Skip to comments.California Goes Off the Rails with High Speed Train (May have killed chances to issue more debt)
Posted on 07/15/2012 2:35:08 PM PDT by Zakeet
The State of California was already facing a $19 billion budget deficit, shorted public schools $8 billion, and was set to release imprisoned rapists into community probation when the Legislature approved selling $4.6 billion in new state bonds to build 130 miles of railroad track through some of the most uninhabited farm country in Central California.
The arrogance of the leveraging the already insolvent state caused a volcanic public outrage, but the Legislature and Governor Jerry Brown were desperate to get their paws on $3.3 billion in federal grants from the Obama Administration. But in a shocking development, Moodys Investor Services, who was expected to provide the credit rating to justify selling the debt, may have just torpedoed Californias credit rating by tripling their estimate of the states unfunded public pension liability from $38.5 billion to $109.1 billion liability and raising the annual cost of state pension funding by $7.3 billion.
But the bogus choo choo bonds may have been too toxic even for Moodys high tolerance for government shenanigans; they were the proverbial straw that broke the camels back. If Moodys issued an investment grade credit rating and the railroad bonds eventually default, the firm would undoubtedly be sued for billions of dollars by lots of angry retired people who tend to be the main buyers of municipal bonds.
Each year, California governments have borrowed huge amounts of money by selling low-cost municipal bonds in late July to finance the period until they collect the majority of their tax revenues in December and April. ... But any downgrades of the state or municipality debt from investment grade to junk bond would send the cost of borrowing up to Greek-like levels of 20%.
(Excerpt) Read more at breitbart.com ...
Moonbeam made a big choo choo boo boo!
The train will travel, as Michael Medved put it, “from Hooterville to Bugtussel”.
What a great picture ~ you can see his lips forming themselves so he can go “whoo, whoo, whoooooo, whooo”.
May have killed chances to issue more debt
At last! A good unintended consequence!
Don’t forget the train unions. Another way to fund the democrats.
Jerry Brown: “Whillikers, GOLLEEE!”
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This is a ploy to project more tax revenue ahead of this year’s election. When it doesn’t go through for any one of a dozen reasons, California will be in even more debt.
When the dumb legislature and equally dumb Brown passed this bill a couple of weeks ago, my comment here was that they can pass bond issues but since the state essentially is bankrupt which institutions would ever consider purchasing them. Kind of like me deciding that I would float a $100 million bond issue for myself. Fine, but then I would need to find quite a few morons to purchase those bonds.
Brown has turned out to be a bigger idiot that I ever could have imagined. I can’t wait to vote against his sales tax and income tax increases on the November ballot.
Yes, but when it is completed it will stop in beautiful downtown Burbank. If only Johnny Carson was still alive to take advantage of it.
Calif. is going under.
Bowie Bonds, back in 1997, were the first example of Pullman Bonds, or the securitisation of intellectual property into bond offerings. Bowie bundled up the publishing royalties (full details here) of his pre-1990 albums and offered them as the security, the cash flow, against which he borrowed $55 million.
Depending on who is telling the story (the full prospectus for the bonds hasnt been published) the bonds all matured in 2007, or the average maturity was 2007 with some maturing as late as 2012.
It is said that the bonds have been retired and that the royalty rights are back in David Bowies full ownership. Its difficult to see how just the royalties would have paid off the $55 million: that would have required royalty revenue of $8.1 million a year for both principal and interest and thats up at Paul McCartney levels of income.
Bowies good and famous, but that much? The BBC radio stations pay £35 to £45 per play (depends on local radio or national) of a song but Bowies not played that often.
There’s a Pixley out there somewhere...I drive though it on my way to Bakersfield.
Liberals and loony unions cannot bankrupt California fast enough and have the other 49 pick up the tab
Let's hope the idiot dems in SF and LA vote against the taxes as well.
Since the Hollywood elites always advocate crap like this, why don't they just pool their wealth, and fund the stupid ideas without involving us? I'm ok with it being their dumb train to nowhere!