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10 Signs That America Is On The Verge Of A Horrible Municipal Debt Crisis
The American Dream ^ | 3-22-2012

Posted on 03/22/2012 3:19:55 PM PDT by blam

10 Signs That America Is On The Verge Of A Horrible Municipal Debt Crisis

March 22, 2012

Is America on the verge of a horrible municipal debt crisis? Unfortunately, the answer is yes. From coast to coast there are an increasing number of cities, towns and counties that are rapidly going broke. Financial analyst Meredith Whitney took a lot of heat when her prediction of a municipal bond crash in 2011 did not happen, but she was not fundamentally wrong in her analysis. A horrifying municipal debt crisis is starting to unfold right in front of our eyes. It just did not happen as soon as she thought that it would.
When most Americans think of our "debt problem", they think of the federal government. But the truth is that we have hundreds and hundreds of smaller "debt problems" all across the country. In 2012, cities such as Stockton, California and Harrisburg, Pennsylvania have already defaulted and a whole bunch of other cities and towns are headed down the exact same path. Once we see the first major wave of municipal defaults, creditors will become much tighter with their money and that will cause even more municipalities to get into financial trouble. This crisis could start spinning out of control at any time.

The frightening thing is that all of this is happening at a time when we are supposed to be having an "economic recovery".

So what will things look like when the economy gets even worse than this?

If hundreds of cities, towns and counties are barely able to keep their heads above water financially right now, what is going to happen when the next recession hits?

That is frightening to think about.

The following are 10 signs that America is on the verge of a horrible municipal debt crisis....

#1 Moody's has downgraded Detroit's debt again. The following is from the Detroit News....

The city received a downgrade to B2 from Ba3 for its $553.1 million in outstanding general obligation unlimited tax debt and also a downgrade to B3 from B1 for the $486.4 million in outstanding general obligation limited tax debt. Both ratings fell two points. #2 The city of Indianapolis is facing an unprecedented 75 million dollar budget deficit in 2012. City officials are warning that there may soon not be enough money to keep the streetlights on.

#3 Suffolk County in New York has declared a "fiscal emergency" after discovering that it is projected to take on a total of more than 500 million dollars of additional debt by the end of 2013.

#4 The city of Trenton, New Jersey is so broke that it has put off buying more toilet paper for city buildings. At last report, there were a total of 15 rolls remaining and after that those that use city restrooms will be on their own.

#5 Some cities are slashing expenses dramatically in an attempt to stay afloat. The following is one example from California....

Costa Mesa, a city of 110,000 south of Los Angeles, has slashed its payroll from 611 to 450. It is selling its police helicopters and has hired a neighboring city for air patrols. It's also pursuing a controversial effort to convert to a charter city from a general law city, which would give City Hall more power to outsource more work, said councilman Jim Righeimer.

#6 In New York, state officials are deeply concerned that city and local governments are paying their pension obligations by borrowing from the state pension fund. This is essentially like making your minimum monthly payment on a credit card by borrowing more money on that same credit card....

And now, their fears are being realized: cities throughout the state, wealthy towns such as Southampton and East Hampton, counties like Nassau and Suffolk, and other public employers like the Westchester Medical Center and the New York Public Library are all managing their rising pension bills by borrowing from the very same $140 billion pension fund to which they owe money.

Across New York, state and local governments are borrowing $750 million this year to finance their contributions to the state pension system, and are likely to borrow at least $1 billion more over the next year. The number of municipalities and public institutions using this new borrowing mechanism to pay off their annual pension bills has tripled in a year.

#7 Pension problems are catching up with a lot of cities all over the nation. For example, CBS News reported recently that the city of Central Falls, Rhode Island has been forced to declare bankruptcy because of pension woes....

For years, city officials promised robust union contracts and pensions without raising revenue to pay for them. Last August, the math caught up with them. Central Falls was broke, its pension fund short $46 million. It declared bankruptcy.

"My daughters grew up here, went to school here. It's all gone," said Mike Geoffroy, a retired firefighter.

He said he could not make the payments on his house after his pension was cut by $1,100 a month.

#8 Last November, Jefferson County, Alabama filed for the largest municipal bankruptcy in U.S. history. At the time, they had accumulated a total of approximately 4.2 billion dollars of debt.

#9 Several other U.S. large cities have defaulted on their debts in early 2012 as a Bloomberg article recently reported....

The California cities of Stockton and Hercules, as well as Pennsylvania's capital, Harrisburg, have opted to default on some of their insured debt in recent months.

#10 In all, there have been 21 municipal defaults so far in 2012. The grand total of those defaults comes to 978 million dollars.

Of course a lot of state governments are experiencing massive budget problems right now as well.

For example, in California state government revenues for February 2012 were down by about 22 percent compared to February 2011. The state government is quickly running out of money once again, and nobody is quite sure how to fix California's rapidly deteriorating financial situation.

And we all know that the biggest debt problem of all is the U.S. national debt.

Professor Antony Davies of Duquesne University has put together a great YouTube video that shows how the U.S. national debt crisis could get wildly out of control if interest rates start going up by even just a little bit....

(Click to the site to see the video)

It is no wonder why so many Americans are so pessimistic about our future.

One new survey has found that 63 percent of all Americans believe that the U.S. economic model is broken.

Things did not have to turn out this way, but they did.

As a nation, we did not have to get absolutely addicted to debt, but we did.

Now we are going to pay the price and it is going to be extremely painful.


TOPICS: Front Page News; Government; News/Current Events
KEYWORDS: bankrupcy; collapse; debt; dollarcollapse; economy; getredyhereitcomes; mortgagingyourkids; municipalaties; municipaldebt; prepperping; survivalping
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To: TLI

Are there any republican cities?


51 posted on 03/22/2012 8:50:55 PM PDT by MNDude
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To: dragnet2

Not that it’s any of your damn business, but I take home less than $1500/month, and I put money aside for retirement by living well below my means.

So kindly save the “eat the rich” bull for your next Occupy meeting. Jackass.


52 posted on 03/22/2012 8:51:15 PM PDT by sthguard (The DNC theme song: "All You Need is Guv")
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To: dragnet2

Why did you ping me to this reply? I’ll thank you not to lump me in with the “overpaid government employees.” I teach for a living, and it just so happens that I do so as part of the state of Ohio’s university system.


53 posted on 03/22/2012 8:56:44 PM PDT by sthguard (The DNC theme song: "All You Need is Guv")
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To: sthguard

Shame on you. Telling lies to children every day. (Just kidding)


54 posted on 03/22/2012 8:59:16 PM PDT by Terry Mross ( "It happened. And we let it happen. - Peter Griffin, Family Guy)
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To: Terry Mross

Sometimes I even tell them that there’s no such thing as a free lunch! Doubleplusungood of me, I know, but I have to get my jollies somewhere.


55 posted on 03/22/2012 9:04:13 PM PDT by sthguard (The DNC theme song: "All You Need is Guv")
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To: blam
Public employee unions.

And before anybody starts railing about weak-kneed public officials, just think of what it is to be a government of a city of 50,000 people going up against the SEIU. Think about refusing Federal funding, despite the strings, knowing that if you take the money for their "standard of whatever," you will probably lose an expensive lawsuit. It's just not that easy.

56 posted on 03/22/2012 11:42:01 PM PDT by Carry_Okie (There is no such thing as "renewable" energy.)
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To: Mariner
We both know that the Greece kerfluffle was nothing more than folks making sure they didn't have to pay up on their Credit Default Swaps. They propped Greece up for as long as they could to clear those suckers off their books, took the money, ran, and stuck the investors and the German taxpayers with the bill.

Anyone buying sovereign debt right now is asking to have their money taken.

With the ZIRP in place, might as well invest it in productive assets...like an oil well. Oh, wait, Bammy's in office.

Better yet, bury it in your back yard.

57 posted on 03/23/2012 12:35:39 AM PDT by TheWriterTX (Riding the Long-Wave Economic Contraction, Baby!)
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To: cherry

I agree with your point. I also wondered why the retired fireman could not make his house payments after the pension was trimmed.

What? He is retired and still paying off his house? That should have been paid off years ago.


58 posted on 03/23/2012 1:32:11 AM PDT by BlackVeil
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To: mojitojoe

Central Falls, RI

Language other than English spoken at home, pct age 5+, 2006-2010 70.4%

I wonder how much welfare is keeping this stupidity afloat.


59 posted on 03/23/2012 4:59:25 AM PDT by soycd
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To: blam

>nobody is quite sure how to fix California’s rapidly deteriorating financial situation

A good start would be to deport the welfare sucking illegals.

And stop putting leftists in charge of workers income.


60 posted on 03/23/2012 5:07:18 AM PDT by soycd
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To: blam

It is a shame blam and I once worked as a Police Officer for the city of Mobile. I saw the writing on the wall many years ago. I sent my “Brother and Sisters in Blue” a message on facebook to check out the solvency regarding their pension plan. I asked them to check if the feds would step in, if bankruptcy occurred. I did not receive one response from any of them. They must prefer to stick their heads in the sand and see what happens.

Funny how things in the 80’s and 90’s were good in Mobile and now what a mess. The mayor will subsidize the pension fund with moon pies when it runs out.


61 posted on 03/23/2012 5:16:29 AM PDT by No Surrender No Retreat
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To: saneright

In our district in Illinois, the teachers are threatening to strike again. A simple Google reveals that Illinois has the highest paid teachers in the nation, we spend the most per student, and we get the worst results. Their pensions are above and beyond sickening, and yet, they want more.

Our state is broke. I like many, am owed more than a hundred thousand dollars by our state, which was a contributing factor to why we closed our business (plus, forced unionization, last year).

You spoke of police pensions, that is the tip of the ice berg. Here in Illinois, most who figure out how to hit the pension lottery, will not only have one pension coming, but they get into the buddy system (note dem system) and go from one pension job to another, putting in just enough time to get that pension. Many will “retire” after 20 years (school district employees, cops, firemen, whatever), then get into the park district for 10 years, then get into a municipal board (where they are only paid 10k a year or so, but get a 20k pension), etc. Some go to work for the toll authority, or library board. It never ends.

I know several people, in their mid fifties, who can already tell you, that when they retire, they will be banking well over 200k a year.

Not only that, the accrued sick days. Last year a woman in our kids scout troop retired as a teacher and was gloating how she was going to get a check for over 150k for accrued sick time and days off when she retired this year.

Yet, these people are the first who will leave the state when they retire because of high taxes.

Oh, yes, and it is supposedly in our Illinois Constitution that unions cannot be screwed with in any way shape or form, or some such nonsense. And, by the way, this problem was not created by dems only, 90% of Illinois counties are Republican, the problem was created by “reaching across the aisle” and promising whatever, to whomever, to get votes. Illinois is sunk.

My favorite are all the unionistas who claim to represent the 99%’rs. I would have to have several million invested to get the sort of trust fund returns that these jokers are going to get, yet me and my small business are supposedly the greedy capitalists that are ruining this country?

This country has to wake up, but it may already be too late.


62 posted on 03/23/2012 6:12:11 AM PDT by esoxmagnum (The rats have been trained to pull the D voting lever to get their little food pellet)
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To: sthguard

Make sure your investment manager is independently-audited. Otherwise you’re really sticking your neck out there too.


63 posted on 03/23/2012 6:20:31 AM PDT by The Duke
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To: grey_whiskers

New tag line - Courts, law enforcement, roads and national defense should be the extent of government

APNewsBreak: Feds consider closing some courtrooms

http://hosted.ap.org/dynamic/stories/U/US_CLOSING_COURTHOUSES?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-03-22-19-39-52


64 posted on 03/23/2012 6:31:23 AM PDT by listenhillary (Courts, law enforcement, roads and national defense should be the extent of government)
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To: esoxmagnum
they will be banking well over 200k a year.

Not for long.

65 posted on 03/23/2012 6:33:08 AM PDT by listenhillary (Courts, law enforcement, roads and national defense should be the extent of government)
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To: blam

Next will be county and state defaults.


66 posted on 03/23/2012 6:41:39 AM PDT by redgolum ("God is dead" -- Nietzsche. "Nietzsche is dead" -- God.)
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To: blam
#8 Last November, Jefferson County, Alabama filed for the largest municipal bankruptcy in U.S. history. At the time, they had accumulated a total of approximately 4.2 billion dollars of debt.

Note that some of that $4.2 gigabucks of debt are due to weird games played with the financing.

Several Jefferson County government officials went to prison for accepting bribes on that financing.

Curiously, nobody from JP Morgan (the bank that did the financing) went to prison for offering those same bribes.

67 posted on 03/23/2012 12:25:50 PM PDT by DuncanWaring (The Lord uses the good ones; the bad ones use the Lord.)
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To: carriage_hill
The crash is going to be nationwide; not just a municipal thing. It may start with them, but it’ll be like an avalanche, once it starts.

It will be a double whammy as many of the underfunded pensions hold millions in Muni obligations due to their tax preferred status. When the pension costs crash the municipalities, the municipalities will default on their debt and bankrupt the pension plans.

68 posted on 03/23/2012 1:00:23 PM PDT by JrsyJack (a healthy dose of buckshot will probably get you the last word in any argument.)
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To: Nervous Tick

>> city and local governments are paying their pension obligations by borrowing from the state pension fund
>
>Neat trick... where do you Suppose they learned it?

The federal government and the giant slush-fund known as Social Security.


69 posted on 03/23/2012 2:03:10 PM PDT by OneWingedShark (Q: Why am I here? A: To do Justly, to love mercy, and to walk humbly with my God.)
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To: blam
"#3 Suffolk County in New York has declared a "fiscal emergency" after discovering that it is projected to take on a total of more than 500 million dollars of additional debt by the end of 2013."

We used to be red. Long Island USED to be a great place to live. Not so much anymore. The illegals probably out number us citizens.

70 posted on 03/23/2012 2:50:26 PM PDT by NoGrayZone (Jim "Firebrand" Robinson endorses Newt...with EPIC call to action!!)
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To: OneWingedShark

>> the giant slush-fund known as Social Security.

Yeah, that’ss what that double SS in SSuppose wass ssuppossed to ssignify.

Thankss for carefully editing one S out of the portion of my posst you quoted, sso I wouldn’t look sstupid... :-)


71 posted on 03/23/2012 5:15:20 PM PDT by Nervous Tick (Trust in God, but row away from the rocks!)
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To: esoxmagnum
"This country has to wake up, but it may already be too late. "

It's already to late. There's no way back from here.

U.S. Economy Dead Man Walking, The Crash Of 2012

72 posted on 03/23/2012 6:04:06 PM PDT by blam
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To: Graybeard58; sickoflibs; stephenjohnbanker; DoughtyOne; calcowgirl; Gilbo_3
But Suze says, buy municipal bonds.

And rogue bankruptcy judges will treat you fairly, just like they did for investors in the Chrysler case /sarc

73 posted on 03/24/2012 4:24:50 AM PDT by ding_dong_daddy_from_dumas (Fool me once, shame on you -- twice, shame on me -- 100 times, it's U. S. immigration policy.)
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To: blam

Public sector workers are criminally overpaid in this country.


74 posted on 03/24/2012 4:32:17 AM PDT by GlockThe Vote (The Obama Adminstration: 2nd wave of attacks on America after 9/11)
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To: saneright

Yup. I have come to regard most cops and fireman and other public workers as financial terrorists.


75 posted on 03/24/2012 4:35:02 AM PDT by GlockThe Vote (The Obama Adminstration: 2nd wave of attacks on America after 9/11)
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To: GlockThe Vote

I have a sister-in-law who retired as a teacher at age 52 in northern Michigan. She always griped that she didn’t get paid enough and so forth (for “working” about 8 months each year). She still gripes incessantly about how she doesn’t get enough pension and health insurance freebies. What a societal parasite. It will be interesting if her county goes bankrupt. Want to take bets on whether we will “help her out” if that happens?????


76 posted on 03/24/2012 4:53:48 AM PDT by hal ogen (1st Amendment or Reeducation Camp?)
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To: GlockThe Vote

I have a sister-in-law who retired as a teacher at age 52 in northern Michigan. She always griped that she didn’t get paid enough and so forth (for “working” about 8 months each year). She still gripes incessantly about how she doesn’t get enough pension and health insurance freebies. What a societal parasite. It will be interesting if her county goes bankrupt. Want to take bets on whether we will “help her out” if that happens?????


77 posted on 03/24/2012 4:53:52 AM PDT by hal ogen (1st Amendment or Reeducation Camp?)
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To: hal ogen

I pray for a collapse. It’s the only way to get on a sound footing. What is going on now is criminal.


78 posted on 03/24/2012 5:04:29 AM PDT by GlockThe Vote (The Obama Adminstration: 2nd wave of attacks on America after 9/11)
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To: ding_dong_daddy_from_dumas

Let Suze buy em.....the rest of us will watch from the sidelines : )


79 posted on 03/24/2012 10:13:15 AM PDT by stephenjohnbanker (God, family, country, mom, apple pie, the girl next door and a Ford F250 to pull my boat.)
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