"Market Conditions" = The States Are BROKE

[traelin0]

New Jersey had to pull a bond auction yesterday..... that's an unusual thing.

Why?

(Bloomberg) - New Jersey Gov. Chris Christie has learned that talking about state insolvency may have a cost.

About 20 minutes after Mr. Christie, 48, told a town-hall meeting in Paramus, N.J., today that health care costs “will bankrupt” the state, the New Jersey Economic Development Authority cut its tax-exempt school-related bond offering by more than half to $712.3 million.

Oh, you mean we should just not talk about state insolvency?

The solution to being insolvent is to lie about being insolvent?

There's a principle in the law called theft by conversion. There's also quite a bit of black-letter law that makes it illegal to lie on a loan application.

When you sell bonds, you're borrowing money. If you intentionally and falsely misrepresent your solvency, either by omission or commission, what is that, exactly, in reference to existing law?

Not only is it securities fraud, it's a clear lie on a loan application, right?

Well, yeah. And while the law is drawn only to count written loan documents, one can certainly argue that an offering of a bond is a "written" document and further, a bond offering is an explicit attempt to borrow money.

“Mr. Christie made a rookie mistake,” Mr. Pietronico said. “The market is very sensitive to the word ‘bankrupt.'”

Oh really? Mr. Christie told the truth and this is a "rookie mistake"?

No, this is what lawful behavior is, unlike the rest of the bankster class who are more than happy to steal your money - or help someone else steal your money - by deceiving you as to the economic conditions of the borrower.

Remember, we have these very same sorts of people who, during the housing bubble, appear to have not only helped borrowers lie about incomes (that is, their economic conditions) they actually did the lying and then asked the borrowers to sign for it, insisting that this was perfectly ok despite the fact that they knew any material misrepresentation on a loan application is a federal offense!

In times of universal deceit, telling the truth will be a revolutionary act.

Read more here.

[fairlycrazy23]

There will probably come a time when states will be able to declare bankruptcy.

Besides that fact that our entire health care mentality needs overhauled to actually introduce real market forces back into it, other (mostly union) benefit liabilities that states have accumulated will become untenable. The only way to get out of contractual obligations would be through bankruptcy court.

I feel sorry for most of the rank and file, it is not there fault that the state agreed to conditions it couldn't possible meet and they will likely feel the effects, the union bosses that may have 'strong armed' the state into agreeing will likely do ok.

[djrick]

I heard a great comment on BBC when discussing coming austerity in the UK.

"I'm all for belt tightening as long as we all are wearing the same pants"

that one sentence crystallizes the issue for me.

[djrick]

AUSTIN — Comptroller Carole Keeton Strayhorn did not win friends five years ago when she warned Gov. Rick Perry and state lawmakers they were writing the "largest hot check in Texas history" during a tax overhaul that resulted in lower property taxes and a revised business tax.

Strayhorn told them their plan would fall about $23 billion short over a five-year period.

Now, five years later, state leaders are staring at an estimated budget shortfall of nearly $27 billion over t

[Savoir Faire-Demogague in NJ]

Am I surprised that New Jersey is the most corrupt state in the US....maybe second to Illionios?
NJ has huge financial problems....corruption, political cronyism... pension padding...double, triple dipping...etc...

[floridayankee]

There's a principle in the law called theft by conversion. There's also quite a bit of black-letter law that makes it illegal to lie on a loan application.

When you sell bonds, you're borrowing money. If you intentionally and falsely misrepresent your solvency, either by omission or commission, what is that, exactly, in reference to existing law?

Not only is it securities fraud, it's a clear lie on a loan application, right?

Great article Trea...but the author makes one fatal flaw in the argument. He assumes government finances are handled like private business finances. This is one arena where the playing field is no where near level.

Face it...if corps handled finances like the federal or even the state government, they'd be nailed for fraud.

[Savoir Faire-Demogague in NJ]

Face it...if corps handled finances like the federal or even the state government, they'd be nailed for fraud.

Anyone find it humorous and ironic, that Congress hauls big corp execs in front of committees investigating hanky-panky in the corp ranks, when it is congress and the senate, that engage in the identical underhanded and corrupt manner? And yet, they sit there in a sanctimonious manner and scold corp America leaders?

[rockon]

It seems the states and our federal budgets are in similar trouble and for the same reason. The spending is and has been out of control. While they may not be able to "declare bankruptcy" they will be bankrupt all the same the day they can not sell bonds or borrow monies to cover their obligations. We might as well talk about it openly and get the process started. It's going to be ugly and everyone is going to be affected but the sooner it happens the better off we will be.
We made the decision to keep voting these people into office. We allowed them to spend more then they take in. We allowed them to sign unfair trade agreements that sent our manufacturing jobs to foreign countries. We allowed them to do a lot of things that caused the mess we are in. Hopefully the election in 2010 is the start of us demanding some accountability.

[AgeOfEnlightenmentSCP]

What's amazing almost to the point of miraculous to me is the fact that Chris Christie is NOT a conservative guy. He's actually quite moderate. But we've gotten to the point where Democrats are so over-the-cliff looney on spending that a guy that once upon a time would have been a Democrat is a Republican one-- and again, a liberal Republican at that-- because the concept of balancing a budget is so radical, Democrats can't even discuss it without blood shooting out of their eyes.

The last Congress to balance the budget-- which was the first Congress in 42 years to balance a budget-- was led by Newt Gingrich. The most recent liberal Congress run by Nancy Pelosi has spent more than ALL previous Congressional bodies...COMBINED.

If you want to get partisan about it.

I just don't believe living within our means should be partisan. I think it's time for MAINLY Democrats, but also many Repblicans to embrace the idea. It's time for Dems to say, we really like this program or that, but we can't afford it. So, we're going to have a scaled back program, or eliminate programs, or rework things to spend less.

The problem for the Dems is that national insolvency-- dealing with it-- means the destruction of their party. They are caught in a financial death spiral because the Democratic Party is primarily funded by public spending and debt.

It works like this: Dems spend money on expanding the federal or state, or whatever public payroll and programs. The money is funneled to unions who make contributions and lobby. When PUBLIC spending shrinks, the Democratic Party shrinks. Some honest Dems will even admit this.

This leaves the public with ONE party to protect us-- and that's a pretty flimsy bet because they (the Republicans) I think many of them look over at the game on the other side, and they want in.

[BeenThere...DoneThat...]

<<< Anyone find it humorous and ironic, >>>

...I find it ironic, but not funny...

[handyman2]

When states were flush with money they thought it would never end and commited to all sorts of labor agreements and retirement packages. Now it is time to pay the piper. The question is how do they break those agreements made 20 plus years ago?

[traelin0]

Simple, handy. Tell the people the politicians lied, the people were stupid for believing the insane promises, and prepare for martial law. LOL

[ungenteel]

"Market Conditions" = The States Are BROKE"

No sh*t ... so the current market run up is manufactured to fleece a few more dollars from the folks who think that all is well in investment land .. cheeze .. why not privatize social security

[AgeOfEnlightenmentSCP]

As is usually the case with unions, it's time to face facts: they can either be told the truth and get something or they can insist the unrealistic promises made to them be kept, and they can get nothing.

How many unions have to completely kill the golden goose before the rank and file understand they are biting the hand that feeds them?

And NEWS FLASH! -- this ain't Europe. The American people will simply NOT tolerate temper tantrums and violence from our servants. If they won't accept reasonable measures, we'll resort to extreme measures. We'll fire them, drastically reduce pay and benefits, and force them to find honest work. Either that, or they can sit down, shut up, and take what is still a better deal than those of us who pay their inflated salaries, gold plated benefits, and early, fat retirements.

[floridayankee]

The last Congress to balance the budget-- which was the first Congress in 42 years to balance a budget-- was led by Newt Gingrich. The most recent liberal Congress run by Nancy Pelosi has spent more than ALL previous Congressional bodies...COMBINED.

If you want to get partisan about it.

I just don't believe living within our means should be partisan. I think it's time for MAINLY Democrats, but also many Repblicans to embrace the idea. It's time for Dems to say, we really like this program or that, but we can't afford it. So, we're going to have a scaled back program, or eliminate programs, or rework things to spend less.

If the last balanced budget was under the Grinch, I'd say mainly all the idiots in DC could use a Balancing the Budget 101 course.

[floridayankee]

Jan 17, 2011 23:56:48 GMT -5 ungenteel said:

No sh*t ... so the current market run up is manufactured to fleece a few more dollars from the folks who think that all is well in investment land .. cheeze .. why not privatize social security

I suppose you think leaving your money with a bankrupt government is much better than a bankrupt investment firm?

[AgeOfEnlightenmentSCP]

Again- Glenn Beck is correct about a great many things. He's right that the left is going to try to foment violence. They've been trying to get the "prolitariat to rise up" since the 1920's (anyone remember learning about the "bonus marchers" in history class?) and create a "crisis" that will be the "tipping point" for ending our Republic and establishing a tyrannical form of government since the progressive movement began.

But Glenn Beck is WRONG about the violence having it's intended effect. The bad thing about the AZ shooting for Democrats is that rather than quickly bury their script for a more opportune time, they have left their cards sitting out on the table. We know they are pre-scripted for an event either caused by, or effectively blamed on a "right winger". I wouldn't even put it past them to frame the right for something.

But thankfully, of late, it seems the public sees right through them. If and when "riots" come to America-- they will quickly be put down. We The People that pay the tab for these government dependent malcontents aren't going to have it-- we aren't going to have it for a second. Law and order will be restored quickly, and justice will be swift and sure for those who try to extort us with violence and threats of violence.

It's a great time to be alive, and a great time to be a (real) American.

[AgeOfEnlightenmentSCP]

If you can't tell, this week my mission is to make Lakhota's head explode- or at least make blood shoot out of his eyes.

[traelin0]

LOL ahh yes, the Bonus Marchers. It didn't even stop with them. Funny thing though...it was the Democratic Congress that overrode FDR's veto to pay them early.