Skip to comments.If Economy Is Recovering, Why Are U.S. Cities Going Bankrupt?
Posted on 03/10/2012 4:36:36 AM PST by blam
If Economy Is Recovering, Why Are U.S. Cities Going Bankrupt?
Interest-Rates / US Debt
Mar 09, 2012 - 01:16 PM
As pundits chatter about an economic recovery, 80 miles east of San Francisco you'll find a city (pop. 292,000) facing bankruptcy:
Stockton is on the verge of becoming the largest city in the United States to declare bankruptcy... San Francisco Chronicle (3/4)
Bloomberg reports (2/25) that it costs the city $175,000 just to get a consulting firm's fiscal evaluation. Management Partners issued a report which said:
...the city took on a large amount of debt in anticipation of ongoing growth that now exceeds the city's ability to pay. Compensation packages exceeded sustainable levels and the city assumed a significant liability for improved retiree health coverage without sufficient recurring revenues to cover growing costs... Stockton also has one of the nation's highest home foreclosure rates and has been called "Foreclosureville USA."
And Moody's just downgraded Stockton's rating to Ba2, which is two levels below investment grade.
In the same Bloomberg article, the California State Treasurer said "The reputational stain can bleed onto other local issuers and the state, and that can hurt taxpayers in the bond market."
Yet in recent months investors have been enamored with municipal bonds. Our December Financial Forecast said:
No matter how thick the storm clouds over state and city finances become, the belief in a bullet-proof municipal bond market just seems to grow. As the [chart below] shows, the ratio of AAA municipal bond yields to comparably-dated U.S. Treasury yields rose...in August.
...investors still believe munis are safe, but we'll stick with our bearish forecast...the evidence continues to mount that a change for the worse is underway. Deflation will only accentuate the impact of waning revenue streams, underfunded pension liabilities and bloated labor costs.
Financial Forecast, Dec. 2011
Other municipalities facing recent bankruptcy include:
Jefferson County, Alabama (home of Birmingham)
Central Falls, Rhode Island
Boise County, Idaho
Jefferson County, Alabama is the biggest U.S. municipality to face bankruptcy; Stockton is the biggest city.
In fact, as of December there were eleven municipal bankruptcies in 2011. Many other cities face extreme financial woes.
Look under the hood so you can see what kind of condition our economic engine is really in.
Prepare for what's ahead.
Survey of big cities and who is in control or was in control for years....rats, there’s your answer.
Our State Fair just went bankrupt. Chapter 7. Talking about a State Fair going bankrupt may seem trite in comparison to all the other businesses that are failing, but it is a great “sign of the times” and the signs all point to a lousy economy.
Obummer can stand up in front of the people and lie about the economy all day (and night) long ..... but until the American people are LIVING the recovery, the recovery “ain’t happening” regardless of any numbers Obummer quotes.
“Survey of big cities and who is in control or was in control for years....rats, there’s your answer.”
Disagree. It is and was and always will be George Bush’s
“Obummer can stand up in front of the people and lie about the economy all day (and night) long...”
That he can, and the press will back him up.
You spend more than you take in, you go broke.
It’s not rocket science.
The real trouble is Democrat tax policy, which simply assumes you can take whatever you want from people and no one will complain.
Lenin pioneered this way of thinking, with results that are amply documented by history.
The Russians could not vote the commmissars out of office, and that’s how the communists stayed in power for so long.
No doubt Obama and his minions would like to suspend voting, too, and perhaps he will invent some excuse for doing so.
> If Economy Is Recovering, Why Are U.S. Cities Going Bankrupt?
Because they’re run by democRATS.
There are a number of good stories on the net about this mess.
The thing is .... it’s gotten so bad that the press cannot put money in pockets, food on the table, gas in the car, and make the mortgage payments. I have really started hearing, enough times in the last couple of days to make my ears perk up: “I can’t take another 4 years like the last 4 .... I won’t survive another 4 years of Obama in office.”
I don’t carry how good the economy numbers sound, if you aren’t LIVING good numbers, the rhetoric is going to start falling on deaf ears .... long way to go yet, but IMHO it’s starting to catch up to Obummer. And yes, the press will shamelessly lie and continue to ride the Obama pony & feed it apples & carrots all the way to Obummer’s defeat ... or re-election.
As much as I hate to see things go under, it would not hurt my feelings if the state fair here in Columbia SC would go away.
Uuuuuhhh, they spent more than they took in?
It’s the socialism, stupid. Corrupt, evil, UNaccountable bureaucracies (socialist constructs) and the minions/co-conspirators/enablers/useful idiots.
I’ve started to notice quite a few radio commercials about XYZ insurance co. guaranteeing municipal bonds. “Rock solid”...”never lost a penny”, etc.
You seldom, if ever, heard them way back when. I wonder if they’re starting to get scared and are trying to avert a massive bond dump by Grandma.
Fellow from Atlanta made that exact statement on Rush’s program yesterday.
A goodly portion of Jefferson County's problems lies in county officials playing silly games with the financing.
Several of them went to prison for accepting bribes related to said financing.
Curiously, no bankers associated with arranging said financing and paying those bribes ever went to prison.
Here's a representative sample of a description of some of those "silly games with the financing":
Whatever can be done down there should be done so that OTHERS don't imagine that they, too, have invented a new and foolproof way to steal!
Cities?????? We don’t need no stinkin’ cities!!!!
Over 100 trillion in unfunded liabilities, massive state ,local and federal debt, massive consumer debt and much more.
That this society will collapse is a mathematical certaintity. Any fool can see that but the media lies ans says the economy is improving: NO we are living off of and on debt.And Obama borrowing 5 trillion instead of cutting government and implementing austerity measures now ensures a collapse. Palin wanted to cut government spending and drill for oil. The liberal media called her dumb and many believed it. But she would have still won.And who is dumb now?
Wait until this reaches critical mass at the state level. Then you’re really going to see the fur fly.
States like California going bankrupt.
The federal government going bankrupt.
Socialism doesn't work.
The U.S. federal government going bankrupt with 17 trillion in debt and exploding every second. Obama has added thousands per working family with it's 5 trillion borrowed.
And the liberal media says the economy is improving. But they are lying . The economy will collapse and Obama’s 5 trillion debt will ensure that. When or if it gets elected again then it will add 3 times that.
The company I worked for wanted to build an asphalt storage and load out plant on city property in Stockton. The property was a former Army base with rail access and a good highway in.
By the time the state air board, the county zoning board and the neighborhood “association” got done working us over, we built the thing in Reno.
The cities can’t go broke!
Not as long as taxpayers still have checks in their checkbooks! The unions just have to steamroll those grubby selfish teabaggers to pay up for what “they” promised...
Another example why government (socialism) at any level can never work.
We need to get rid of most of these government agencies at all levels of government, starting with the IRS and the EPA.
Reagan was right when he said in his Inauguration address: “Government is not the solution to our problems : Government is the problem” :
Gingrich , better Palin should become president. Hey Sarah run now , we kinda need you ok? It's ridiculous that liberals and the liberal media want to elect Obama so badly and they want government( and debt) to keep growing .
Oh, but they do! The Marxists need you in the cities for easier control and that is what is behind the need for gasoline to get to $8 a gallon. That way more and more people will be forced to move back into the city to use public transportation. They can't have all us bitter clingers out in the sticks with our guns and bibles don't ya know.
I heard him and he would be one of the voices I was referring to :-) I believe this gentleman was black as well, which makes it all the more significant .... and why Obama had to just start a group called ‘African-Americans for Obama’.
On a lighter note (sort of) saw an anti-Obama bumper sticker:
“The bro has to go!”
Because about everything the left is pointing to as signs of a recovery are just the results of the government pumping astronomical amounts of “borrowed” money into the economy. Trouble is, as soon as the government money disappears so do the signs of recovery. We can’t live forever on imaginary capital. There’s a hard rain gonna fall.
Ours just announced it’s bankrupt but that has more to do with the idiots running it. Sorry to say, can’t blame Hussein for this one.
Those are all lagging indicators../s
I don't know, but it can't happen soon enough.
On a 29-day month, to boot.
The month of May coming up may beat that.
The cities are mega-communes, and those who love them are called "Communists".
See the Thomas Jefferson quote in my tag line. Says it all.
Oh sure you can, and we will. As the pork and federal revenue sharing gets cut, blue states and cities will stop getting bailed out.
Let their filthy bureaucRAT infrastructures crash.
It was pointed out, back when she made her prediction, that only cities with disastrous finances would want to declare bankruptcy, because if they have any money at all left, servicing their debts are usually far preferable, and only cost a small amount.
Looking at those cities that have declared bankruptcy, you will note that each of them had such a disaster independent of everything else. For example, Jefferson County had just an insanely huge obligation from a ridiculous water project that few counties in the US could afford.
Like a US Army private who shows up driving a Trans-Am he bought on credit with his enlistment bonus, you know that this is not going to work.
Very few cities are that bad off.
Yup. If the GOP wins and starts cutting = CRASH.
If the Dems win and don't start cutting = CRASH.
It does not get any plainer than that.
We're gonna CRASH. When is the only question unanswered.
There's No Peaceful Way Back From Here.
As a native Mississippian, yours chosen tagline is interesting, you from Mississippi?
The Old Dominion .... VA.
A few years ago we did Skyline Drive and it was eerie viewing what must have been seen in the 1860s from those vantage points. A really beautiful part of Virginia. We have grandchildren in Fairfax.