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New Jersey Seeking $2.25Bn Loan From Jp Morgan At 9%!

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http://www.zerohedge.com/article/broke-new-jersey-seeking-225-billion-bridge-loan-9-jpmorgan-emergency-funding

Is New Jersey the canary in Meredith Whitney's coalmine? According to the WSJ, New Jersey may be the first state to use the highly unconventional approach of using a commercial bank funded bridge loan as large as $2.25 billion to "plug a cash shortfall." The loan raised by Chris Christie's state, "would cover bills the state will need to pay as its new fiscal year begins July 1. Normally, states have some cash available as they finish one fiscal year and begin the next, while gearing up for a bond offering based on the new budget...Terms of the loan, also known as a credit line, haven't been finalized and negotiations could fall apart, according to the people familiar with the matter." And since this will likely be a benchmark loan whose term sheet will be promptly circulated to other cash-strapped states, it will be all the more important in defining such key term components as subordination, collateralization, and general interest rates.

WSJ link

The whole circle jerk is just getting bigger, now the banks are moving to become even too too big to fail by lending money to local govt who are suffering collapsing tax revenues. So if New Jersey use this they'll be paying $200m approx in interest per year for the loan. They had a similar facility in 2009 but didn't need it as a load of taxes turned up just in time, this time they don't think they'll be so lucky.

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http://www.zerohedge.com/article/broke-new-jersey-seeking-225-billion-bridge-loan-9-jpmorgan-emergency-funding

WSJ link

The whole circle jerk is just getting bigger, now the banks are moving to become even too too big to fail by lending money to local govt who are suffering collapsing tax revenues. So if New Jersey use this they'll be paying $200m approx in interest per year for the loan. They had a similar facility in 2009 but didn't need it as a load of taxes turned up just in time, this time they don't think they'll be so lucky.

Can you explain to me why JP Morgan can borrow at zero off the Fed and then lend to New Jersey at 9%. Why wouldnt NJ just go to the Fed directly? Simples :unsure:

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Can you explain to me why JP Morgan can borrow at zero off the Fed and then lend to New Jersey at 9%. Why wouldnt NJ just go to the Fed directly? Simples :unsure:

Risk?

Because the Fed doesn't want to be seen to be directly funding govt spending plus the bankers want their slice for the bonus pool?

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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