Stockton set to become the largest US city to declare bankruptcy

ogc163

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Residents of San Bernardino woke up to suddenly find their city has been told "Do Not Pass Go, Do Not Collect $200." And oh, do they need money.

The city is bankrupt. Starting Aug. 15, it won't be able to pay wages or any other bills. Last night, San Bernardino acting city manager Andrea Miller warned the city council, "We have an immediate cash flow issue," notes the Los Angeles Times. Council members voted four to two with one abstention to seek bankruptcy protection.

The causes sound familiar: soaring pension costs, rising pay for municipal workers, depleted emergency funds and the Great Recession. The city, which is about 60 miles east of Los Angeles, faces a gap of about $45 million dollars, the Times reports.

Why didn't city council members see the financial cliff coming? At last night's hearing, city attorney James Penman shocked the council by telling them they'd received falsified budget documents for 13 out of the past 16 years. The San Bernardino Sun reports over several years, a variety of elected officials were given documents showing the city was in financial health when in fact, it was in deficit spending.


Penman says acting city manager Miller and her deputy found the discrepancies in reports prepared by prior city managers. Their report is here. Miller submitted an earlier report showing three quarters of city general fund spending is for employee compensation.

City officials obtained multi-million wage concessions from unionized workers and laid off 20 percent of staff over the past four years, according to KNBC but it's not enough to make up the difference. The Sun reports bankruptcy means employee wage negotiations can restart, but pension obligations will be the same.

San Bernardino follows California cities Mammoth Lakes and Stockton in filing for bankruptcy in less than a month's time.
Surprise, San Bernardino! You're Bankrupt : The Two-Way : NPR

:wow::scusthov::scusthov: at falsifying budget documents for 13 of the past 16 years
 
newworldafro

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In the Silver Lining
"Oakland vs. Goldman Sachs - Cities should be too Big to Fail not Banks"

http://www.youtube.com/watch?feature=player_embedded&v=6NJ5h25nGZA&list=PLCFCFFDF904D723BB#!


Brief explanation of interest rate swaps.....

"Wall Street's hidden bailouts: interest rate swaps"

[ame="http://www.youtube.com/watch?v=85EYaPl-Kwg&feature=autoplay&list=PLCFCFFDF904D723BB&playnext=1"]http://www.youtube.com/watch?v=85EYaPl-Kwg&feature=autoplay&list=PLCFCFFDF904D723BB&playnext=1[/ame]
 
KingpinOG

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Liberalism: Doing for California what they did for Detroit!!!!

California: We might be bankrupt, but at least we're getting high speed rail!!!!
 
KingpinOG

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Seriously, all you can do is laugh at the morons in California that keep electing Democrats year after year. They are so concerned about sh*t like medical marijuana, gay studies, affirmative action, etc that they are voting in crooks that are bankrupting their entire state.

Everything liberals touch they destroy.
 
Jello Biafra

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I don't understand why Jerry Brown fought so hard to win the governorship of this sinking ship. If he was desperate to get back in politics he should have run for senator because all being the governor of Cali is going to do is effectively end his political career.
 
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Gundamzeta post from 2005

ProjectCOVO.com Global Forum - View Single Post - Headline on MSNBC: 10 and counting. Economists??


Originally Posted by gundam zeta
i see a big structural change happening..

Manufacturing, high paid grocery jobs, 15 an hour telephone service jobs , and many high paying municipal jobs will disapear, and the days of a good high wage out-of-high-school job are over.

Healthcare wages will continue upwards on a linear direction and will continue to create more jobs.



The housing bubble will pop, but the effects of how hard it hits will differ from region to region. I definately see a big brown bear on the horizon, for certian areas. One being the homeland of so g1ad and myself- california's central valley. Stockton, tracy, modesto, peterson, elk grove, sacramento and fresno<---these places have seen a huge expansion in their economies driven mostly by housing and retail industries where such growth spikes have relied almost soley on the bay area's migrants who are fleeing the bay area's vastly higer price level. For example, I have seen Stockton grow more in the last 5 years than I have in the past 22 years that I had lived there. The situation is the same for every small city across the San jauquin Valley.

These BOOM-towns, and others like them across the nation are highly at risk for hard hitting regional recessions. For a list of reasons.

1) Stockton, tracy etc. have relied almost soley on two industries that are closely related to each other-- retial and housing. If housing prices were to go flat or decline, people would definately be more inclined to save more money because as of right now, many people see their house as their savings. If expectations of further apreciation were to shake, we definately see more saving. More saving = less spending on consumption= less jobs needed for the retail industry. In areas like the Central Valley and the Southern united states where small towns have boomed because of housing boom and the services needed to accommodate the new arivals, a hit in housing industry might be something that could be hard to recover from. The job loss in both the housing industry and the retial industry might turn boom-towns into ghost-towns.



2) As I said before, these boom areas have recieved added growth because of the retial industry which is in many ways complementary to the housing industry. It might not make perception happy, but retial industry has recently created more jobs in the united states than any other industry period. Protectionists policies and probably the coming correction of the Current account deficit will hit the retial industy something harsh. Protecting underwear manufacturers in north carolina or anyone else in any other uncompetive domestic industry WILL effect the price of final goods. There's no debating that. Rising prices mean consumers buy less, which will effect employment. Furthermore, the coming Current acount deficit correction, if it does happen, might in send the dollar down nearly 30%. Such a devaluation will make imports skyrocket, and with the retail industry making so much of its sales from imports, I don't think a retial relient town like Tracy could survive such a hit.

3) these housing Boom towns are populated by low income or fix income families and individuals. These families that are barely paying minimum payments on houses and scrapping away with low level retail jobs are going to have far less incentive to stay home owners with raising rates (FED), declining incomes (cooling retial market), rising price levels and more importantly lowered expectations of future home apreciation. The high number of low income home owners residing in these Boom-Towns may serve to amplify the effects of either the housing bust or a hit in the retial industry due to protectionist policies and/or Current account Corrections.
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