So now California is literally stealing tax refunds - that is, over-payments, and issuing "IOUs", never mind that those funds are not theirs. In any ordinary business such a game (while there was any cash available) would lead to the proprietor being locked up for theft-by-conversion.
In addition so-called "entitlement" payments to some are being made with these "IOUs", which are in fact nothing more than a promise to pay next Tuesday for a hamburger that is supposedly owed today.
In truth there is no hamburger; the cow was slaughtered and eaten six months ago. It has long since been "recycled" into fertilizer, yet the charade continues onward for another day, with the sheeple believing that somehow these pieces of worthless paper make it "all ok."
The banks, assuming they stick to their Friday deadline, understand this. They're saying "uh, you know, come October those things might not actually BE good!" That's a problem, you see, as someone's going to be stuck with the bill if that happens.
A "trading environment" has almost instantly sprung up for these things, including on eBAY and Craigslist, which has led to rumblings that the government may have petitioned the SEC to deem these things "securities." Huh? Securities? Like hell; these are nothing more or less than a post-dated check, and a potentially-rubber one at that. But this hasn't stopped the government from trying to make sure that you, the person owed, are the one stuck with the worthless toilet paper, has it?
Even worse is the fact that if you're a small business and are being "paid" with these things it is illegal for you to pay your employees with them yourself. Oh no - Wage and Hour laws say you must pay your staff with actual money. This is more than a small problem as you're being effectively forced to take on the credit risk of the state!
If you're a vendor to California you had better figure this one out and fast. My view would be exactly as it as when I ran MCSNet in Chicago and the city thought it would play "I'll pay you later" with our invoices for internet service to the library system. After several warnings I simply walked up to the terminal and typed:
$ disable account_tag = Chicago_Library
When the terminals in the libraries went dark there was an immediate reaction - and threats - from the City. Too bad, said I, I don't get "forbearance" on my parking tickets! Pay up or no service. Period.
An hour later - literally - a city employee walked into our offices with a check for the full balance, and that problem never happened again.
Those of you who "serve" California need to take the same position - pay now, pay in cash, pay from now on with order or COD, or no more goods and services - period. If you don't, you're running the risk of being the bag holder, and if it happens, don't say I didn't warn you.
Wednesday, July 08, 2009
Denninger has the right attitude: