Loan Sharkin' In New Jersey

On Sunday I discussed the real reason why Indiana Republican Gov. Mitch Daniels wasn't running for 2012: his disastrous failure in attempting to privatize the state's public assistance programs.  Now we get word of why New Jersey's Republican Gov. Chris Christie has turned down the 2012 Clown Car Circuit.  His term as Governor has been mismanaged to the point where "Mr. Fiscal Responsibility" may have no choice but to take a $2.25 billion dollar loan from the bank.  Zero Hedge:

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.

And who would give the Garden State a loan?  Why, JP Morgan Chase. But isn't Christie the GOP's poster child for how to run a blue state?  If he's so good at it, why is New Jersey going to be broke on Friday?  Still wondering why Christie decided not to run for the White House?  Not me.  New Jersey's short because the state's had revenue problems caused by a stagnant economy...an economy that has slowed down because Christie's spending cuts aren't creating jobs, and fewer jobs means fewer people paying taxes into the system.

Worse, his plan to raise taxes on working-class New Jersey families, to slash Medicare and family planning funding, and to gut education in order to save money was offset by a billion dollar tax cut for families making over $400,000.  Christie's half a billion in cuts to education were overturned by the state's supreme court, but that fight continues.

Meanwhile, the state runs out of money end of the week.  And you wonder why Christie's not running. Somebody might notice that the GOP tax cut for the rich plan is failing miserably, and the GOP can't have the national spotlight on that.