Posted on 04/11/2013 7:07:35 AM PDT by SeekAndFind
After a federal judge ruled last week that the city of Stockton can reduce its debt through bankruptcy, observers began to frame the battle as one of municipal bondholders against public employees. But it's hard to shed tears for either of them.
During the boom years, Stockton promised its future public-sector retirees free lifetime medical coverage. It also adopted rules allowing workers to spike their pensions by letting them include overtime and other payments from their final work year to calculate retirement pay.
Stockton also issued far too many bonds. From 2003 to 2009, on an annual budget of just $156 million, Stockton borrowed $191 million for a spending spree that included public housing, an events center and arena, parking garages and a new City Hall and police communications center.
The city also borrowed $125 million to make its required payments to the California pension fund. Yes, even during the boom years, Stockton could not afford to make its pension payments.
Since 2008, the average home price in Stockton has fallen from $407,000 to $118,500, which means that property and sales tax collections have fallen sharply too. The city has cut back severely, reducing its workforce by 25%, including deep cuts in the fire and police departments, and cutting worker pay and benefits. When it became clear that wasn't enough to balance the budget, Stockton last year suspended $2 million of its $13 million in annual bond payments.
In its bankruptcy filing, Stockton noted that "debt taken on … in the 2000s is simply not supportable given current economic realities without devastating city services."
The city's position has those who invested in bonds crying foul. A coalition of creditors, including municipal bond funds and a company insuring government bonds against default, tried to prevent Stockton from even filing for bankruptcy.
(Excerpt) Read more at latimes.com ...
. When a company goes under, the business is shut down. If Stockton goes under, what are they going to do....roll up the streets and make everybody move? Nope, the income source is still there. It’s just a matter of who is going to get screwed. Are the politicians who caused this losing any money or going to jail? Nope. They get away clean. We’re all thinking that bankruptcy is going to teach these Democrat politicians in California a lesson. The lesson they will actually learn is to declare bankruptcy and screw the people who loaned them money. Just watch and see how many Democrat politicians go to jail and how much the government employees retirement gets cut. These people have nothing better to do all day than sit around and think of ways to steal money.
If you’ve never been to Stockton, you can’t possibly understand how Stockton has been bankrupt in every way for decades.
You wouldn’t want your wife to walk the streets at high noon in that town.
“The lesson they will actually learn is to declare bankruptcy and screw the people who loaned them money”
With the exception of CALPERS. If you invest in something that CALPERS is in you get the same rate of return but you assume all the risk. They are a “senior investor” so they will get paid first.
NOTE: To the uninitiated, bonding means borrowing..... with endless taxation to pay it off....... w/ interest.
Why did Stockton love those bond issues? B/c it meant big bucks for politicians---bonding companies make money til the end of time AND as a payoff to politicians for throwing money their way---numerous financial bombs are secretly planted to payoff politicans bigtime.
At the state level, Californians hase a busy bee state Treasurer---Bill Lockyer---who loves putting those Wall Street bonding deals together-----saddling Cali business and individual taxpayers with billions in taxes.
How very easy it is for conniving pols to get for themselves a gigantic piece of those billion dollar bond pies.
Rmember---Wall Street knows how to make money disappear faster than a cream puff at a Weight Watchers weigh-in.
Holy Crap! And here I thought my house in Redding took a hit.
“If you’ve never been to Stockton, you can’t possibly understand how Stockton has been bankrupt in every way for decades.”
But OTOH if you’ve ever been to Mexico City, you fully understand the situation.
Stockton is more Mexican than Los Angeles.
“I feel we owe such a rational effort to all that have gone before us. “
Me too. But it will be an uphill fight, because the RATs in Sacto are bent on imposing a Marxist Society here in CA on all of us. Personally, although it might be severely detrimental to me personally, I can’t wait for the State of California to go broke! I know that under the Constitution that a State can’t go bankrupt, but when they are unable to pay their creditors, as is quite likely in the near future, it will amount to the same thing. And it will sink the businesses that have come to depend on the state for their existence.
I’m going to write the Howard Jarvis tax people to see if they have such an amendment in the works.
“I know that under the Constitution that a State can’t go bankrupt”
This is not at all clear. It’s just never been tried before.
Native Californian here. I’m convinced California should be and will be the first state to declare bankruptcy. All that it would take to put our financial house in order would be a bankruptcy court-ordered abrogation of all the public employee union contracts and pension plans that are killing us.
So you know what that means, fifty-year-old retired prison guards with free lifetime medical care and hundred grand a year pensions? START LOOKING FOR A JOB!
“French Camp” which is immediately south of Stocton is actually where the Mexicans live.
The biggest proproblem in Stocton is the UOP faculty’s influence.
You should read up on Bill’s estranged wife, Nadia (25 years his junior).
I was in Stockton a few years ago for the first time. I thought I was in Mexico. Practically NO WHITE PEOPLE in downtown Stockton. By the age of the architecture, the city scape looks like it was abandoned 30 or 40 years ago. The whole ambiance was one of poverty and extreme laziness and sloth by the people I saw. I half expected tumbleweed to blow down the nearly deserted streets.
Hard to believe that Stockton was the approximate vicinity of The Big Valley — admittedly a fictional location. But, to imagine there is anything of the Old West about Stockton any more — impossible.
By the way, the same could be said about many if not most central valley towns or cities within 100s of miles of Stockton. Fresno was slightly less tawdry, but barely. Only Bakersfield retained anything like an Old West flavor.
As they say in France, "you get what you vote for, merci".
Leni
Oh yeah, I know all about her—married him when she got pregnant w/ son Diego-—Bill financed her political life-—then she shacked up w/ a rehab pal. Marriage went south.
But I hear they’re reconciling (gag).
Not true. During the canal building era of the 19th century at least one state (Indiana) if not more did go bankrupt.
It is federal law (Chapter 9) and not the Constitution that prevents states from declaring bankruptcy. Congress and the President can change Chapter 9.
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