California’s Debt Double Whammy
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It hurts enough to get an I.O.U. from the state because they are out of money, but the wolves are standing in line to snatch up these new security instruments via eBay and Craigslist.
Boy-oh-boy is California in debt.
California has so little cash it has started issuing I.O.U.’s instead of paying their bills.
The Banks
Some banks, including Bank of America and Wells Fargo, have said they will continue to honor these I.O.U.’s for at least another week.
But what about after that week is up?
The Wolves
Since these little babies carry an interest rate (3.75%) and a payoff date (October 2), some people are thinking they’re a lot like a security.
Some people think that those who receive these instruments are going to be needing their money now. In comes eBay and Craigslist, already receiving guidelines from the Securities and Exchange Commission on how to handle sales of the instruments.
For a fee of course.
And a discount. It’s an investment after all, what do you expect?
So it’s a double whammy for Californians owed money by the State. Not only don’t you get paid now, but you either have to wait until October 2, or put it up for sale at a loss. Thanks California.
Authorities doubt there will be much of a market for the I.O.U.’s, but aren’t these the same authorities who created the problem in the first place.?
