Posted on 04/01/2010 12:09:56 PM PDT by george76
Thursday is the deadline for Harrisburg, Pa., to make a debt payment tied to a trash incinerator, and city officials aren’t optimistic.
City Controller Daniel C. Miller said Wednesday it’s “very likely” that the city will miss the $637,500 payment ...
The incinerator debt...threatens to send the city into Chapter 9 bankruptcy. The city is facing a $164 million budget gap...
The city is also due to pay $4 million on its own debt and $1 million in payroll expenses Thursday, Miller told Dow Jones.
The mayor of Harrisburg, Linda Thompson, hasn’t been receptive to the use of Chapter 9 to solve the city’s financial woes. But...
(Excerpt) Read more at blogs.wsj.com ...
So their entire budget may go up in smoke? Just the first domino to fall... Obama just can’t print enough dollar bills to keep the Republic afloat.
There are a lot of cities and states in similar shape. How they can operate under such deficits is beyond me. I think city councils get under some delusional spell and think money will just fall ferom the sky, instead of cutting budgets. Some prognosticators say the US economy will plain collapse this summer. Stories like these make it seem plausible.
She would be receptive to an Obama bail out, however.
Funny name for a beauty pageant. May is a good time for it. Guess it’s a sign of the times. “Miss Debt Payment” pageant in May in Harrisburg.
Why not?
Chapter 9 bankruptcy in 3, 2, ...
(Note: Cities and other subdivisions OF states can enter bankruptcy, but states themselves cannot.)
True. Also, she should remember that creditors don’t have to wait for a debtor to file for bankruptcy. If they (creditors) believe that waiting will worsen their situation, they can petition themselves for the debtor’s bankruptcy.
So much for the muni bond business
The muni bond business may survive, but investors now will want to see a mix of higher safety (proof of several layers of solid re-insurance, for example, but re-insurance itself costs money!) and higher interest rates. It’s true that folks no longer will invest for a little more return than inflation rates.
I wonder how many bureaucrats are on the Harrisburg city payroll?
Thompson walked in this mess left by the old Mayor Reed. He spent his time buying museums instead of taking care of the problem. I doubt she can fix it. Maybe she should declare bankruptcy and start over.
Waiting for many cities ( even other state capitals to go chapter 9) as well as some states to flip.
Not sure how re-insurance will work ( remember AIG and their pals ? ) unless we get more Obama money printing.
Plenty and Thompson hired more when she was elected.
a more recent snapshot of Harrisburg.
For good or ill, states are not eligible for bankruptcy protection. The bankruptcy code lists the various kinds of eligible debtors, including subdivisions of states and special districts (like a transit authority or water works), but not states themselves. Will be interesting to see what happens when states run out of money and aren't bailed out by the feds. Basically they'll be credit pariahs: No one will lend to them absent very high interest rates and/or other assurances.
I was thinking of the recent California issuing of IOUs and such.
There are 40 plus ( 47 or so ? ) states in massive financial trouble now.
When Obama Care, cap & trade, and similar unfunded federal mandates hits the states and us taxpayers...it seems that the collapse will go full time.
Obama will have to build more printing presses and run them 24/7 just to keep up with his bail-outs.
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> So much for the muni bond business If it takes enormously high interest rates to FORCE municipal governments to tighten their belts and live within their means ... SO BE IT. It's good medicine for the Big Spender. Cut up the damn credit card if you can't afford it! As 30 to 40 percent of US Bonds are being purchased by third-parties — likely the Fed itself — Buyers need to wise up and stop "lending" money to a US Treasury that spends money at an UNSUSTAINABLE rate.
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Harrisburg and a lot of the small cities in Pennsylvania along with the big cities are receptacles for a lot of useless human garbage: career welfarites, employee union scammers and illegal aliens. It had to happen.
Oh, yes, states will be “bankrupt” in the less technical sense; they will be insolvent. And whether or not they are bailed out, creditors will run and keep running.
Thanks george76. “Miss Debt Payment” will soon be the only televised pageant in the United States.
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