The Conservative Cave
Current Events => Breaking News => Topic started by: NHSparky on July 13, 2012, 11:40:05 AM
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LA County Supervisor: San Bernardino An ‘Ominous Warning’
(http://cdn.breitbart.com/mediaserver/Breitbart/Big-Government/2012/07/11/tn-gnp-0429-photo-gallery-crescenta-valley-ann-001.jpg)
LINK (http://www.breitbart.com/Big-Government/2012/07/11/exclusive-la-county-supervisor-antonovich)
(C) Breitbart.com
by Ben Shapiro
11 Jul 2012
(too short to excerpt)
Los Angeles County Supervisor Mike Antonovich, in an exclusive interview with Breitbart News, says that he has directed the Chief Executive Officer to report back to the Board of Supervisors on how LA County’s fiscal health compares to that of Stockton and San Bernardino.
“These latest bankruptcies provide an ominous warning for other municipalities that fiscally responsible policies must be the top priority in budgetary planning,†says Antonovich. “A full assessment of the County’s handing of its fiscal responsibilities and its ability to meet its own meet its obligations in comparison to these other public entities will serve as a benchmark for the county.â€
In other words, Stockton and San Bernardino may be only the first dominoes to fall in California. In Stockton, avers Antonovich, “Rather than matching spending to revenue, they float bonds in order to cover escalating costs for retiree health care, pensions and public facilities and capital improvements. This is a recipe for fiscal collapse.â€
Unfortunately, it’s the same recipe that the entire State of California seems to be using. If Supervisor Antonovich’s suspicions are correct, California may be headed for the fiscal cliff.
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And if LA County goes bankrupt, this will make Orange County's bankruptcy in 1995 seem like child's play in comparison. Couple that with the fact that the economy was far better able to absorb the costs of OC's bankruptcy, and that several other municipalities will be or already are in bankruptcy (Riverside may be close behind San Bernardino, joining Vallejo, Stockton, and Mammoth Lakes), the entire state might well fall off the cliff before November, or in early 2013 at the latest. And if the feds decide to bail out California, IMO, that will be the day future historians point to as the start of the Second American Revolution.
YMMV.
-H/T-Ace of Spades
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Sometime in the last couple of days, I had Fox News on and they were talking about all the towns in CA that were in trouble, and what was going to happen to them.
Can't remember which specific shows, but I think I've heard it discussed on a couple different ones.
Anyhow.... they(the talking heads) were talking about how difficult it is for cities as they are dependent upon local property owners, businesses, etc. for filling up their coffers. And with the economy the way it is, they haven't been able to, particularly with so many people losing their homes, or just not paying property taxes. (here you can go at least 3 years without paying with no consequences other than late fees). Or with businesses either failing, leaving the area, or not seeing the profits from consumers.
All were saying that without cutting city/county programs, employees, services, that cities
in trouble had no other choices but to file bankruptcy, if they had already cut out as much as they could from the city/county budgets, or to raise taxes, which in many cases is not feasible.
And they all said...."cities don't have the option, like the federal government....or just printing more money!
Scary times right now.
Please God, let Romney win.
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Please God, let Romney win. Obama lose.
At this point in time, anything would be better than Obama.
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At this point in time, anything would be better than Obama.
Even Ron Paul? :tongue:
Seriously, I just hope no one starts a write-in campaign for a 3rd party candidate and Romney picks a good - and acceptable to independants - for VP.
4 more years of Obama will totally destroy this country!! :mad:
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float bonds in order to cover escalating costs for retiree health care, pensions
In 2011, among full-time wage and salary workers, union members had
median usual weekly earnings of $938, while those who were not union
members had median weekly earnings of $729.
http://www.bls.gov/news.release/union2.nr0.htm
90% of the problem. Public sector unions strike again.
Watch, they'll go begging for more money ala taxes/fees/surcharges ad nauseum.
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Even Ron Paul? :tongue:
Seriously, I just hope no one starts a write-in campaign for a 3rd party candidate and Romney picks a good - and acceptable to independants - for VP.
4 more years of Obama will totally destroy this country!! :mad:
Well, I did say anything. The local dogcatcher, the moanback on the garbage truck, anything.
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The problem with municipal bonds are that you have to find people dumb enough to buy them. Kinda like GM stock.
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Well, I did say anything. The local dogcatcher, the moanback on the garbage truck, anything.
:-)
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The problem with municipal bonds are that you have to find people dumb enough to buy them. Kinda like GM stock.
Well, for many many years, munis, being tax-free (or "triple-tax free" meaning no federal, state or local taxes), were an excellent and very safe investment, despite their comparatively low interest rates. Default rates have traditionallly been below 0.05 percent--that's right, less than 5 of 10,000 go into default. Corporate bonds have had a historical default rate of nearly 10 percent. Even if a muni defaults, insurance will typically pick it up, the risk is that low.
Even cashing them out is usually penalty-free, even if cashed before the maturity date, and will be worth market price. These are an excellent source of steady-stream income for seniors and others wanting a very safe place to put their money. Granted, they don't look as attractive in high-inflation or other market booms where they simply can't compete with a 6-8 percent annual increase in the market, but neither do they have the wild swings some stocks or mutual funds have.
But now we're getting to the point where more and more larger cities are defaulting. Predictions that are over the next several years, there might be upwards of $35-50 BILLION in municipal bond defaults. That's half the CA state budget. They simply can't make up that much of a shortfall. We currently have nearly $3 Trillion in bonds out there. Some are held by private citizens and investors, but most is held by banks--and many of those are foreign banks. And guess who else holds a lot of municipal bonds?
UNIONS.
Guess who is underfunded and showing signs of hemmoraging cash by the billions? UNIONS. Both public and private unions hold them, and they have to pay their obligations somehow. To this point they've had the feds bailing them out, but that will end and is already slowing down. Or worse yet, the cash that Porkulus provided only delayed the inevitable by keeping public sector employees on the payroll much longer than should have been reasonably sustainable. Solution of last resort--sell the bonds, flood the market with them, and as a result the prices collapse. And when munis collapse, the federal bond market collapses and takes pretty much the entire world economy with it. Everyone talks about China being such a huge power, but their GDP is barely 1/4 of ours. The US is still in excess of 25 percent of world GDP, and if we're the best deal in town right now (and believe it or not, as bad off as we are right now, everyone is sucking WORSE) you can only imagine how far and fast the Eurozone, Asia, and South America are going to tank.
And if there is a run on cashing in these bonds, we see a real shitstorm brewing. CA will be the tipping point, but NY, MD, IL, and large cities will be following soon behind. As loathe as I am to sound like a tinfoil hatter, this is some serious stuff we COULD be seeing. Will it happen? It's not likely, but that's of little comfort compared to how laughably impossible it was a decade ago.
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At this point in time, anything would be better than Obama.
I'm actually debating in my mind which is worse, Obama or The Thing from John Carpenter's movie.
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And even towns/cities who aren't in the news are on the brink:
OC Register Link (http://taxdollars.ocregister.com/2012/07/14/financial-doom-looms-for-at-least-one-o-c-city/159000/)
The Register examined the latest audited statements for all 34 cities in Orange County to assess their overall fiscal health.
While most cities appeared in quite positive territory when their hard assets were in the mix – land, buildings, etc. – the cash cushions in their general funds ran the gamut.
Two were in razor-thin territory, with reserves below 1 percent of annual expenses: Cypress and Placentia.
One was below the 5 percent threshold considered a barebones cushion: Santa Ana.
And Garden Grove and Costa Mesa were below 7 percent.
About half of local cities had more than 50 percent reserves, including Laguna Niguel, Rancho Santa Margarita, Villa Park, Westminster, Seal Beach, Buena Park, Mission Viejo, Aliso Viejo, La Palma, Fountain Valley, Laguna Woods, Lake Forest, Westminster and Yorba Linda.
STORM CLOUDS OVER STANTON
The Register found the financial clouds were darkest over Stanton.
Steep budget cuts over the last four years have left Stanton, population 38,000, a shell of a city.
Visitors to Hollenbeck Park will find it fenced off, because the city can no longer afford to water the grass. Children who once played in the sprinkler-like water attraction at Dotson Park will now find it dry. Over at Zuniga Park, volunteers are taking care of maintenance and paying for water.
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From 1986 through 2011, just 263 cities, counties and districts filed for protection from creditors under Chapter 9 of the bankruptcy code, the official U.S. Courts website reported Friday.
The vast majority have been small utility or hospital districts. Just a few – most notably Orange County in 1994 and Jefferson County, Alabama in 2011 – have involved billions of dollars.
Only four California cities have filed bankruptcy in the past 20 years. But two of them, Stockton and Mammoth Lakes, have done so in the last three weeks. And a fifth city, San Bernardino, is expected to file later this month or in August.
Despite the obvious advantages – bill collectors are silenced, labor unions are at least briefly stunned – municipal bankruptcy costs time and money. It also damages an agency’s reputation among potential lenders for years.
Vallejo, which filed for protection in May 2008, finally emerged in November 2011. Councilwoman Stephanie Gomes said on her blog that legal bills reached $11 million.
Vallejo got off cheaply.
During its epic bankruptcy, Orange County paid nearly $87 million in legal and financial advisory fees, according to a 1996 tally by the Register. That came to $156,058 for each of the 555 days the county spent in bankruptcy court. And it didn’t count money the county paid after emerging from bankruptcy for lawsuits against its onetime financial advisers.
Orange County is still paying off its 1994 bankruptcy. It floated a bond in 1996 to repay creditors. This year it is paying $43 million on that bond. The final payment will come due in 2018, county spokesman Howard Sutter said.