rwneill wrote on 12/22/2008 07:21:59 PM:
“States can not file bankruptcy.
True. And they can’t print money either.
That’s why, when a State becomes insolvent, the Courts would order that a Federal Receiver takeover administering the reorganization of that State by allowing the People of the State time to form a new, stable, solvent State government to govern the people of that State.
Federal troops could be involved, Federal money (the Feds CAN print money), whatever it takes to provide time for the reorganization.
This is the best plan for California under the current circumstances, IMHO.”
That's of very dubious constitutionality as well.
A state cannot be sued, except as it permits itself to be. When a state no longer has credit, what happens is it then only can pay for what is has money for.
What happens then is that reality is imposed on the state, and the state government officials have to come down from their LSD trip. Phrases like "legally mandated expenditures" no longer have meaning. The entity issuing the checks must suddenly decide who gets paid, and who does not, and bear personal responsibility for the decision.