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.
>I live in CA and it is our only hope.
If a state-bailout happens, I can easily imagine dead officials: taxation w/o representation — and taking my taxes and GIVING it to CA where I have no representation would qualify in MOST people’s minds — has been fought over before as it was one of the points that influenced the Revolutionary War.
What’s interesting is that the argument “you ARE represented in the legislature via your Representative/Senator” is EXACTLY the sort of argument England was making; “You ARE represented by the House of Commons.”
Send the New Conquistadores back home.
” Bernanke has stated publicly he’s not going to do it”
Bernanke testified under oath to Congress he was not going to monetize the debt and now they have monetized the debt and will be at least until June when QE2 runs out.
“I imagine any bailout will follow the TARP script of “too big to fail”
I think your right it will be the same crap as the banks we didn’t want to bail them out either but they didn’t listen so now on top of that they will say Moral Hazard. Bernanke is the last one you should trust he’s nothing more then a Marxist enabler and the Fed has now changed their accounting tactics. How convenient.
Accounting Tweak Could Save Fed From Losses
http://www.freerepublic.com/focus/f-news/2661476/posts
“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.”
Good assessment Fee I agree.
No.
It was bush's fault.
Right. Now CEO's who drive a company to bankruptcy get rewarded with a nice gov't bail out bonus and an appointment to the regime.
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