Commentaries

Now raising intellectual capital

California IOU’s soon to be DOA

August 19, 2009

As J.P. Morgan Chase has seemingly been the only rock in the financial storm, it is not surprising that the bank is now helping California, lending it $1.5 billion. The money will enable the state to stop issuing IOU’s a month earlier than planned (on Sept. 4). The loan is essentially a bridge until the state sells $10.5 billion in short-term notes next month. Here’s Reuters’ story.

The Los Angeles Times says:

The risk to JPMorgan is virtually nil: The loan will be repaid by late September, when the state plans to sell $10.5 billion of so-called revenue anticipation notes, or RANs — securities that will mature next spring. Individual investors are expected to flock to the RAN offering as a place to stash cash, because the notes should offer much more lucrative returns than money market funds and other short-term accounts paying next to nothing.

Some muni bond analysts expect the annualized interest yield on the RANs to be between 2% and 3%. For California residents, that interest would be exempt from state and federal income tax.

The loan is something of a about-face: J.P. Morgan was among the banks that refused to accept the state IOU’s after their first week.

Comments

Now just where do I, Joe Lunchmeat, go to buy one of these California RAN (Revenue Anticipation Notes, Running Away from Normality notes)? Oh! I get it! I can’t! I am not one of the nobility in American society, a corporation. Only corporations, the ‘society of the nameless’ in Latin countries that know frauds when they see them, can buy these notes. For they are probably sold in exchanges where the public is excluded by law, just like in Michigan where car auctions of repossessed cars are open only to the privileged corporate few and a few rich individuals that they allowed in as tokens. What is next? Oh, we already have it! Laws that in effect say that ordinary proletarian workers cannot give evidence against a corporation in a court of law, like in the ‘veggie liability’ case where Bush introduced anew the idea of ‘illegal to criticize a corporation or its product; and in the case where a ‘citizen’ overheard a criminal conspiracy among politically powerful on an open air wave used by cell fones….and the criminals were given a medal whilst the citizen was jailed. Shades of ancient Egypt where the those ‘citizens’ were executed on the spot for looking at the ‘Pharoah’ while his parade marched by….they had to stare at the ground! Of course this will probably not be posted as the monopolists control this media website. Conservatives rail against socialism from the government while corporate socialism, fascism, creeps in the side door with heavy jackboots.

Posted by Chester Drawers | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •