Some people call them vultures. I call them capitalists providing a much needed service. It’s no surprise the people calling them vultures are in San Francisco:
The California IOU has become the prey of so-called vulture investors who hope to profit by buying them on the cheap and redeeming them later.
The idea is that “distressed asset investors” (their nicer name) will pay less than face value to mom-and-pop businesses that receive IOUs but need cash immediately to meet payroll or other expenses. Once the IOUs mature on Oct. 2, the investors will cash them in for their full value plus the 3.75 percent interest the state is offering.
They call the IOU “the prey”? What does that make the state of California? Bambi’s mother? The parents of baby seals? In reality the state is the predator. The state contracted for services and/or goods (or taken excess money in taxes then failed to return the excess as promised) and is now failing to live up to the contract. Had they given IOUs to those that had not provided goods and/or services, such as welfare recipients, I would be less harsh in condemning the state. But to receive something of value and then fail to compensate them as agreed is really unacceptable.
But these people see the state fail to live up to its obligations creating countless victims, the capitalists provide relief to the victims, and then they condemn those providing the relief–that is some sort of insanity. Sometimes I have to conclude that Michael Savage is right on at least one point–Liberalism is a Mental Disorder.
The sad part is that the IOUs are, in essence, a new form of currency. I’m certain the state will soon realize this and start offering to pay in IOUs instead of money. The people, knowing they can sell them for 85% (whatever) of face value will ask for IOUs with face value of $118 for every $100 (85% of 118 is ~100) of goods and/or services. The state will, in a sick, perverted, rationalized sort of way, figure their money mostly problems are solved and not cut back on spending. This will drive the state faster and harder into the financial abyss.
Expect that result to be blamed on “vultures” as well.