By Rob Janicki
We previously commented here at CP on the prospect of Stockton, California, declaring Chapter 9 bankruptcy. The city acknowledged that Tuesday, June 26, was the deadline to either get creditors to agree to restructuring the city's debt or declare bankruptcy. Mediation with creditors had been an ongoing process for several months. Here's what the Los Angles Times is reporting at the deadline time.
STOCKTON — This Gold Rush-era port city, an epicenter of California's agricultural exports, will become the nation's largest city to seek protection under the U.S. bankruptcy code after its City Council on Tuesday stopped bond payments, slashed employee health and retirement benefits and adopted a day-to-day survival budget.
City Manager Bob Deis likened the process to cutting off an arm to save the body. He is expected to file bankruptcy papers immediately. [...]
This was no impulse action by the City of Stockton to intimidate creditors, government unions and city employees. The city had finally come up against the numbers and the numbers were screaming bankruptcy. How the bankruptcy runs its course it yet to be determined. By all appearances it is a sad and solemn day for Stockton and will continue going forward in time.
[...] Stockton has been in negotiations with its creditors since late March under AB 506, a new California law requiring mediation before a municipality can file for reorganization of debt. [...]
The unasked question is whether California will see more cities like Stockton having to declare bankruptcy. And what about the state of California itself? Will California manage to avoid similar circumstances? Right now Governor Jerry Brown and the Democrat legislature are rearranging the deck chairs on the good ship Lollipop, much like a game of three card Monte where the "mark" has to guess where the Queen is, when in fact the Queen has been palmed and is no longer in play in this con game we call California.
"Stopped bond payments..." Wait, people are actually stupid enough to buy bonds for any city in California, let alone Sock-it-to-Us-Town? These are truly people who get what they pay for. Of course, many of the bonds sold were probably bundled into funds that were then bought by the city and the state, but hey - in that case - you get what you vote for!
ReplyDeleteStockton is only the tip of the iceberg of municipal bankruptcies to follow. No one is even talking about the fiscal disasters looming in Detroit, Philadelphia, Chicago and Los Angeles. Meanwhile government unions are fighting to save the very concept of public unions, the largest cause of fiscal deficits around the country. The cancer of fiscal irresponsibility runs deep throughout the land. The question becomes one of the cure. Will it be major surgery or merely band aids applied to the most obvious financial wounds? It's going to be a long and rocky road to any possible recovery, which could not come at a worse time with the state of the economy as bad as it is.
ReplyDeleteNotice the glaring similarities in the 4 places - plus Stockton - that you mention: traditionally high crime areas, former homes of prosperous industries that have fallen on exceptionally hard times, industries controlled by big labor unions, public works controlled by big unions, all formerly thought of as the crown jewel of their state (well, okay, maybe not Stockton), a proven high level of corruption in public office and public works, high numbers of immigrants in the past century, legal and otherwise. In other words, bastions of liberal politics.
ReplyDeleteYour last sentence sums it up precisely. Liberal politicians conjoined at the hip with government unions have run roughshod over taxpayers and now to use the phrase of that memorable man of the cloth, Rev. Jeremiah Wright, "The chickens have come home to roost."
ReplyDeleteMajor cities across America that have been run by liberal Democrats for years will experience the fiscal equivalent of a nuclear disaster event. Perhaps it will take such events as bankruptcy to raze these cities from the death grip of liberals.
I see a political tsunami coming this November. The greater question is how the Republicans will handle governance this time around. Will they become the salvation of the country or once again, part of the problem. They do have a history of snatching defeat from the jaws of victory.