It depends on the value of the dollar. On May 31, 7:46�am, bruce majors <[email protected]> wrote: > so true > > or get that all the people who were bundling illegal foreign contribitions > for odumbie and hillary to get those saudis and asians to pay for it > > > > On Sun, May 31, 2009 at 8:41 AM, rigsy03 <[email protected]> wrote: > > > There are Hollywood idiots willing to pay $30,000. to dine with Obama. > > Let them bail out California. > > > On May 31, 7:33 am, bruce majors <[email protected]> wrote: > > > Obama (Should Say) to California: Drop Dead by: Peter Schiff May 30, > > 2009 > > > > [image: Peter Schiff > > > picture]<http://seekingalpha.com/author/peter-schiff> Peter > > > Schiff <http://seekingalpha.com/author/peter-schiff> > > > > During the height of New York City's financial crisis in the 1970s, > > > President Gerald Ford had the good sense to turn down Mayor Abe Beame's > > > request for a federal bailout. The refusal prompted the famous New York > > Post > > > headline, "Ford to City: Drop Dead." More than 30 years later, as > > California > > > Governor Arnold Schwarzenegger makes a similar plea to Washington, I hope > > > President Obama will show similar restraint. Unfortunately, given Obama's > > > recent string of unwise economic decisions, it's hard to imagine that his > > > judgment will suddenly improve. > > > > A federal bailout would spare California from having to make spending > > cuts > > > needed to bring its budget into balance. The matter has become urgent > > since > > > California voters rejected several tax-hiking ballot initiatives. Rather > > > than taking the vote as a signal to dramatically curtail spending, the > > state > > > turned to the feds. If they get a free pass, the politicians can avoid > > > fixing any of their past mistakes or preparing California for the future. > > > > California, like many states, expended its bureaucracy as the nation's > > > bubble economy inflated. When condos flipped like hamburgers and > > homeowners > > > flush with equity spent like lottery winners, extra tax revenue flooded > > into > > > Sacramento. However, instead of saving the money for a rainy day or > > paying > > > off prior debts, the state government simply ballooned its spending. Now > > > that the bubble has burst, and revenues are severely depleted, it is time > > > for California to reconsider its excesses. > > > > Governor Schwarzenegger's claim that a federal guarantee is not a bailout > > is > > > ludicrous. No one in the private sector will lend California any money > > > because the state can't pay it back. Just like AIG and GM, it needs > > federal > > > help to stay solvent. And although the Federal balance sheet is in far > > worse > > > shape than California's, there is one crucial difference: Washington has > > a > > > printing press, and Sacramento does not. With the ability to pay off > > debts > > > with newly created funds, a federal default is not a concern. > > > > However, if Obama comes to the rescue, none of the needed cuts will be > > made. > > > Instead, California will continue to operate its bloated bureaucracy and > > > will be in constant need of more bailouts. In other words, if > > Schwarzenegger > > > gets his bailout, look for him to utter his famous line - "I'll be back." > > > > But it's not just Schwarzenegger who will be back, but governors from all > > > the other states as well. After all, if the Federal government bails out > > > California, by what right can they deny similar aid to other states? The > > > bailout will send a clear message that states do not need to cut > > spending. > > > > Similar to the reckless behavior that resulted from federally guaranteed > > > mortgages, federal guarantees on state debt will counteract the market's > > > attempt to force states to act responsibly. As the market accurately > > > prices-in the heightened risk of default, California faces staggering > > > increases in its borrowing cost. Under normal circumstances, this > > pressure > > > would force the state to act prudently now to diminish the risk of a > > future > > > default. However, by allowing California to evade the "bond market > > > vigilantes," the stage will be set for much bigger losses. > > > > The moral hazards created by state bailouts are tremendous. With federal > > > guarantees given to profligate states, those states that had shown > > greater > > > fiscal responsibility will face higher interest rates - as their bonds > > lack > > > a federal guarantee. This creates the perverse incentive for all states > > to > > > act irresponsibly. > > > > Just as government-guaranteed mortgages lead the market to make overly > > risky > > > home loans, federally guaranteed state obligations will set the stage for > > > yet another crisis. > > > > Federal backing of California bonds would effectively turn them into > > > Treasury bonds, with the added appeal of being exempt from California > > state > > > income tax. Therefore, the Treasury will be at a competitive disadvantage > > > when it looks to issue its own debt to Californians. If it then has to > > > guarantee the bonds of all the other 50 states, why would any Americans > > buy > > > Treasuries when they can get identical credit quality on better terms > > from > > > the states? The only real buyers left would be foreigners, who are > > already > > > queasy about the Treasuries they own. > > > > The need to make good on state and federal obligations will further > > depress > > > the appeal of all U.S. dollar-denominated debt. As a result, as real > > buyers > > > flee the market, the Fed will have to run its printing presses even > > faster > > > to pick up the slack. This will set into motion a self-perpetuating > > spiral > > > of money printing and Treasury sales with a predictable result: > > > hyperinflation. > > > > In the meantime, by redirecting credit to California that otherwise would > > > have gone to more credit-worthy borrowers, the government will worsen the > > > credit crunch for the rest of the country. Since there is only a finite > > > supply of credit, money borrowed by California will no longer be > > available > > > to other borrowers. The effect is a less efficient allocation of capital > > > that further undermines national productivity. > > > > The only rational policy choice for Obama is to send Schwarzenegger > > packing. > > > If he does, California will have no choice but to cut spending or default > > on > > > its bonds. My guess is that, with their backs to the wall, the California > > > legislature will choose the former. However, even if they default, at > > least > > > the losses will be borne by those who freely assumed the risks. With a > > > bailout, the losses will be shouldered by those who were not even parties > > to > > > the transactions. If we go this route, we can all say "hasta la vista, > > baby" > > > to our prosperity. > > > >http://seekingalpha.com/article/140371-obama-should-say-to-california... > > > __._,_.___ > > > Messages in this topic > > > <http://groups.yahoo.com/group/ThePoliticalSpinroom/message/442901;_yl.. > > .>( > > > 1) Reply (via web post) > > > <http://groups.yahoo.com/group/ThePoliticalSpinroom/post;_ylc=X3oDMTJy.. > > .>| > > > Start > > > a new topic > > > <http://groups.yahoo.com/group/ThePoliticalSpinroom/post;_ylc=X3oDMTJl.. > > .> > > > Messages< > >http://groups.yahoo.com/group/ThePoliticalSpinroom/messages;_ylc=X3oD...>| > > > Files< > >http://groups.yahoo.com/group/ThePoliticalSpinroom/files;_ylc=X3oDMTJ...>| > > > Photos< > >http://groups.yahoo.com/group/ThePoliticalSpinroom/photos;_ylc=X3oDMT...>| > > > Links< > >http://groups.yahoo.com/group/ThePoliticalSpinroom/links;_ylc=X3oDMTJ...>| > > > Polls< > >http://groups.yahoo.com/group/ThePoliticalSpinroom/polls;_ylc=X3oDMTJ...>| > > > Calendar< > >http://groups.yahoo.com/group/ThePoliticalSpinroom/calendar;_ylc=X3oD...> > > > [image: Yahoo! > > > Groups]< > >http://groups.yahoo.com/;_ylc=X3oDMTJkb21wMjA4BF9TAzk3NDc2NTkwBGdycEl...> > > > Change settings via the > > > Web< > >http://groups.yahoo.com/group/ThePoliticalSpinroom/join;_ylc=X3oDMTJm.. > > .>(Yahoo! > > > ID required) > > > Change settings via email: Switch delivery to Daily > > > Digest< > > [email protected]?subject=email+delivery:+Digest > > >| > > > Switch > > > format to Traditional< > > [email protected]?subject=change+delivery+format:+Traditional > > > > Visit Your Group > > > <http://groups.yahoo.com/group/ThePoliticalSpinroom;_ylc=X3oDMTJkMXE2Y.. > > .>| > > > Yahoo! > > > Groups Terms of Use <http://docs.yahoo.com/info/terms/> | Unsubscribe > > > <[email protected]?subject=> > > > Recent Activity > > > > - 4 > > > New Members< > >http://groups.yahoo.com/group/ThePoliticalSpinroom/members;_ylc=X3oDM...> > > > - 1 > > > New Links< > >http://groups.yahoo.com/group/ThePoliticalSpinroom/links;_ylc=X3oDMTJ...> > > > > Visit Your Group > > > <http://groups.yahoo.com/group/ThePoliticalSpinroom;_ylc=X3oDMTJldGFud.. > > .> > > > Give Back > > > > Yahoo! for Good< > >http://us.lrd.yahoo.com/_ylc=X3oDMTJtbHB2Nmw4BF9TAzk3MzU5NzE0BF9wAzEE...> > > > > Get inspired > > > > by a good cause. > > > Y! 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