California: State in talks to maintain debt ratings

The San Francisco Chronicle ^ | Friday, February 7, 2003 | Greg Lucas, Lynda Gledhill, Chronicle Sacramento Bureau

[Ernest_at_the_Beach]

Sacramento -- Fueled by California's giant cash shortfall, a third major rating agency on Wall Street will lower the state's creditworthiness, State Treasurer Phil Angelides predicted Thursday.

Angelides and top officials from Gov. Gray Davis' administration met with two credit agencies in New York Thursday and will meet with a third today to try to convince them that California has a realistic plan to erase its cash gap.

[Ernest_at_the_Beach]

calgov2002:

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[JoeFromCA]

State of California municipal bonds used to be a good investment, with a decent interest rate and tax free for CA residents. I sold all mine last year as CA sunk into the economic doldrums. It's unlikely CA will actually default on the bonds, but the higher interest rates CA will have to pay in order to borrow in the future will reduce the value of outstanding bonds significantly.

[AdamSelene235]

El Salvador's debt is far more attractive.

[Dog Gone]

Davis can fool the press and he can fool the voters, but he can't fool Wall Street.

It will be interesting to watch what happens.

[Carry_Okie]

Davis can fool the press and he can fool the voters, but he can't fool Wall Street.

They've been fooled before (WPPSS did it).

Davis can fool the press and he can fool the voters, but he can't fool Wall Street.

[Robert357]

Very well said. It will be interesting

[Robert357]

California already is rolling over debt. A $7.5 billion short-term loan from last June was paid off in November by $12.5 billion in new loans. Those loans, in turn, must be paid off this June.

I have been involved with many bond issues, notes, bond anticipation notes and refinancings by electric utilities. Note how a $7.5 billion loan is now becoming part of a $12.5 billion loan. Can you imagine what $5 (5=12.5-7.5) billion in social program cuts looks like? Wall Street can and they will demand to see those kind of cuts in the budget or sources of taxes that will pay off both the increasing debt and the base debt. The legislature is going to need Wall Street money to keep going and Wall Street will lend it, but there will be a huge and growing cost.

The point is that by delaying things, the legislature is just making their choices that much more painful. Wall Street will give the Governor and Legislature enough rope to let them all politically hang themselves. Actually, I think that has already occurred. The perps just don't know it yet.

[Ernest_at_the_Beach]

The point is that by delaying things, the legislature is just making their choices that much more painful. Wall Street will give the Governor and Legislature enough rope to let them all politically hang themselves. Actually, I think that has already occurred. The perps just don't know it yet.

Wonder what the reactions will be when they finally figure it out?

[Robert357]

Wonder what the reactions will be when they finally figure it out?

(1) That elected officials get to decide things and shouldn't be pushed around by laws, contracts, or threats of withholding the lending of money by bankers and financial analysts who are not elected by the people.

(2) That Wall Street is not fair and just out to punish common people. The Wall Street types are just as bad and evil Texas power selling gougers.

(3) It was the republican's and Pete Wilson's fault, not any current democrats fault.

(4) It is the fault of G. W. Bush and the federal government controlled by Republicans.

(5) I'm not going to run for elected office again as not being able to do pork-barrel politics sucks.

[Ernest_at_the_Beach]

LOL!

That is a very good list and you even have one for lewislynn