.com for News on Dogs and Puppies)
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To: rvoitier
...if you try to sell these "securities" for immediate cash.

CA has declared that selling their IOUs requires notarization of approved transfer from the original payee - practically prohibiting selling these "securities" for immediate cash.

The Soviet Union's last straw was inability to pay obligations. These IOUs are effectively non-transferrable low-interest high-risk securities - an obfuscated way of saying CA isn't paying obligations.

12 posted on 07/10/2009 8:03:35 AM PDT by ctdonath2 (John Galt was exiled.)
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To: Onelifetogive

They won’t cower and submit.
They’ll rally for Aztlan.
Ya ready to take on 10,000,000 CA residents declaring state independence?


13 posted on 07/10/2009 8:05:04 AM PDT by ctdonath2 (John Galt was exiled.)
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To: rvoitier
Now all that remains is for Treasurerury or the Fed to open a facility to back the securities. Presto, chango, allakazham, you have solved the crisis. We are witnessing the birth of a new currency.
14 posted on 07/10/2009 8:06:01 AM PDT by FreedomNotSafety
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To: Dr.Syn
If a state owes you a tax refund and does not pay it, can you withhold any future tax payments up to the amount that is owed plus interest...and penalties?

Maybe not interest and penalties, but possibly the principal. The Federal Govenment allows taxpayers to offset refunds against future payments of estimated tax. If a state, like California, allows such offsets, then that would be a good way to collect an unpaid refund.

15 posted on 07/10/2009 8:06:17 AM PDT by libstripper
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To: rvoitier

Another reason why Texas must undertake its right under Union entry and secede from the mess that is now the USA


16 posted on 07/10/2009 8:09:50 AM PDT by bestintxas
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To: rvoitier

The man is quite correct.


17 posted on 07/10/2009 8:10:36 AM PDT by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: rvoitier
Now all that remains is for Treasurerury or the Fed to open a facility to back the securities. Presto, chango, allakazham, you have solved the crisis. We are witnessing the birth of a new currency.
18 posted on 07/10/2009 8:20:55 AM PDT by FreedomNotSafety
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To: Dr.Syn

Yes.


19 posted on 07/10/2009 8:23:19 AM PDT by Grampa Dave (Does Zer0 have any friends, who are not criminals, foreign/domestic terrorists, or tax cheats?)
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To: FreedomNotSafety
We are witnessing the birth of a new currency.

Yeah, never mind that pesky Constitution.

I shudder to think what consequences all this Alinskyite destruction will bring.

20 posted on 07/10/2009 8:23:25 AM PDT by TChris (There is no freedom without the possibility of failure.)
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To: ctdonath2
They won’t cower and submit. They’ll rally for Aztlan. Ya ready to take on 10,000,000 CA residents declaring state independence?

Yes before they are 20,000,000.

21 posted on 07/10/2009 8:26:04 AM PDT by Nuc1 (NUC1 Sub pusher SSN 668 (Liberals Aren't Patriots))
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To: rvoitier
Cool!

Garde la Foi, mes amis! Nous nous sommes les sauveurs de la République! Maintenant et Toujours!
(Keep the Faith, my friends! We are the saviors of the Republic! Now and Forever!)

LonePalm, le Républicain du verre cassé (The Broken Glass Republican)

22 posted on 07/10/2009 8:34:11 AM PDT by LonePalm (Commander and Chef)
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To: rvoitier

I wonder if a company that does business with the state can send in their IOUs when their taxes are due. I don’t know how California does it but withholding and sales tax are usually submitted in most states at least quarterly. So if a business owes $50,000 in taxes and have an IOU for service render for $25,000 could they send in tyhe IOU + a check for $25,000?

Somehow I bet CA won’t accept their own IOUs as payment.


23 posted on 07/10/2009 8:36:34 AM PDT by gunnut
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To: Lurker

If you accept the IOU’s, then it is income taxable by the Feds.
How are you going to be able to pay federal taxes with an IOU?

If they are securities and go unpaid then you could apply to the SIPC for a claim of up to $500,000. That would leave the taxpayers (federal) stuck with California’s bills.


24 posted on 07/10/2009 8:38:00 AM PDT by learner
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To: ctdonath2
CA has declared that selling their IOUs requires notarization of approved transfer from the original payee...

How convenient, then, that the Democrats passed a law a few years ago that devastated the availability of notaries public by imposing ridiculous training, exam, and continuing education requirements upon notaries. The "handbook" is over 50 pages long, but the maximum fee is $10, the same as it is in New Hampshire which only requires an application fee, oath, and a criminal background check.

I know people who'd been trying to adopt children while living in California, and at least one was eventually forced to give up due to the ridiculous expense and hassle of getting a document notarized, let alone an apostille from Sacramento as required for international court proceedings.

25 posted on 07/10/2009 8:47:08 AM PDT by mvpel (Michael Pelletier)
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To: mvpel

Oh, that’s funny.

In lieu of payment, issue IOUs which...
- return paltry interest
- are high-risk for non-payment on maturity
- are not legal tender for payment of any debts public or private
- cannot be transferred without notarization
- notaries are practically non-existent

Popcorn, anyone?

Awright, it’s all but official: CA is done. Now, what is the outcome of the 6th largest economy in the world, and major food producer for the USA (anyone got the %?), going outright bankrupt?

“I’m dead, I just haven’t stopped moving yet.” - Zaphod


26 posted on 07/10/2009 8:52:28 AM PDT by ctdonath2 (John Galt was exiled.)
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To: ctdonath2
Ya ready to take on 10,000,000 CA residents declaring state independence?

"You can't just arbitrarily deport millions of illegal aliens"

"Wrong"

"Yeah, watch us"


27 posted on 07/10/2009 8:58:22 AM PDT by Costumed Vigilante (Congress: When a handful of evil morons just isn't enough)
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To: Costumed Vigilante

While spectacular, things didn’t turn out particularly well for those two.


28 posted on 07/10/2009 9:00:56 AM PDT by ctdonath2 (John Galt was exiled.)
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To: Costumed Vigilante

29 posted on 07/10/2009 9:15:05 AM PDT by Mat_Helm
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To: bestintxas
You are so RIGHT. The debit burden will crush us all, even the fiscally sound states.
30 posted on 07/10/2009 9:18:47 AM PDT by 2001convSVT ("Only Property Owners that pay taxes should have the right to Vote")
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To: rvoitier
CooL!


31 posted on 07/10/2009 9:23:11 AM PDT by BBell
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To: BBell

Lol! Good to know I am not the only one with a brain that jumps there first ; }

Tatt
(GoGators!)


32 posted on 07/10/2009 9:25:32 AM PDT by thesearethetimes... ("Courage, is fear that has said its prayers." DorothyBernard)
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To: ctdonath2
While spectacular, things didn’t turn out particularly well for those two.

They died doing what they loved best: Deporting aliens back to the hell holes they came from.

33 posted on 07/10/2009 9:45:37 AM PDT by Costumed Vigilante (Congress: When a handful of evil morons just isn't enough)
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To: Costumed Vigilante

Be my guest. Not exactly high on my personal list of life-fullfilling goals.


34 posted on 07/10/2009 10:19:28 AM PDT by ctdonath2 (John Galt was exiled.)
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To: thesearethetimes...

Go Tigers!


35 posted on 07/10/2009 10:42:41 AM PDT by BBell
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To: P-Marlowe
The SEC did not destroy California. California committed suicide.

I'd describe it as California climbing out on the bridge and the SEC becoming impatient at the traffic tie-up and pushing it off.

36 posted on 07/10/2009 11:43:15 AM PDT by John Jorsett (scam never sleeps)
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