More U.S. cities set to enter default danger zone

Reuters ^ | Tue Apr 17, 2012 4:43pm EDT | Michael Connor

[Olog-hai]

America's swelling ranks of fallen municipal borrowers have been blamed in the past year on 'what-were-they-thinking' causes, be it a Taj Mahal sewer system in Alabama or an overpriced trash incinerator in Pennsylvania's capital city of Harrisburg.

But the next series of major cities and counties in danger of defaulting on their debt can hardly point to one single decision for their malaise. Whether it be Detroit, Miami or Providence, Rhode Island, their problems have a lot more to do with financial policies that put them on course to live well beyond their means.

Municipal defaults have shot up since 2007 and are on pace for another high year in 2012, according to Richard Lehmann, publisher of the Distressed Securities Newsletter.

Many failures will be due to local politicians' willingness to give unionized local government workers lucrative pensions and health care benefits when times were good. For others, the housing bust was enough to destroy their real estate tax base. They almost all share the failure to prepare for a rainy day.

Now, belt tightening by state and federal governments is adding to the pain—as contributions to governments at city and county levels get squeezed. Many of the places in the worst condition are in the Northeast, Midwest, California and Florida. …

[Olog-hai]

Ah, liberalism. Destroys itself (and everyone else) in the end . . .

[Oldeconomybuyer]

First in with ‘unexpected’.

[C210N]

Just like the feds having unfunded liabilities of 7 or 8 times the debt, the same with cites and towns. By going to the hilt with union contracts, pensions and health plans, it has been too easy to spend our kids and the wealth of the unborn without their permission, with little oversight since it won’t have to be paid back till these temporary hacks are long gone. Each new life, before they work a day, own not just the tens of thousands at the federal level, but probably tens of thousands at the state and local levels as well...

[familyop]

"Ah, liberalism. Destroys itself...in the end . . . "

Real producers (tinkering, technical rednecks and engineers) and savers (not only money but necessities) will prevail. But residential real estate hasn't begun to fall. The dam against the foreclosure flood is cracking now. The political/regulator class couldn't hold listings and property taxes insanely high forever.

[Olog-hai]

I get the feeling that these aforementioned hacks will have to face the consequences of their actions, even before they are gone. Problem is, they’ll drag everyone else down with them . . .

[COBOL2Java]

...as contributions to governments at city and county levels get squeezed...

Who is John Galt?

[rovenstinez]

In human logic, first the cities go bankrupt, then the counties, then the States..and then the Big One.

[vpintheak]

Let them fail, and let common sense prevail! Hey, I could write for Jesse Highjackson!

[qam1]

But the next series of major cities and counties in danger of defaulting on their debt can hardly point to one single decision for their malaise

That one single decision is voting in Democrats all those years

[Soul of the South]

“In human logic, first the cities go bankrupt, then the counties, then the States..and then the Big One.”

In Maryland the governor is trying to push the cost of teacher pensions onto counties. Obamacare saddles the state with higher health care costs. With tight budgets and a bad economy we should expect to see governments trying to push costs on other layers of government.

[RedMDer]

All contributions are for the Current Quarter Expenses.

[Minnesota fox]

These city fathers//administrators ought to be booking flights to Bismarck to learn how adults run governmental entities.

[ken5050]

This is on Reuters?

[ken5050]

This is on Reuters?

[TADSLOS]

Let’s be Greece!! /s