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Harrisburg Requests Last-Ditch Rescue Financing From State, Says Alterantive Is "Full Blown Financial Crisis"
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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They're going to start taxing shale gas.
So its EROEI goes negative? Smart plan.
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.
Edit: ROI.
"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
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.
Shhh! Don't look down.
Monetary levitation on your back, Jack.
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......
EXACTLY!!! And the market will rally 3% on the good news...as Ponzipalooza sweeps the nation...
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...
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Muni's will be the next leg of this crisis, along with Ireland...
Comment from MichaelC:
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!
Translation:
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.
Is there an ETF to short lawyers?
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...
Awww...prep school bitches went Ivy League and gotta pay a big loan back. *sniff*
Learn to swim, pussy.
Here we go, the municipal 2B2Fail race to the bottom.
The Harrisburg IOU becomes the Pennsylvania IOU.
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..."
"Can you say 'Default?' I knew you could."
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.
this will never end now. they help here, and there will be nothing that will not be "bailed out"
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.
Who junked him? He's right. It's not time yet for the apocalypse.
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.
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.
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!
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
Say it isn't so Kengland. I have got some puts to profit from.
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.
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...
Bens reaction.. States? We don't need no stinking states. Let's save Amzn instead.
+1
https://webdisk.lclark.edu/econ/steinhardt2010/steinhardt2010.html
hopey, changey
not working
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...
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!!!
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.
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.
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.
I am waiting for the neocons to trot out the 'moral hazard' argument for bailing out the public.
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.
News Flash! - There are no Dems. There are no Repugs. It's all kabuki to keep you in your place.
TARP started under Shrub. But I won't deny it - Barry did fuck things up royally and continues to fuck things up today.
I think you meant "national security" rather than "moral hazard.
anyone wondering what putrid piece of crap bernankrupt would put in his cart on his next shopping spree with paris hilton can stop wondering....
DearLinda, The the check is in the mail . Love Ben
Harrisburg Mayor Linda Thompson to replace Larry Summers!!! Calling Ben 'Backstop' Bernacke - Call on Line 1!
Oh please, don't even say that. The Harrisburg mayor is batshit crazy! Really. I live in Harrisburg. I know.
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.
Comprehensive Annual Financial Report ( CAFR) should show net income from county and state investments. These are the "RAINY DAY" funds, or second balance sheets KNOWBODY EVER TALKS ABOUT. For the United States, as a whole, CAFRs earned 50-70 trillion dollars annually. PROFITS ANYBODY??? The press, media neveh-eveh mention this. It is time that people stand up and tell TPTB to sell their worldly assets and stop taking taxes or anything more from the people. WE ARE BROKE, they are NOT!
Are you the person who blogs about CAFR's? I've got several years of them on my desk here for my city, and much of their balance sheet assets are property. While some funds are reserves, many are reserves intended to meet existing debt obligations. Other funds are actually operational funds that will deplete as time goes on and revenue declines.
Sure (in some cases) these funds can be spent this year, but then they will be totally bankrupt the next. Since political orgs are not structured for liquidation, this benefits no one.
Besides, all governmental entities are already insolvent due to their ponzi pension schemes.
Please note, I'm not defending the practices of these leeches, but they are fast running out of local blood.
Muni's to boom? Given that the IRS has taxable Build America Bonds now, I expect them to completely replace the hated tax-free munis.
In the first 14 months of the BAB program, California, for instance sold nearly $23B of them.
In that same period (4/3/9 - 5/31/10), nationwide there were 1306 issuances for $106B, accounting for 21.2% of total munis issued. In the last month of the report, the monthly total was 33%.
According to the IRS, they are the best thing since sliced bread... er... make that the payroll withholding tax.
Is it BK for sure this time, or is it just another PR scheme.
Well, if they don't need money now, then it's quite possible that in the future they will (that's why there are munis!), in which case it doesn't serve them well to appear to be bankrupt. Oh, wait! if they file bankruptcy then maybe they can still get money, you know, all those offers for credit cards?!
" threatens its ability to pay vendors and meet payroll,"
Now, we're getting somewhere. Maybe the good Mayor of Harrisburg might want to consider some LAYOFFS? Get the public payroll and pensions and absurd health care benefits off the backs of the public.
20% pay cuts for all government employees would be a grand start, though I know it will never happen. The only solution, therefore is a good, old-fashioned tax holiday, engineered from the bottom up by those unwilling to continue funding a bloated, self-serving, rapacious government machine.
I don't know the details yet, but Obamacare is going to completely restructure gov. employee health care benefits. Rumor has it that you are either going to see insane deductibles, or you will go to the new medical savings acct. structure.
Next week, the secrets will be let out in mandatory (as per the Obamacare law) meetings.
Yeah, here they're threatening to cut sherrif deputies. Pretty clear sign of being at wits end given that that's political suicide (of course, the opposing party will get in and be faced with having to repeat the same fucking thing). I'm rooting it on, hoping that it'll catch on at the national level, that we'll see the CIA and FBI closed down to budget problems...
http://finance.yahoo.com/tech-ticker
This guy says this will start a wave of chapter 9, which he says is a good thing actually. He also says the Fed is going to revive the consumer by pushing down mortgage rates to 3.75, and that "this puts money in consumers pockets for 30 years.."
bless their insanity. of course if you haven't a debt to try and make money from, i guess you are screwed. who knew taking on debt you couldn't hope to repay was the road to riches???
so the FED is now running a DEFLATION target. (remember Bernanke's inflation target?) although perhaps it will be a disinflation, or redisinflation target, or some other newspeak.
The fun side effect of (correctly) halting the foreclosure process is that it extends the timeline of zero property tax collections on these properties. Ergo, another nail in the coffin for muni finances.
Great observation. Here I was thinking this was going to keep people in their houses longer without having to pay their nut and therefore continuing to spend freely and support the zombie economy. How long to sort all this out? I'll bet the banks and TPTB hope long enough for the real economy to gain traction so all this nasty fraud can be forgotten in the next round of good times. A pipe dream to be certain but these are strange, desperate days.
Mr. Funk:
I could be mistaken, but I believe that in most states, the mortgage Servicer is obliged to pay the taxes, or at least escrow them, while the property is in foreclosure.
But your point is well taken.
Full Blown, starring Jill Kelly.
Updated GOLD monthly chart:
http://stockmarket618.wordpress.com