Harrisburg Requests Last-Ditch Rescue Financing From State, Says Alterantive Is "Full Blown Financial Crisis"

Tyler Durden's picture

The collapse of America continues, and Meredith Whitney may be proven right that the municipal bankruptcies are about to make a full frontal appearance. Harrisburg has just requested a last minute rescue financing from the state Pennsylvania, as the alternative would be insolvency. From BusinessWeek.

Harrisburg Mayor Linda Thompson asked Pennsylvania to determine the city to be in municipal financial distress so it would qualify for help and oversight under the state’s Act 47 program.

The city “stands on the precipice of full-blown financial crisis as a looming cash shortfall threatens its ability to pay vendors and meet payroll,” a statement from the mayor’s office said.

While it is unlikely that PA will allow its capital to go bankrupt, we are concerned about the capital reserves of the broader state in general. In the meantime, look for muni bonds to surge as the market expects Bernanke to announce a full blown rescue program for states and municipalities.

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Catullus's picture

They're going to start taxing shale gas.

Mr Lennon Hendrix's picture

So its EROEI goes negative?  Smart plan.

BaboonAss's picture

I think you mean just regular plain ol' ROI in this case. EROEI only has to do with the physical quantities of energy extracted and energy expended. Nothing at all to do with the finances connected to those physical quantities.

No doubt increased taxation on the producers/consumers of shale oil could make the ROI negative.

TheGreatPonzi's picture

"While it is unlikely that PA will allow its capital to go bankrupt, we are concerned about the capital reserves of the broader state in general"

PA will rescue Harrisburg, and the FED will rescue PA.

Nothing to see here, move along

Jack's picture

Sounds like the Superman movie.

Superman catching a falling Lois in mid air: "I've got you."

Lois:  "You've got me?  Who's got you?"

 

The FED can't fly, afaik.

LeBalance's picture

Monetary levitation on your back, Jack.

Minion's picture

When everyone is bullish, they are just advertising the positions they have already taken.  The real "cash on the sidelines" is the funds holding equities, looking at the exit while cheering for more volume so they can avoid detection when the inevitable cash register must be rung......

cnbcsucks's picture

EXACTLY!!!  And the market will rally 3% on the good news...as Ponzipalooza sweeps the nation...

 

traderjoe's picture

Tyler, Yves has a story on the OCC requesting 7 banks review their foreclosure practices...

http://www.nakedcapitalism.com/2010/10/regulator-orders-seven-large-lend...

---

Muni's will be the next leg of this crisis, along with Ireland...

StychoKiller's picture

Comment from MichaelC:

I think its noteworthy that the OCC is at least nominally independent and has recently been pushing back against the Admin and the Fed.

As this issue has been gathering steam the interested parties participating , notably the judiciary and the AGs all have political inhibitions.

Having the OCC jump in is a significant event.

That's the bad thing about a conspiracy, you cannot let EVERYONE in on it!  So dem what ain't in on it, stumble across it and demand the Truth -- how rude!

mikla's picture

Translation:

"Please give us some cash to blow, because we'd prefer not to file bankruptcy today.  Next week is much better for us.  But, we can't get to next week without your help."

Dudes, there's a reason companies file for bankruptcy *while you still have cash in the bank* so you have something to pay the lawyers.

Bankruptcy is a "given".  Cash-in-the-bank gives you options regarding what comes out the other side.  You can see their IQ dropping each day they wait to file for bankruptcy.

Mr Lennon Hendrix's picture

Is there an ETF to short lawyers?

Shameful's picture

Hmmm with Uncle Sugar directly handling indentured servitude...err... student loans I don't know.  If there was a way to take a position against student loans getting paid back, that would be a money maker.  I'm in the storm now of last year and I have no idea how my classmates will pay them back. 120k+ in student loans is the average (One I know is pushing 200k) and looking at 30k-40k a year for a job in many cases because of the weak market...

snowball777's picture

Awww...prep school bitches went Ivy League and gotta pay a big loan back. *sniff*

Learn to swim, pussy.

williambanzai7's picture

Here we go, the municipal 2B2Fail race to the bottom.

 

bugs_'s picture

The Harrisburg IOU becomes the Pennsylvania IOU.

truont's picture

And Pennsylvania IOU become the FED's IOU.

America if full of little tiny Greeces everywhere!

"Who are the people in your neighborhood, in your neigborhood..."

StychoKiller's picture

"Can you say 'Default?'  I knew you could."

gwar5's picture

I thought Gov. Ed Rendell had ridden to the rescue already.

The Munis, States, Federal government, private pensions, public pensions, and derivatives are all bubbles. You just can't spit in any direction without hitting a bubble. That's bad right now, because there also seems to be no shortage of pricks either.

 

Vergeltung's picture

this will never end now. they help here, and there will be nothing that will not be "bailed out"

 

kengland's picture

This is getting just stupid. Do you think they were just farting around with TARP and 5 or so other facilities? Do you honestly think they won't "float a bridge line" to these losers?

Come on guys...they are not going to let er go down until they...well..no one plays the game. There is no alternative. Now apply yourself elsewhere and stop reading/posting about how its all about to come down. It's not...at least not yet. Give yourelf another 5-10yrs.

AbandonShip's picture

Who junked him?  He's right.  It's not time yet for the apocalypse.

Bringin It's picture

I hope he's right because me and the misses want to run around the Homeland next summer.  Bummer if I get in and can't get out.

-273's picture

Exactly, I agree, since the money is not real, it is some computer digits, it is not backed by anything and they know there is no way it can ever be paid back, they can keep creating is at long as they like. They can keep extending and pretending. Things will only get real when there is not enough oil to keep the wheels turning. According to the Pentagon, the Lloyd’s and Chatham House, and by the German army, this is going to happen sometime in the next few years.

Seer's picture

Hey!  This is an economics blog, we're not supposed to talk about the physical world here!

//sarcasm off

If printing money and or generating electronic bits would make everything better it would have been done and over with.  What's going on now is, as many have suggested, a wind-down to the game, in which there is a scramble to replace the existing system such that its replacement will continue to hold TPTB in power- shock! Not!

Tense INDIAN's picture

Things will only get real when there is not enough oil to keep the wheels turning.

....Peak oil is a scam ...there is eought oil for many more years.......this is no reason for apocalypse.....this apocalypse is man-made...so if u think that this crisis or the incoming-crisis is caused by some scarcity..of money or oil whatever...u will never connect the dots

Pedro's picture

Say it isn't so Kengland.  I have got some puts to profit from.

Shameful's picture

5-10 years?  Man that is downright bullish! And here I was thinking that barring a war this ponzi ends at the latest in 2013 and probably before that.

Calmyourself's picture

He is right years of pain and bullcrap to go.. Cable is on, NFL going to 18 game season, tbtf still tbtf...  Most people want this to continue as long as possible and Nov. 2 will not change anything.  Would you like to be known as the party that pushed reset...

plocequ1's picture

Bens reaction.. States? We don't need no stinking states. Let's save Amzn instead.

NOTW777's picture

hopey, changey

not working

system failure's picture

But, but, but the markets always continues to go up, how can this be??? They simply have to raise taxes for everyone for this to equal out and so they can hire even more people...just so the private workforce of who are left can simply fork out even more taxes for these special benifited people of the public workfarce...

system failure's picture

Better yet, maybe they should spend several hundred thousand dollars on an analysis as to why they are in such a shortfall. Only to come to the conclusion, of which, is much to obvious to a common neanderthal that a declining tax base, requires less gov't spending. Genius!!!

Seer's picture

The reason why a reduction hasn't happened faster is because corporations benefit from big govt: one only needs to look at the biggest corporate entities -banks- to see that; insurance companies also win big.  The recent sick-care bill was a prefect example of not delivering what would best serve the taxpayers, only the sick-care industry itself.

kaiserhoff's picture

Their name is legion.  This will kill the bastards, unless something else gets there first. 

The last of the working class in the Midwest and Midsouth are NOT going to work their asses off to pay pensions for a bunch of fat, useless bureaucrats from every state, school district, and transit authority.  There will be blood in the streets long before that happens. 

Welcome to the End Game.

 

Seer's picture

No, the working class is going to work its ass off for the likes of Wal-Mart...

Not until people get it through their heads -no gods, no masters- will this enslavement end.  those who believe it's a govt vs. "private business" issue just doesn't get the Big Picture.

ZeroPoint's picture

I am waiting for the neocons to trot out the 'moral hazard' argument for bailing out the public.

infotechsailor's picture

it might be the neocons who trot out this argument, but where were the dems when bush  McBama were bailing out the TBTF zombie banks?

 

Either way, don't label Schiff/RonPaul/or myself as neocons for calling out the moral hazard of bailing out either public or private debt.

Bringin It's picture

News Flash! - There are no Dems.  There are no Repugs.  It's all kabuki to keep you in your place.

ZeroPoint's picture

TARP started under Shrub. But I won't deny it - Barry did fuck things up royally and continues to fuck things up today.

Seer's picture

I think you meant "national security" rather than "moral hazard.

tony bonn's picture

anyone wondering what putrid piece of crap bernankrupt would put in his cart on his next shopping spree with paris hilton can stop wondering....

rle1221's picture

DearLinda,                  The the check is in the mail .                 Love Ben                                                                                               

willien1derland's picture

Harrisburg Mayor Linda Thompson to replace Larry Summers!!! Calling Ben 'Backstop' Bernacke - Call on Line 1!

Mad Mad Woman's picture

Oh please, don't even say that. The Harrisburg mayor is batshit crazy! Really. I live in Harrisburg. I know.

Implicit simplicit's picture

The US went through the most unbelievable massive overleveraged

                       

fiasco bubble ever created just a couple of years ago. This bubble was not deflated, and the repurcussions will be felt for years to come.The banks were saved, so the hurt must show up in other places. It just doesn't evaporate.

It will eventually work its way back to the banks again. Follow up waves after a tsunami are still huge, but  more frequent.