Chapter 9....the coming wave

[TalkingDog]

http://finance.yahoo.com/taxes/article/108866/muni-threat-cities-weigh-chapter-9

Just days after becoming controller of financially strapped Harrisburg, Pa., in January, Daniel Miller began uttering an obscure term that baffled most people who had never heard it and chilled those who had: Chapter 9.

The seldom-used part of U.S. bankruptcy law gives municipalities protection from creditors while developing a plan to pay off debts. Created in the wake of the Great Depression, Chapter 9 is widely considered a last resort and filings under it are more taboo than other parts of bankruptcy code because of the resulting uncertainty for everyone from municipal employees to bondholders

The economic slump, however, is forcing debt-laden cities, towns and smaller taxing districts throughout the U.S. to consider using Chapter 9. As their revenue declines faster than expenses, some public entities are scrambling to keep making payments on municipal bonds. And that is causing experts to worry about the safety of securities traditionally considered low risk.


/end snip


Look for Chapter 9 defaults to sweep the country in the next year. Local tax collections are bottoming out.

[AllentownJake]

1. Followed by State bankruptcies

There are about 7 states that have been so poorly mismanaged fiscally they are about to bring the rest of the Union down.

[FreakinDJ]

2. Yep - and California is 1 of them

[AllentownJake]

3. California is the big one

Nevada goes first, an entire state largely built on discretionary spending of the others, cannot possibly survive a Great Depression level downturn. It won't without a federal bailout.

[bertman]

4. Actually, Jake, they weren't poorly mismanaged, they were beautifully mismanaged or

poorly managed. But I imagine you're right about the seven states. You seem to know your stuff.

[TalkingDog]

5. CA and NV aside (those are pretty much a given)

It seems like it will start with poor and overextended cities and when a critical mass is reached the state will fail.

I will be curious to see the correlation between hyperinflated housing, the coming retail building loan defaults and which cities tank first. It seems like rural areas might have a slight cushion.

[AllentownJake]

6. Suburban and rural municipalities are in as much trouble as cities

We had an Ecoli breakout in my suburban municipality this weekend in the water.

For some reason the standard protocol of alerting citizens of a health hazard door to door was not followed and a small notice was put in a paper. I suspect budgetary problems (paying overtime on a Saturday).

Whatever the reason, I'm probably going to end up on the local news on Tuesday yelling at our local government over it. Ecoli will put a guy like me down for 3 days, it will kill a kid. Not to happy that my township played games with kid's lives.

[TalkingDog]

7. Damn.....

Well, the Pubs got what they wanted. Everybody is on their own. Self-reliance and all that rot.

[Sen. Walter Sobchak]

11. obviously states can run out of money, but states can't actually file for bankruptcy

[democraticinsurgent]

8. I knew it

There had to be more chapters than just 7, 11 and 13.

[TalkingDog]

9. Yeah. I imagine we'll see each of them paraded out before it's all over with.

Congrats on your upcoming 1000.

[agent46]

10. But...but...but...tax cuts! Want tax cuts!

Keep what I earn! Tax cuts! Tax cuts! Aaaargh! Revolution! Tea Party. Big gubmint. Zzzzz. Phttth. Wheeeze. Gasp. Liberty. Sarah Palin. Hot. Sexy. Hot. Guns. Guns. Beckkk. Guns. Uppity Commie White House Nigra Fascist Deficit Nazi Jeebuzz Socialist. Patriot. Merka. Big Show. Scary. Scary. Scary.

:shrug: Guess we'll just have to privatize everything that's left now.

Mission complete.
:beer:

[xchrom]

12. You didn't list guns NEARLY enough!

Guns are more important than living.

[TalkingDog]

13. Put it on a Tee-Shirt, you'll be a millionaire!

Welcome to DU!