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Posted on 01/22/2011 1:34:13 PM PST by RC one
Ten U.S. states, accounting for about one-third of the U.S. population, are insolvent. You will find the list of states below.
The question: what state will go bankrupt first?
Technically, there is no legal process by which a state can file for bankruptcy. Chapter 9 of the Bankruptcy Code permits cities and municipalities to file for bankruptcy, but not states. One of the most famous municipalities to go bankrupt was Orange County, California, in 1994. Fifteen U.S. municipalities filed for bankruptcy in 2009 and 2010.
California’s deficit could reach $24.0 billion this year. Illinois deficit sits at about $15.0 billion.
Illinois, which could be the most insolvent state, raised its personal income tax rate earlier this year by a whopping 66%. Illinois is sitting on about $5.0 billion in bills it cannot pay.
Some states are making the hard decisions necessary to remain solvent. A two-year budget plan released by the Texas House of Representatives yesterday calls for the elimination of about 10,000 state-related jobs over the next two years.
According to the Washington-based Center on Budget and Policy Priorities, U.S. states as a whole will have a budget deficit of $140 billion this year.
The U.S. government lent more than $100 billion to a single company, American International Group (AIG), during the credit crisis. AIG is now paying back the government. If push comes to shove, why wouldn’t the federal government lend $100 billion to $200 billion to state governments, asking for repayment over a 20-year period?
Here’s why: AIG could have filed for bankruptcy; state governments have no legal mechanism to do so. Financially troubled states just keep piling on the bills without paying them. They are like interest-free loans from your suppliers. Why borrow money to pay your suppliers if they cannot petition you into bankruptcy?
The total value of the bond market worldwide is about $50.0 trillion. Half of that market is made up of U.S. bonds, $25.0 trillion, of which $2.7 trillion is the size of the U.S. municipality bond market.
The 10 most insolvent U.S. states are: California, Florida, Illinois, Arizona, New Jersey, Michigan, Nevada, Oregon, Wisconsin, and Rhode Island. These states make up about one-third of the U.S. population.
Bummer it is missing the folding AR7 sniper’s rifle with infra-red sight. Someone would probably need a ton of ATF paperwork just to take it out of the store.
I pray everyday for CA to go Bankrupt- we could be back in action real fast if we dissolved the union thuggeraucraty
States will raise taxes and fees to make up the shortfall if the situation becomes critical. They rather risk losing businesses and see people leave, but that all takes time before that impacts the state. In the meantime there are many who cannot leave and they will be the ones fleeced. States will avoid defaulting because it means decades into the future where no one will loan them money nor buy their bonds. That is a fate worst then political unpopularity.
Freepers we live in dangerous times. When government and financial elites blow up our economy, that is the era where the middle class will be destroyed. Remember in any economic change (globalism, free trade) or crisis (depression, hyperinflation, default, etc) the middle class will always be sacrificed and the rich (who control the system) will protect themselves.
A booming and expanding economy is the only period where the middle class and upper middle class grows. IMHO we are too powerless to force change on our corporate and government elites, unless we chose violent armed revolution. Most Americans are not prepared to do that, and even if they do, does one replace chaos with chaos. The only path left is democracy. Democracy is too slow to bring on change, because our smaller number elites are too nimble and will counter faster then the voters. By the time we are mobilized to change, the crisis is already upon us.
The only thing we have power to do is protect our families from the coming financial storm of inflation as our bankers/fed reserve/US Treasury made a strategic decision to borrow and inflate our way out of debt. People should have started preparing since the meltdown in 2008. It is still not too late to prepare, but time is running out.
Does that if the US goes bankrupt we get to fire Obama -
just like a failed CEO...?
Spending, spending, spending - with no reservations...
Then, the worst state of all - Illinois does exactly the opposite of what they should to rectify the situation - they keep spending, then jack up income taxes by 66% - thus further screwing businesses and individuals.
The #1 method of stimulating the tax income of states is to LOWER taxes so that more $ is available for spending, investing, paying salaries, and thus feeding the economy which PRODUCES revenue...
But hey-— it’s ok. Obama is gonna bail his Chicago thug jerks out...again...
Put yer money down, ladies and gents. the winner gets a lovely pile of cash from the taxpayers!
As they should be figuring out by now, we still have the power to throw the bums out every other year. They don't like getting fired any more than anyone else.
CEO’s no longer lose their jobs. As I recall all of the Wall Street CEO’s kept their jobs after being technically insolvent and getting billions in government bailouts in 2008 and 2009. They then collected millions in bonuses. Why should Obama expect different treatment?
I don't think there will be a major bailout of the states. Bernanke has stated publicly he's not going to do it, and Tea Partiers will stiffen the spines of Pubbies in the House of Representatives.
Problem we are facing is the proper financial decisions should have been made atleast ten years ago to avoid high debt and forced move to inflate our way out. Throwing the bums out will only throttle the speed towards inflation, but will not avoid it. Having a GOP Tea Party Congress will not stop it if the Federal Reserve continues to print money. Granted reducing the federal budget by $ 2.5 trillion over ten years is nice GOP first move, but our debt, guarantees and unfunded liabilities is equal to about 90 to 100 trillion dollars.
My best advice to freepers is don’t put all your hopes on the GOP or Tea Party because the forces of destruction has already been unleashed and it is too late to stop it. The only thing left is prepare yourself and family to survive the coming crisis.
The House originates all spending bills, & it is controlled by Pubs. So any bailout will be the work of REPUBLICANS who can easily block any bailout.
Certainly Obama would love to have all that bailout money pass through his sticky hands. The game of Wealth Redistribution always means some of the money will end up in his pockets through kickbacks, er... contributions. But his slush fund is not big enough to bail out even one of the mentioned states.
I imagine any bailout will follow the TARP script of “too big to fail”. The RINOs (with tears in their eyes & earmarks in their pockets) will join the Rats, & the deal will be done.
Frankly, I think these states are trying to hold off any bailout until after Obama is reelected to avoid any backlash from the voters affecting his chances in ‘12. TARP was very unpopular with voters. A bailout of states will be even more unpopular.
Extraordinary times call for truly unique solutions. Rather than conducting business as usual, with all the lemmings marching steadily toward the cliff, we should have a new law that removes all but one representative from those states with a debt greater than $100M times the current number of representatives. This would cut the number of Congress-critters by nearly 35%, give states an incentive to get their finances in order, and prevent at least a portion of the inept from having a voice in governing the rest of the states that are making the hard decisions to stay solvent.
Just a thought.
Bankruptcy is not a good idea for prolifigate spending states like California. It foists their irresponsibility on suppliers who gave them credit and muni bond investors who get wiped out. California’s debt slate is wiped clean with no consequences and they resume their spending to begin the cycle all over again. The voters of California never learn the consequences of their liberal votes.No bankruptcy and no bailouts.
Congress will not approve allocation of money for bailouts.
There are two other avenues for states to get money - the executive branch and the judicial branch.
There are no doubt many avenues open to allocate funds to states by executive order. Last I read there were still funds available in porkulus. That’s one way. It would be unpopular, but Obama is between a rock and a hard place. He’ll do what the unions want him to do.
States in trouble can mount lawsuits claiming their state bears an unfair burden for the care of illegals, children, subsidized college students, senior citizens, mentally ill, addicted - you name it. Other states who don’t have this type of burden should share the cost. A liberal sympathetic court would agree.
When liberals don’t get their way through legislation, they usually turn to the courts, so I think that’s what they’ll do.
I live in CA and it is our only hope.
Nevada, which is 90% owned by the federal government, the BLM and the UN is insolvent because the Feds don’t know how to enforce the No Trespassing signs on the US border.
Anyone applying for substantial financial payments should apply to the US Treasury before even stepping on the Governors doorstep.
There is absolutely NO Reason why the feds should own more than a few acres of Nevada!
>When liberals don’t get their way through legislation, they usually turn to the courts, so I think that’s what they’ll do.
On that note: http://www.freerepublic.com/focus/f-news/2661665/posts
I don't understand why states NEED bankruptcy. Other than a few items assigned by the Constitution to the Federal Government, states are soveriegn. Don't want to pay pension obligations? Pass a law and don't pay them.
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