California to issue IOU’s
Posted by WARREN MOSLER on July 1st, 2009
Tell Arnold to make them eligible for payment of state taxes and they can forever use the IOU’s for state purchases in place of $US
July 1 (Reuters) — California prepared on Tuesday to resort to issuing IOUs as the giant but cash-strapped U.S. state struggled to approve a new budget in time for the new fiscal year that begins on Wednesday.
The IOUs, which are notes promising payment to vendors and local agencies, or shutting down some public services, are among measures that California and other states may have to rely on as they contend with staggering budget gaps caused by the U.S. recession.
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July 1st, 2009 at 1:51 pm
“As everyone knows, California’s state budget is in dire straits. Unlike the federal government, US state governments really do finance their spending through a combination of tax revenues and borrowing. They are users of the nation’s currency (the dollar), not issuers. The current recession (or depression) has caused their tax revenues to collapse. Their projected budget deficits cause ratings agencies to downgrade their debt—making it too expensive to borrow as this sets off a vicious cycle of further downgrades and ever rising interest rates.”
Read more here:http://neweconomicperspectives.blogspot.com/
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July 6th, 2009 at 8:58 pm
Big Banks Don’t Want California’s IOUs
A group of the biggest U.S. banks said they would stop accepting California’s IOUs on Friday, adding pressure on the state to close its $26.3 billion annual budget gap.
http://online.wsj.com/article/SB124692354575702881.html?ru=yahoo
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