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Stockton Becomes Biggest US City To Declare Bankruptcy (It's Official)
Zero Hedge ^ | April 1, 2013

Posted on 04/01/2013 12:46:47 PM PDT by Zakeet

A mere nine months after we first discussed the inevitability of Stockton, CA.'s bankruptcy, a judge has ordered today that the city will now become the most populous in the US to be declared bankrupt.

*STOCKTON CREDITORS DIDN'T NEGOTIATE IN GOOD FAITH, JUDGE SAYS

Creditors are pushing to get the city out of bankruptcy but the judge states that "by any measure" the city was insolvent. So, in summary, yeah, it was broke years ago, it still is broke - despite the best efforts by the Central Planning Reserve to reflate the same housing bubble that was the primary reason for the city's insolvency in the first place. Only this time, it's official!

Via Reuters:

Stockton, California, was ruled eligible for bankruptcy protection under Chapter 9 of the U.S. bankruptcy code, a U.S. judged said on Monday, turning aside creditors' arguments that the city was not truly insolvent when it sought protection last year and had improperly failed to seek concessions.

In a case that has been widely watched by the $3.7 trillion municipal bond market, U.S. Bankruptcy Judge Christopher Klein said Stockton had established during last week's three-day trial that it had met requirements to be found eligible to proceed with its municipal bankruptcy case.

Officials in the city of nearly 300,000, the largest city so far to have filed for municipal bankruptcy, will now be allowed to start drafting a so-called plan of adjustment for the city's debts.

The case is expected to pit municipal bondholders against the California Public Employee Retirement System, which manages pensions for Stockton and many other California governments.



TOPICS: Business/Economy; Government; News/Current Events; US: California
KEYWORDS: bankrupt; california; stockton

This is not going to be much of a problem so long as we are allowed to continue to raise taxes, empty prisons, confiscate guns, import more illegal voters from across the border, fund millions of EBT cards each month, celebrate gay marriages, and build my choo-choo ... and if not, then things might just start to get dicey out here in the Socialist Worker's paradise.

1 posted on 04/01/2013 12:46:47 PM PDT by Zakeet
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To: Zakeet

What about NYC??? I think it’s bigger than Stockton.


2 posted on 04/01/2013 12:48:59 PM PDT by Ann Archy (Abortion.....the HUMAN Sacrifice to the god of Convenience.)
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To: Zakeet

If they screw the bond holders in favor of the CALPERS leeches, there won’t be a city in that state that will be able to raise money via public bonds any more. They’ll have to rape their public employee pensioners at some point.


3 posted on 04/01/2013 12:50:22 PM PDT by Gaffer
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To: Ann Archy

Liberals spending themselves into poverty and taking their voters with them.

Problem is, they are also dragging along those who didn’t vote for this mess.

Hear that loud sucking sound?


4 posted on 04/01/2013 12:51:08 PM PDT by History Repeats (sic transit gloria mundi)
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To: Gaffer

I think the secret plan is a federal guarantee for state issued bonds, likely for NY, IL, and CA.


5 posted on 04/01/2013 12:52:09 PM PDT by nascarnation (Baraq's economic policy: trickle up poverty)
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To: Zakeet

Bankruptcy will allow the city to void all the contracts and financial obligations they currently have with the public employee labor unions. The city tried to negotiate with the unions but they refused. Now they will get nothing, no pensions, no healthcare, nothing. This ruling will have an effect elsewhere think Illinois, Michigan and other cities and states where the corrupt labor unions have driven the taxpayers into the ground.


6 posted on 04/01/2013 12:53:01 PM PDT by tom paine 2
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To: nascarnation

That may well be true, but it will have to have some kind of impact, at least on commercial credit ratings. It is the same kind of signal one sends when they can’t get a car loan unless their daddy co-signs for them.


7 posted on 04/01/2013 12:54:34 PM PDT by Gaffer
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To: tom paine 2
Now they will get nothing, no pensions, no healthcare, nothing.

Oh well.

8 posted on 04/01/2013 12:54:57 PM PDT by St_Thomas_Aquinas
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To: Gaffer
If they screw the bond holders in favor of the CALPERS leeches, there won’t be a city in that state that will be able to raise money via public bonds any more.

Creditors will come back, they usually do.

I wish what you are saying would be true. People are idiots to buy CA bonds, but this won't stop them - though they may ask for a better return.

9 posted on 04/01/2013 12:55:37 PM PDT by Longbow1969
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To: Zakeet

If the bondholders get raped it will effect every other city in the state when they try to issue bonds. If the public sector unions get raped...well...nothing much happens. They don’t get to vote for fed judges or bondholders.

The unions bankrupt the cities, break it off in their...


10 posted on 04/01/2013 12:57:10 PM PDT by Beagle8U (Free Republic -- One stop shopping ....... It's the Conservative Super WalMart for news .)
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To: History Repeats

11 posted on 04/01/2013 12:58:26 PM PDT by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: Gaffer

Why limit the thrill of unlimited Baraqqi/Bernanke/Lew minibucks to the fedgov?

Let Govs Moobeam, Cuomo, and Mayor Rhambo share the intoxication.


12 posted on 04/01/2013 12:59:01 PM PDT by nascarnation (Baraq's economic policy: trickle up poverty)
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To: Zakeet

IIRC CalPERs is one of, if not the, largest owner of commercial real estate in the country. If CalPERs starts getting exposed to massive liability caused by their fantasy math over the last few decades expect huge ripples in other industries.


13 posted on 04/01/2013 1:01:40 PM PDT by Pan_Yan (I love it when spell check selects every single word in my post.)
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To: Zakeet

Stockton is leading the way and showing them all how it’s done.


14 posted on 04/01/2013 1:13:03 PM PDT by Uncle Chip
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To: tom paine 2

Good — may the Stockton solution spread


15 posted on 04/01/2013 1:15:24 PM PDT by Uncle Chip
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To: Zakeet
Hear that soft rumbling sound far off in the heights? Soon it will gather steam and then its katie-bar-the-door.

If Stockton is allowed to cancel the Union Contracts and revoke the pensions this is gonna get real ugly real quick!

16 posted on 04/01/2013 1:18:29 PM PDT by Mad Dawgg (If you're going to deny my 1st Amendment rights then I must proceed to the 2nd one...)
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To: Mad Dawgg

If they’re “allowed” to do that, ie, they get away with it, I foresee a lot more municipalities doing the same thing.

However, if they get bailed out by the feds, this ball will stay in the air just a bit longer, but crash all the harder.


17 posted on 04/01/2013 1:20:08 PM PDT by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: MrB
"However, if they get bailed out by the feds..."

And once that genie comes out of the bottle it won't go back. And then it will spread all across the states dragging us all down!

18 posted on 04/01/2013 1:23:07 PM PDT by Mad Dawgg (If you're going to deny my 1st Amendment rights then I must proceed to the 2nd one...)
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To: Mad Dawgg

It’s not whether we’re going to take a hit,
but when and who is going to take the hit.

If they renege on the union contracts, it’ll just be the “retirees and pensioners” that take the hit.

If they’re bailed out by the feds, the world takes the hit.


19 posted on 04/01/2013 1:25:44 PM PDT by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: Zakeet

This must be an April Fools joke...Krugman says Republicans are lying about the dire financial straights in CA.


20 posted on 04/01/2013 1:26:14 PM PDT by ez (Laws are for little people. Criminals, politicians, police, and David Gregory are exempt.)
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To: Zakeet

Just the first of many to come...


21 posted on 04/01/2013 1:32:26 PM PDT by AngelesCrestHighway
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To: Uncle Chip
Stockton is leading the way and showing them all how it’s done.

Why would not all of California follow? I know that states are not allowed to default, but if they have no money.....are they preparing for the US federal government to bail out the first of the states to demand a bailout?

Was Cypris a dry run to see which glitches to be expected? What remedy to impose?...And is this the beginning of us being made aware of what the Feds are planning at a national scale? And if there are pockets of resistance of appropriating all banked money, 1.75 billion rounds of 9 mm or 10 mm ammunition will bring us back into line. The connections seem more than tenuous. Perhaps my imagination is getting out of hand.

22 posted on 04/01/2013 1:43:57 PM PDT by Texas Songwriter (')
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To: Zakeet
There was a thread just up about Krugman saying how things were picking up in California.
Could he have been wrong? ROTFLMAO!!
23 posted on 04/01/2013 1:49:33 PM PDT by The Cajun (Sarah Palin, Mark Levin......Nuff said.)
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To: Zakeet

Oh I have to steal your post:)


24 posted on 04/01/2013 1:53:18 PM PDT by katiedidit1
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To: Zakeet

Wait! This is gotta be another April Fool’s Joke, cause Paul Krugman just wrote an article praising conditions in Kalifornia!


25 posted on 04/01/2013 2:56:03 PM PDT by griswold3
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To: nascarnation

And this will guarantee three landing zones/firebases (CA, IL, NY) for the fedgov when CWII breaks out. Strategic placement too.


26 posted on 04/01/2013 2:56:14 PM PDT by Secret Agent Man (I can neither confirm or deny that; even if I could, I couldn't - it's classified.)
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To: MrB

Where do you think all the federal dollars have been flowing the last few years? To the states to bolster all the union pensions.


27 posted on 04/01/2013 2:57:15 PM PDT by Secret Agent Man (I can neither confirm or deny that; even if I could, I couldn't - it's classified.)
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To: Ann Archy

NYC is going to become the next lost city of Detroit.

Doomberg killed NYC.


28 posted on 04/01/2013 2:58:25 PM PDT by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: Gaffer

” They’ll have to rape their public employee pensioners at some point.”

Your post implies stealing from retired government trough feeders is wrong.

Considering that the large majority of those trough feeders were de facto commies and needless drone, specific justification for your implication is hereby respectfully requested.


29 posted on 04/01/2013 3:13:39 PM PDT by GladesGuru (In a society predicated upon freedom, it is necessary to examine principles."..)
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To: Zakeet

Surf’s up!


30 posted on 04/01/2013 3:31:02 PM PDT by blueunicorn6 ("A crack shot and a good dancer")
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To: Mad Dawgg

“If Stockton is allowed to cancel the Union Contracts and revoke the pensions this is gonna get real ugly real quick! “

I think it would be amusing to watch the parasites rebel against the parasite feeders. Elections have consequences.


31 posted on 04/01/2013 3:54:31 PM PDT by freeangel ( (free speech is only good until someone else doesn't like it)
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To: Zakeet

THIS IS FANTASTIC.

Finally, a defense for California taxpayers, who have been powerless against STINKIN’ PUBLIC EMPLOYEE UNIONS my entire voting, taxpaying lifetime in this state.

Retired fifty-year-old cops and firemen? The deals you ‘negotiated’ with those city officials were naked bribery. You threw campaign cash at them for giant pensions. Well, bribery is illegal. So all those deals should be abrogated. And I don’t care if it has to happen in bankruptcy court. A court is a court — we’ll take justice where we find it.

WE’RE NOT PAYING. Start looking for a job.


32 posted on 04/01/2013 4:01:04 PM PDT by Blue Ink
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To: Blue Ink

“Central Planning Reserve”? I think “central planning”, a proven socialist failure, is at the root of the problem.


33 posted on 04/01/2013 4:08:55 PM PDT by littleharbour ("All men having power ought to be distrusted to a certain degree. ~ James Madison)
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To: Longbow1969

“Creditors will come back, they usually do.

I wish what you are saying would be true. People are idiots to buy CA bonds, but this won’t stop them - though they may ask for a better return. “

What are you, some kind of nutcase? Creditors don’t USUALLY come back to a deadbeat, they ALWAYS come back to a deadbeat (LOL).


34 posted on 04/01/2013 4:46:54 PM PDT by BobL (Look up "CSCOPE" if you want to see something really scary)
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To: Zakeet

Doesn’t California Public Employee Retirement System own California munis?

What a muddle.


35 posted on 04/01/2013 7:21:20 PM PDT by razorback-bert (I'm in shape. Round is a shape isn't it?)
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To: History Repeats
Hear that loud sucking sound?

Sounds more like a fart to me.

36 posted on 04/01/2013 7:21:47 PM PDT by Windflier (To anger a conservative, tell him a lie. To anger a liberal, tell him the truth.)
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To: GladesGuru

I didn’t mean to.


37 posted on 04/01/2013 8:38:47 PM PDT by Gaffer
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