QE 3 not far away
Here is a bridge to nowhere
California Seeks $5B ’Bridge’ Loan to Pay Bills
By Michael B. Marois – Jul 25, 2011 9:00 PM MT
California will borrow $5 billion today through a temporary loan as U.S. states make plans to cope with any credit-market disruption should lawmakers fail to raise the federal debt ceiling by the Aug. 2 deadline.
Proceeds from California’s bridge loan will help pay bills until the state can sell cash-flow notes that had been scheduled for late August. New Mexico is asking agencies to complete requests for federal reimbursement by midday July 29 to ensure the it can get repaid, and Maryland was forced to cut $206 million off a planned bond sale as the debt talks dragged on.
“Given the uncertainty in Washington with the debt ceiling, the treasurer felt it was prudent to get a bridge loan,” said Tom Dresslar, a spokesman for California Treasurer Bill Lockyer. “We couldn’t have planned on the president and Congress taking us to the brink.”
States and local governments face higher borrowing costs if Congress fails to reach a compromise by the deadline. Because the U.S. borrows money through the sale of Treasury notes to pay its bills and refinance maturing debt, it could default if the limit isn’t increased. That might cost the government its top- ranked credit score, upend financial markets and send interest rates higher.
Moody’s Investors Service has said it may lower its top ratings on Maryland, South Carolina, New Mexico, Tennessee and Virginia because their dependence on federal revenue makes them vulnerable to a U.S. credit cut should talks to raise the debt limit fail.
More…
Jim Sinclair’s Commentary
Default or not, confidence is broken as more countries move to protect themselves against the dollar.
Turkey Bank Moves to Stem Lira Losses, Cancels Dollar Buying
By Selcuk Gokoluk and Ercan Ersoy – Jul 25, 2011 2:26 AM MT
Turkey’s central bank moved to stem a slump in the lira, suspending daily purchases of dollars and cutting the cost of long-term deposits in foreign exchange. The lira pared earlier losses.
The central bank in Ankara ended daily purchases of $30 million, according to an e-mailed statement today. It also reduced the reserve requirement for banks on foreign currency deposits of more than a year by as much as 2 percentage points to 9 percent.
The bank cited the need to monitor “implementation of the decisions taken by the EU leaders to resolve European countries’ public debts.”
The lira extended a two-year low today with investors citing concern that Turkey is not doing enough to tackle a current account deficit that widened to 9 percent of economic output in May. Central bank’s efforts, including making consumer lending more costly, have so far failed to trim the import bill while export growth has slowed with the crisis in Europe.
The lira fell 0.6 percent to 1.7075 per dollar at 12:19 p.m. in Istanbul. The currency dropped as much as 2.2 percent earlier.
More…
jsmineset.com |
