Well when the capital city of one of our 50 states files for bankruptcy the dominoes start to fall. This city of 50,000 is looking to have $100M of bonds forgiven. Michigan has 19 cities teetering on insolvency... ultimately the state becomes the receiver... Exactly how does this play out? Commercial entities will rape and pillage the city assets for pennies on the dollar with residual generating public services becoming privatized: Parking, Tax Collection, land, permits etc. http://money.cnn.com/2011/10/12/news/economy/harrisburg_bankruptcy/
green shoots! and i'm pretty sure that city's top gvt officials will recieve their share from this "privatization". i 've seen this before. last sentence from same article-
Capitals aren't necessarily great cities... Harrisburg has a median household income of just $30K/yr. It's a poor city, like DC.
A lot of people believe that California cities will soon be falling like dominos. Following is a fairly long (7-page), and sometimes rambling article; but it gives a scary peek behind the curtain of municipal finances. California and Bust http://www.vanityfair.com/business/features/2011/11/michael-lewis-201111
The stock market knows that more bailouts will come and that cities and states will all be saved, no need to panic, remember FAILURE IS REWARDED in the new world we live in.
I have limited understanding of the inter workings of a municipality. Their bond holders were moving the court to order all tax receipts to be paid to them first leaving the city with near zero operating funds. Chapter 9 allows them an opportunity to renegotiate or even have these bonds forgiven. $300M in debt 50,000 residents = approx $25k per family. Lawyers will make out like bandits.
Exactly. Now if cities were doing really, really well - that would be bad news since they'd be in line to get punished for their success. Welcome to the upside down world of socialism where good is bad and right is wrong.