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Stockton Becomes Biggest US City To Declare Bankruptcy (It's Official)

Tyler Durden's picture




 

A mere nine months after we first discussed the inevitability of Stockton, CA.'s bankruptcy, a judge has ordered today that the city will now become the most populous in the US to be declared bankrupt.

  • *STOCKTON CREDITORS DIDN'T NEGOTIATE IN GOOD FAITH, JUDGE SAYS

Creditors are pushing to get the city out of bankruptcy but the judge states that "by any measure" the city was insolvent. So, in summary, yeah, it was broke years ago, it still is broke - despite the best efforts by the Central Planning Reserve to reflate the same housing bubble that was the primary reason for the city's insolvency in the first place. Only this time, it's official!

Via Reuters:

Stockton, California, was ruled eligible for bankruptcy protection under Chapter 9 of the U.S. bankruptcy code, a U.S. judged said on Monday, turning aside creditors' arguments that the city was not truly insolvent when it sought protection last year and had improperly failed to seek concessions.

 

In a case that has been widely watched by the $3.7 trillion municipal bond market, U.S. Bankruptcy Judge Christopher Klein said Stockton had established during last week's three-day trial that it had met requirements to be found eligible to proceed with its municipal bankruptcy case.

 

Officials in the city of nearly 300,000, the largest city so far to have filed for municipal bankruptcy, will now be allowed to start drafting a so-called plan of adjustment for the city's debts.

 

The case is expected to pit municipal bondholders against the California Public Employee Retirement System, which manages pensions for Stockton and many other California governments.

 

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Mon, 04/01/2013 - 15:28 | 3396876 Cursive
Cursive's picture

Bondholders vs. public pensioners!  Grab the popcorn!  Surely there's a Survivor-type reality show in here somewhere.

Mon, 04/01/2013 - 15:28 | 3396885 ACP
ACP's picture

Wouldn't that be bondholders vs. taxpayers then?

Mon, 04/01/2013 - 15:33 | 3396897 zorba THE GREEK
zorba THE GREEK's picture

It is more like pensioners vs taxpayers.

The bondholders hold squat. 

Mon, 04/01/2013 - 15:36 | 3396915 Ancona
Ancona's picture

Survivor? Try Lord of the Flies brother! This is going to go biblical.

Mon, 04/01/2013 - 16:10 | 3397087 francis_sawyer
francis_sawyer's picture

Sooner or later, you run out of other people's...

~~~

AWWW ~ FUCKIT... You'll just deny it in the end anyway...

Mon, 04/01/2013 - 18:05 | 3397474 Son of Loki
Son of Loki's picture

"By 2009 Stockton had accumulated nearly $1 billion in debt on civic improvements, money owed to pay pension contributions, and the most generous health care benefit in the state — coverage for life for all retirees plus a dependent, no matter how long they had worked for the city."

 

Is it any wonder?

 

http://finance.yahoo.com/news/judge-rules-stockton-calif-enter-191118955...

Mon, 04/01/2013 - 18:17 | 3397505 fourchan
fourchan's picture

detriot which will be next to go under will be bigger.

Mon, 04/01/2013 - 19:58 | 3397779 Henry Chinaski
Henry Chinaski's picture

It's all the republicans' fault.

Lessons From a Comeback
http://www.nytimes.com/2013/04/01/opinion/krugman-lessons-from-a-comeback.html?hpw

Mon, 04/01/2013 - 20:14 | 3397812 Raymond K Hessel
Raymond K Hessel's picture

How many Sons of Anarchy logo'ed t-shirts & shit do you have to sell to cover $1 billion in debt???

Mon, 04/01/2013 - 20:10 | 3397802 Silver Garbage Man
Silver Garbage Man's picture

Yeh Detroit will need 2 or 3 dozen of those shiny new homeland armoured vehicles.

Mon, 04/01/2013 - 20:11 | 3397805 steelhead23
steelhead23's picture

While such benefits are entirely irrational, the big question, to me at least, is who has the superior claim to Stockton's assets?  Bondholders or employee/pensioners?  This little blurb would be far more interesting had it been written by a bankruptcy attorney.  And those decisions would have enormous repercussions.  Let us say that bondholders are given massive haircuts while pensioner aren't.  What would happen?  I will tell you what would happen (if such a decision stood as the law of the land) - every holder of CA munis would head for the exits.  Prices would head for the floor and rates would raise the roof.  Economic development in CA would slow to a crawl.  But if the courts head in the opposite direction - screwing pensioners and employees - there just might be riots.

Someone up above suggested we all pop some popcorn and watch the fireworks.  I am reminded of the fine citizens of Washington DC and northern Virginia that thought it would be fun to watch the First Battle of Bull Run but hurriedly left the scene when musket balls went whizzing by.  While I do wish to watch, I sure as hell will stay out of Stockton until the all clear signal is given.

Tue, 04/02/2013 - 06:29 | 3398679 Handful of Dust
Handful of Dust's picture

Test case most likely. Perhaps many cities to follow as orderly restructuring may need to occur to renegotiate some contracts if they cannot be hammered out pre-bankruptcy.

Mon, 04/01/2013 - 15:36 | 3396921 NoDebt
NoDebt's picture

It's a drunken bar fight.  Pensioners, taxpayers, bond holders, employees..... all in one giant melee because the beer taps stopped flowing.  Out of that list, guess who's gonna lose (worst) in the end?

Mon, 04/01/2013 - 15:40 | 3396944 ParkAveFlasher
ParkAveFlasher's picture

I think your order is correct.  Pensioners, taxpayers, bond holders, employees.

 

Mon, 04/01/2013 - 15:46 | 3396962 Pool Shark
Pool Shark's picture

Don't know about municipalities, but at the state level, Bondholders are at the top of the food chain in California.

Mon, 04/01/2013 - 19:05 | 3397642 KickIce
KickIce's picture

The GM bondholders probably felt the same.

Potential votes > rule of law

Mon, 04/01/2013 - 16:03 | 3397045 aerojet
aerojet's picture

Hoping pensioners.  Not because I'm a heartless bastard, but because it would be a bad precedent for the US if not.  The people who played the system to get those outsized retirement benefits should have them clawed back.  Those with modest pensions should have their honored if at all possible.

Mon, 04/01/2013 - 16:30 | 3397174 James_Cole
James_Cole's picture

Hoping pensioners.  Not because I'm a heartless bastard, but because it would be a bad precedent for the US if not.  

Right, so make sure Wells Fargo gets their pound of flesh and the pensioners who at worst took advantage of the bankers avarice get cat food? 

The other precedent set here would be; fuck the pensioners, protect the morons lending the money. 

WFC was one of the chief engineers of this mess, let their bonds go to nothing. 

MBI & WFC deserve to get fucked over for this, if it happens that's great. 

Mon, 04/01/2013 - 18:08 | 3397444 Boxed Merlot
Boxed Merlot's picture

WFC was one of the chief engineers of this mess, let their bonds go to nothing...

 

If I remember correctly, WFC got title to the parking garage(s) their bonds subsidized and are able to use the values to hypothecate further excesses in addition to collecting fees from us.  I won't shed a tear for them.

In fact, now that I think about it, Stockton should impose a punitive tax on their operations if our sovereignty is adversely affected by a future negotiation that would somehow benefit these parsites.

 

jmho.

Mon, 04/01/2013 - 22:02 | 3398064 Chuck Walla
Chuck Walla's picture

Right, so make sure Wells Fargo gets their pound of flesh and the pensioners who at worst took advantage of the bankers avarice get cat food? 

Except for that rat bastard in charge of Alameda County who gets $433,000 per year pension, the excuse being she could have run a Fortune 500 company.

 

The whole idea of public service long ago died when they got a good look at the profits and perks. And how stupid the people paying for it are...

FORWARD SOVIET!

Mon, 04/01/2013 - 16:35 | 3397189 Meat Hammer
Meat Hammer's picture

www.ksfo.com 560am out of San Francisco does "Whistle-blower Wednesdays" from 5-9 a.m. each week.....people who work for or with state and local municipalities call in, sometimes using the Darth Vader voice disguiser, to report on the fraud, waste, and corruption in the California public sector.  Listen for a week or two and you will understand clearly why California is doomed.  

Here's an example - public employees in certain departments are getting paid walk-from-the-car-to-the-cubicle time.  Yep, you read that right.....they get paid for the time it takes to walk from the parking garage to the office.  I'm sure that will evolve into being paid for driving to work, then getting dressed for work, then sleeping in order to stay awake during work (allegedly), and so on.

 

Mon, 04/01/2013 - 16:54 | 3397251 James_Cole
James_Cole's picture

www.ksfo.com 560am out of San Francisco does "Whistle-blower Wednesdays" from 5-9 a.m. each week.....

If there were truth in advertising the show would be titled "irrelevant bullshit to outrage simpletons."

OMG public employees are ripping the system 20 or 30$ extra a day charging to walk from their cars to their cubicles?? Ring the alarm bell the apocalypse is here!

It's funny how stupid people are, , always getting mad about the most inconsequential nonsense while cheerily being marched off a cliff. 

Mon, 04/01/2013 - 17:03 | 3397283 Meat Hammer
Meat Hammer's picture

There are hundreds more stories that are much worse, but I don't want you to have to dumb yourself down to listen.  

 

Mon, 04/01/2013 - 17:33 | 3397376 James_Cole
James_Cole's picture

I'm not under any delusion I am above the fray, just easier to call out stupidity in others than in oneself. The media most people seem to seek generally appears to me based on the 'outrage' model, but interestingly never outrage of any consequence. 

Easy to get mad at people individually taking advantage of a stupid system, but very rarely is the system itself called into question. The real villains get to stand by mostly unscathed while the peons rip each other to shreds. 

This bankruptcy thing is a good example, everyone gets mad at the counties for wasting money blah blah blah but almost no one stops to say, wait, why the fuck were the counties ever able to secure these loans in the first place? How were the loans structured? What was the insurance? Why should idiotic lending be protected??

Those quesitons require thought, which is a lot more effort than outrage. 

Mon, 04/01/2013 - 19:15 | 3397677 Not My Real Name
Not My Real Name's picture

"... everyone gets mad at the counties for wasting money blah blah blah but almost no one stops to say, wait, why the fuck were the counties ever able to secure these loans in the first place?"

Really? Who gives a fuck why? The fact is, elected officials made piss-poor financial decisions and now the taxpayers will probably be on the hook for them. For christ's sake. God forbid we ever hold aybody accountable for anything any more.

 

Mon, 04/01/2013 - 19:44 | 3397746 James_Cole
James_Cole's picture

Really? Who gives a fuck why? The fact is, elected officials made piss-poor financial decisions and now the taxpayers will probably be on the hook for them. 

If they can't get access to the money they can't waste it. If more bondholders go belly-up they might think twice about throwing money at their corrupt political friends. 

Mon, 04/01/2013 - 21:52 | 3398045 Not My Real Name
Not My Real Name's picture

As long as the power to tax exists, there will always be waste.

Mon, 04/01/2013 - 17:49 | 3397429 LawsofPhysics
LawsofPhysics's picture

True, but I think the real interesting bit will be exactly how the rest of the country feels about bailing out those "shiny happy people" in Cali.  I thought moonbeam said everything was "fixed"?    The Texans I know sure as hell don't give a rat's ass about those arrogant fucks.

Mon, 04/01/2013 - 18:08 | 3397483 Son of Loki
Son of Loki's picture

Life of Riley:

 

$200,000 Lifeguards to Receive Millions in Retirement

 

http://townhall.com/columnists/davidspady/2011/05/08/$200,000_lifeguards_to_receive_millions_in_retirement/page/full/

 

...and they get to watch all those semi-naked Pam Anderson girls too !

Mon, 04/01/2013 - 18:18 | 3397511 yogibear
yogibear's picture

What a life! Babe watch.

Mon, 04/01/2013 - 15:52 | 3397003 smlbizman
smlbizman's picture

ok, what bank in stockton are we going to "tax" deposits to fix this one?

Mon, 04/01/2013 - 16:15 | 3397114 Sabibaby
Sabibaby's picture

Legalize marajuana and guns, tax the hell out of them and there you go!

Mon, 04/01/2013 - 17:47 | 3397426 donsluck
donsluck's picture

Huh? Guns ARE legal (and taxed). As for marijuana, it grows like a weed and any half-conscious idiot can grow mind blowing dope, no problem. So how do you tax that? Making possession legal and production controlled? No problems solved.

Mon, 04/01/2013 - 20:42 | 3397876 Freddie
Freddie's picture

Hilarious and true.  It is a damn weed.  Probably harder to kill than grow if it is like crabgrass.   These idiots growing premium organic pot claim legalization is killing prices.  Let people grow it at home so the govt scum cannot tax it.  I don't like pot but I like cartels and govt cartels less. 

Mon, 04/01/2013 - 16:04 | 3397055 A Nanny Moose
A Nanny Moose's picture

But the pensions are the bondholders.

Mon, 04/01/2013 - 17:36 | 3397383 ronaldawg
ronaldawg's picture

 COOL - Time to cancel all the ridiculous pensions to Social Security levels - no more free healthcare for retired City workers.  Crush the unions.  Then to the next city and finally to the state.

Where is MDB at?

Mon, 04/01/2013 - 18:08 | 3397479 Hobbleknee
Hobbleknee's picture

Hmmmm... pensioners pay taxes too.  Income tax is not the only tax.

Tue, 04/02/2013 - 02:47 | 3398510 dunce
dunce's picture

Ordinarily i am on the taxpayers side of these deals but as long as the liability is not shifted to the other states, i am in favor of sticking it to all those dot com millionaires and billionaires that financed all the campaigns for liberal democrats. Now they can pay for all those public pensioners. As obama is fond of pointing out, they can afford it. It does not matter that the pensioners never produced much in the first place. I would like to see liens on their giant companies so they can not relocate and leave the mess behind.

Mon, 04/01/2013 - 15:38 | 3396927 Bastiat
Bastiat's picture

Them too but you have limits on taxes:  Prop 13 in CA caps real estate tax and competitive reality caps sales tax.

So that's the revenue side, he's talking about the expense side--and the big part of that is pensions and bonds.  So who takes the hit and how much?

Mon, 04/01/2013 - 15:54 | 3397012 Cursive
Cursive's picture

@Bastiat

This.

Mon, 04/01/2013 - 15:30 | 3396892 zorba THE GREEK
zorba THE GREEK's picture

Stockton is just the largest city to file.

Most major U.S. cities are already bankrupt

and just robbing Peter to pay Paul.

Got to keep the Ponzi going.

Mon, 04/01/2013 - 15:47 | 3396976 Bangin7GramRocks
Bangin7GramRocks's picture

If you were fucking dumb enough to buy bonds in California bubble cities, you get what you deserve; to eat a big bag of dicks. GOOD DAY SIR!

Mon, 04/01/2013 - 16:07 | 3397072 Urban Redneck
Urban Redneck's picture

Orange County was some bizarre aberration... It could never happen again.. Rinse, Repeat is a is some tinfoil hatter mantra...

Mon, 04/01/2013 - 16:53 | 3397249 smlbizman
smlbizman's picture

stop thinking people are buying this shit thinking it is good.....the buyers are earning fees and commish et.al....for some stupid fucker that trust them...the broker at the end could give twoshits if its good or not....last sucker holding the bag of shit wins...and thats the ubiqduitous you

Mon, 04/01/2013 - 17:42 | 3397407 eatthebanksters
eatthebanksters's picture

Motown is gonna be singin the same song soon!

Mon, 04/01/2013 - 16:20 | 3397131 MachoMan
MachoMan's picture

Yes, but eating a big bag of dicks on your speculation isn't socially acceptable...  so, we ensure taxpayers and the youth (given the time it will take to get out of this quagmire) eat a bag of dicks after grinding them up and feeding them intravenously.

Mon, 04/01/2013 - 16:28 | 3397162 Bangin7GramRocks
Bangin7GramRocks's picture

Eventually bondholders will lose. I'm amazed how many people on here blame the well-paid gubmint workers. This information was public. Why would anyone buy the bonds if they had such an out-sized pay structure and benefits package? So if you did because of the high yield, bend over and take it. A few stitches and bed rest will heal the anal contusions.

Mon, 04/01/2013 - 16:46 | 3397226 Meat Hammer
Meat Hammer's picture

I blame the gubmint workers because these are the same cocksuckers who vote to raise my taxes, vote to create new and completely useless regulatory agencies that are a front for increased public-union power, and vote for people like Jerry Brown who drive businesses and jobs out of the state, all the while making sure they get to retire at 55 and go fishing while I get to work until I'm 65 to pay for it.  

Fuck em...I hope I see them at McDonald's picking up trash in the parking lot.  I'll spit on them if I can get a good shot and the wind direction is right.

Mon, 04/01/2013 - 17:37 | 3397391 ronaldawg
ronaldawg's picture

You forgot to mention that a LOT of the gubmint workers are in "make work" jobs and most gubmint workers don't really provide the full day of work.  FUCK. THEM.ALL (gumment workers).

There I feel better now.

Mon, 04/01/2013 - 17:44 | 3397415 eatthebanksters
eatthebanksters's picture

Meat Hammer you're my new hero!

Mon, 04/01/2013 - 17:58 | 3397456 donsluck
donsluck's picture

A pretty broad stroke there, dude. Brown won handily (not just from government workers' votes). Don't forget the state provides justices services. Those "cocksuckers" ensure your day in court. My wife is a teacher, who will NOT be able to retire at 55. Here we are in the middle of a bankster rape of the economy, and you blame the workers.

Mon, 04/01/2013 - 21:14 | 3397957 Meat Hammer
Meat Hammer's picture

Brown won handily, which implies that the vast majority of the hard-working, esteemed citizens of my Golden State are innocent in all of this.  Ah, yes, I forgot about the other non-gubmint workers who thoroughly researched all of the issues, studied the history of fiscal policy, objectively looked at Meg Whitman and THEN voted for Moonbeam -  they include Baby Mama on welfare, the college kid with the Che Guevara t-shirt, the filthy rich Bay Area liberal with a 10,000 sq ft house and Prius in the driveway who is stricken with rich guilt, the Mexican guy who is a legal citizen and has 12 illegals under his roof, and the 19-year-old Oakland high school student with his dope Obama t-shirt and saggy pants.  Did I miss anyone?

The occupation of teacher doesn't absolve anyone of guilt, no matter how many shrines they build to themselves.  

Banksters are only part of the equation.

The Constitution ensures my day in court.

 

Tue, 04/02/2013 - 02:58 | 3398519 dunce
dunce's picture

No, not just government workers, there were a couple of million that do not work but still get government checks and/or benefits. All those tech company super rich also vote a straight democrat ticket.

Mon, 04/01/2013 - 18:34 | 3397561 Guy Fawkes
Guy Fawkes's picture

Typical blaming the victims mentality. Continue to display your ignorance please. 

Mon, 04/01/2013 - 21:10 | 3397945 John_Coltrane
John_Coltrane's picture

Hammer, just to say, I consistently love your comments (OK confirmation bias up the wazoo).  We're both mad as hell and aren't going to take these parasites anymore!  Work, produce or die-its not just for evolution anymore.

Mon, 04/01/2013 - 21:23 | 3397975 Meat Hammer
Meat Hammer's picture

Thanks, Coltrane.  

On a side note, since the Jameson has kicked in and my wife is out with the kids.....

People were shocked that gay marriage was voted down in this state.  I wasn't.  The social issues aren't the main reason why the majority consistently votes democrat...it's just to vote for politicians who offer more goodies.  It's makers vs takers in Cali.  

Mon, 04/01/2013 - 15:53 | 3396996 McMolotov
McMolotov's picture

I find it incredibly ironic that in the midst of "all-time highs" for the markets, this particular city — whose name literally means Stock Town — is declaring bankruptcy.

Mon, 04/01/2013 - 17:15 | 3397327 RichardP
RichardP's picture

There is more than one meaning for stock.  In the case of Stockton, I'm pretty sure their stock was cattle and other livestock.

Mon, 04/01/2013 - 19:46 | 3397753 KickIce
KickIce's picture

Rename it Stockholm, then you have Stockholm  syndrome to Ben’s printer, just like the  rest of the world.

Mon, 04/01/2013 - 18:21 | 3397520 yogibear
yogibear's picture

But Illinois is different.  It's Obummer's state.

Mon, 04/01/2013 - 15:36 | 3396922 PD Quig
PD Quig's picture

Yeah it's the 1% against the 1%...NOT.

In the 1990s, Stockton granted its employees some of the most generous and unsustainable labor contracts in the State of California.… Safety employees could now retire at the age of 50.… Many safety retirees today earn 90 to 100 percent of what they made when they were still on the job.

Stockton went even further than most other cities and granted things like unlimited vacation and sick time that could be cashed out when an employee retired, and added pay categories for almost everything imaginable.… Our public safety employees were costing us on average more than $150,000 a year each. That’s three times more than most of us in Stockton make in a year.

           The Stocktom “Lamborghini” health plan the city’s employees received:

This was free medical care for a retiree and a dependent for the rest of their lives. No co-pays, no generic requirements, no HMOs, and no premiums. See any doctor, stay in any hospital, purchase any drug, and just send the bill to the city of Stockton.

 

Mon, 04/01/2013 - 15:46 | 3396971 McMolotov
McMolotov's picture

But in fairness, who could have foreseen that such generosity with taxpayer money couldn't continue forever?

/sarc

Mon, 04/01/2013 - 18:12 | 3397492 Son of Loki
Son of Loki's picture

Any chance they're still hiring? Am I too late?

Mon, 04/01/2013 - 18:35 | 3397563 RafterManFMJ
RafterManFMJ's picture

Yup too late SoL; you're SOL.  In a few years the Stocktown Pubic Employees will be paid in tips. And here's a tip for you brokeback bastards - Alpo is the best tasting dog food.

Mon, 04/01/2013 - 15:48 | 3396983 SheepDog-One
SheepDog-One's picture

Socialist pipe dreams bottom line...'Come work as a city employee for a couple years and you get guaranteed red carpet retirement package, full medical, dental, hefty paycheck, etc'....it's more free lunch promises that obviously can never be met but unfortunately it seems the lesson will never be learned.

Mon, 04/01/2013 - 15:59 | 3397032 Dr. Richard Head
Dr. Richard Head's picture

No shit.  I tried to explain the math to my firefighter brother one day.  I asked how much he has to contribute to his pension, he said 7% and the city matches it dollar for dollar.  I asked how many years he has to work before he can retired, he said 30 which will put him at just 50 years old.  I asked how old he expected to live and he said 30 more probably.  I asked how much they pay out for those thirty years, he said 60% of his highest three years of compensation averaged out. 

So 14% of his salary contributed for 30 years to pension.  30 years paid out at 60% of highest of three year average salary?  What investment vehichle can do that sort of fucking magic. 

Oh well.  Back to Words with Friends or whatever the fuck.

Mon, 04/01/2013 - 16:24 | 3397142 MachoMan
MachoMan's picture

That's some easy mental math there too...  I always try and break things down for people in the easiest of ways...  it's the only chance you have at the message getting through...  but, they don't want to acknowledge that they're actually sucking more money out of the system than a welfare queen... 

Mon, 04/01/2013 - 18:34 | 3397562 Cathartes Aura
Cathartes Aura's picture

BLASPHEMY!!!!!!

lol, +1 for truths.

Mon, 04/01/2013 - 16:03 | 3397053 aerojet
aerojet's picture

Uh, yeah, that all needs to stop right now.

Mon, 04/01/2013 - 16:43 | 3397216 cpzimmon
cpzimmon's picture

For a second there I thought you were talking about Greece or Cyprus.

Mon, 04/01/2013 - 17:09 | 3397306 Accounting101
Accounting101's picture

Really, 100% of of their peak earnings for retirement? Source it please!

Mon, 04/01/2013 - 17:59 | 3397459 Clycntct
Clycntct's picture

You be no accounting for me. Read Much?

"So 14% of his salary contributed for 30 years to pension. 30 years paid out at 60% of highest of three year average salary? "

Mon, 04/01/2013 - 21:22 | 3397972 Freddie
Freddie's picture

Dude - it is worse than that.  In their retirement year they get a lot of overtime.  If they were making $100K - they get loads of OT to $135K.  This way they retire with close to $135 K a year.   It gets worse.  Then they come back and get rehired and do it all again at the same pay rate.  They pull other crap so it is even worse than that. 

Mon, 04/01/2013 - 17:03 | 3397127 Banksters
Banksters's picture

Finance, otherwise know by the names:  rape, pillage, and destruction.

 

In other news, one has to wonder about the  collateralized derivatives market.  

 

 

Mon, 04/01/2013 - 16:41 | 3397211 Stuck on Zero
Stuck on Zero's picture

Praise be to Allah if the bulk of the bondholders are the public employee pensions.

 

Mon, 04/01/2013 - 16:49 | 3397236 True.North
True.North's picture

From CNBC (I know, I know): The $900 million that Stockton owes to the California Public Employees' Retirement System to cover pension promises is its biggest debt. So far Stockton has kept up with pension payments while it has reneged on other debts, maintaining that it needs a strong pension plan to retain its pared-down workforce.

From the wording, I am unable to tell if CALPERs is a creditor or these are just pension obligations (and if so, where do they fall in the cap structure?). If it's the former, it appears Stockton just subordinated the non-CALPERS debt. How the fuck is that legal? 

Mon, 04/01/2013 - 19:31 | 3397714 SmittyinLA
SmittyinLA's picture

its bond holders and pensioners and illegal aliens Vs Taxpayers 

 

they'll all agree to "tax whitey", even the white retirees who will be living in another state

Mon, 04/01/2013 - 15:27 | 3396878 zorba THE GREEK
zorba THE GREEK's picture

He who bankrupts first, bankrupts best.

Mon, 04/01/2013 - 15:36 | 3396879 Lost Wages
Lost Wages's picture

Stockton, home of the 90's greatest slacker rock band, Pavement. 

http://www.youtube.com/watch?v=AnrM4UjaQmY

Slackers.

Mon, 04/01/2013 - 15:29 | 3396881 Stoploss
Stoploss's picture

Krugman said California had recovered the best out of all the states with their tax raises and the general hammering of any business that dare profit...

 

Must be a different Stockton..

Mon, 04/01/2013 - 15:37 | 3396926 nmewn
nmewn's picture

California, this one never gets old...

http://www.youtube.com/watch?v=UjbPZAMked0

Mon, 04/01/2013 - 15:40 | 3396934 Bastiat
Bastiat's picture

Classic!  Maxine Waters could do as well.

Mon, 04/01/2013 - 15:51 | 3396995 Bastiat
Bastiat's picture

It was really quite deft the way she talked her way out of saying "socializing"  by defining it!!! LOL!  "by the government taking over and running your companies."  Phew, close one Maxine.  Take your boots off before you try tap dancing.

Mon, 04/01/2013 - 16:02 | 3397041 nmewn
nmewn's picture

lol...give em enough rope and they'll hang us all.

I was gonna pull up the "posers" ridiculing Armando Falcon but everyone should be getting the point by now ;-)

Mon, 04/01/2013 - 16:19 | 3397117 ebworthen
ebworthen's picture

What a pompous ass Pete Stark is.

"The larger the national debt the greater the wealth of the nation."

Is it any wonder Stockton is declaring bankruptcy?  Is it any wonder that with epic buffoons like Stark the U.S. is hopelessly insolvent and teetering on the brink of collapse?

Mon, 04/01/2013 - 16:37 | 3397193 nmewn
nmewn's picture

Its amazing eb.

Here's a good one (from the One) who blew through 5 trillion in five years...

"My Administration is dedicated to helping people make sound decisions in the marketplace. Last year, we partnered with businesses and community leaders to roll out new public and private commitments to increasing financial literacy." (Dear God save us from more help) "We released a new financial capability toolkit (LOL...a whaaa?) to help schools and employers as they launch their own initiatives. And with our College Scorecard and Financial Aid Shopping Sheet, we are working to give families clear, transparent information on college costs so they can make good choices when they invest in higher education. (Don't get me started on that word "investment" when mouthed by the state) "Together, we can prepare young people to tackle financial challenges -- from learning how to budget responsibly to saving for college, starting a business, or opening a retirement account." (This from the guy who STILL hasn't presented a budget request) "Financial capability also means helping people avoid scams and demand fair treatment when they take out a mortgage, use a credit card, or apply for a student loan. My Administration continues to encourage responsibility at all levels of our financial system by cracking down on deceptive practices and ensuring that consumers are informed of their rights." (As long as you use banker debt and your last name is Corzine, we've got your back...lol) http://www.whitehouse.gov/the-press-office/2013/03/29/presidential-proclamation-national-financial-capability-month-2013 Its like I'm living in an alternate universe.
Mon, 04/01/2013 - 16:59 | 3397271 Accounting101
Accounting101's picture

Geez, lets think about this for longer than two seconds. What precipitated the $5 trillion in debt since 2008? And no asshat, I am not carrying water for Obama. He is a corporate and financial industry whore. Who has, according to former SIGTARP Neil Barofsky, received $23 trillion in taxpayer bailouts?

If you answer pensioners, SS recipients, food stamp recipients, or those collecting unemployment benefits, you are a useful idiot. A tool of the Oligarchs.

Mon, 04/01/2013 - 17:10 | 3397305 ebworthen
ebworthen's picture

Funny.

Mon, 04/01/2013 - 19:24 | 3397702 nmewn
nmewn's picture

"Geez, lets think about this for longer than two seconds. What precipitated the $5 trillion in debt since 2008? And no asshat, I am not carrying water for Obama"

Going back how far, azzzhat?

You wanna start with Wilson, the creation of the Fed WHICH FACILITATES ALL THIS BULLSHIT, Social Security being put into the general fund under Johnson, his War on Poverty which never goes away, the CRA & Carter, Bwaney Fwank saying there is nothing wrong with Fannie Mae or what?

Don't give me this Johnny-Come-Lately "Obama is a corporatist" leftwing bullshit either...he was a card carrying member of the New Party who always enjoyed spending other peoples money just like any other fucking socialist...now (like Marx sucking off of Engels' money) he's aligned himself with his crony-socialist banker masters sucking the entire nations lifeblood...meaning yours too...now all of a sudden you have a problem with him?

If anyone is a tool of the oligarchs around here its you, you'll be hard pressed to EVER find where I endorsed bailing out anyone or anything, least of all perpetuating a welfare state...and UI is paid by the EMPLOYER...if you had ever been an employer in the US you would know this...but just like Obama you've never had to make a payroll and not give yourself a check in the process at times.

Douchenozzle.

Mon, 04/01/2013 - 17:32 | 3397333 ebworthen
ebworthen's picture

Yes, amazing.

"Save money so we can debase it, or just steal it outright.  Invest in the markets, so our banker friends can gamble with your retirement.  And when they crash the system using corruption, rate rigging, buying fake ratings, and generally ignoring the rule of law - we let them walk and you lose.  So save and invest today.  We have your back(side)."

Mon, 04/01/2013 - 16:49 | 3397239 Accounting101
Accounting101's picture

Not sure whether Mr. Stark is a pompous ass, but he does seem to posses economic literacy. I would certainly have worded his above quote differently, but the implication is correct. Government debt equals private sector assests. That is just a basic economic fact that Tyler, Krasting, or any other contributer here at Zero Hedge will attest to.

Mon, 04/01/2013 - 17:10 | 3397312 ebworthen
ebworthen's picture

Even funnier.

Mon, 04/01/2013 - 17:15 | 3397330 Five8Charlie
Five8Charlie's picture

A debt which can't be paid back is _not_ an asset.

Mon, 04/01/2013 - 18:01 | 3397463 NihilistZero
NihilistZero's picture

But the assets bought with the debt remain in the hands of those who posses them.  If they improve/put to productive use said assets it could be said the debt led to wealth creation.It's kind of a chicken/egg argument but it is a working thesis, though I don't agree with it as it never works this way in the real world of specuvesting.  Their are few true capitalist, wealth creating endeavors happening in this country today.

Mon, 04/01/2013 - 16:57 | 3397267 Meat Hammer
Meat Hammer's picture

So when Stark said that Republicans were cutting taxes for the rich, thus creating the need for more borrowing, Jan should've pointed out that, based on Starks logic that debt is a sign of wealth, essentially it was the Republicans who should get the credit for creating more wealth due to the need for increased debt due to the tax cuts.  I think that would've ended the interview much sooner.  

Mon, 04/01/2013 - 17:02 | 3397282 Accounting101
Accounting101's picture

Actually, that would be correct. Tax cuts are stimulative and create debt. They never pay for themselves. Unless of course, things like economics and math don't matter.

Mon, 04/01/2013 - 17:11 | 3397317 ebworthen
ebworthen's picture

And in economics, math doesn't matter.

Mon, 04/01/2013 - 16:40 | 3397203 Banksters
Banksters's picture

Krugman is  a god damn fool.

Mon, 04/01/2013 - 16:52 | 3397229 cpzimmon
cpzimmon's picture

Comment removed. Like the City of Stockton.

Mon, 04/01/2013 - 16:49 | 3397240 cpzimmon
cpzimmon's picture

Here's my usual "Fuck You Krugman" to Dr. Krugman.

Mon, 04/01/2013 - 15:28 | 3396882 Antifederalist
Antifederalist's picture

Bye, bye muni market.   Meredith looking better all the time.

Mon, 04/01/2013 - 15:30 | 3396888 short screwed
short screwed's picture

Merideth Whitney is  laughing from beyond the grave

Mon, 04/01/2013 - 15:38 | 3396928 Lost Wages
Lost Wages's picture

R.I.P.

Mon, 04/01/2013 - 15:42 | 3396945 NoDebt
NoDebt's picture

I'm not dead yet!

- Meredith Whitney

Mon, 04/01/2013 - 15:45 | 3396959 fonzannoon
fonzannoon's picture

Nope she is out there pitching financial stocks and the US market every time I see her. Dirty pirate hooker...

Mon, 04/01/2013 - 15:45 | 3396960 NoTTD
NoTTD's picture

She's only mostly dead...

Mon, 04/01/2013 - 15:49 | 3396980 McMolotov
McMolotov's picture

She distinctly said, "To blave..."

Mon, 04/01/2013 - 15:55 | 3397009 fonzannoon
fonzannoon's picture

anyone watching this market right now? what a rigged mess. 

Mon, 04/01/2013 - 16:12 | 3397096 kito
kito's picture

stop this nonsense fonz....it cant be rigged when tbtf own the league, the coaches, the players, the refs, the stadium, make their own rules..........they are everything.....they are one.......there is nothing to rig..................its just how things are...accept it or else

Mon, 04/01/2013 - 16:28 | 3397164 fonzannoon
fonzannoon's picture

another week or so and I will be on to my garden. I am just passing the time.

Mon, 04/01/2013 - 16:42 | 3397215 valley chick
valley chick's picture

yeah fonz...watched it floating up...like any other day...30 more days and I will be canning my first crop...early garden peas. ;)

 

Mon, 04/01/2013 - 16:53 | 3397250 fonzannoon
fonzannoon's picture

good stuff valley chick. This could go on for a while.

Mon, 04/01/2013 - 18:20 | 3397513 valley chick
valley chick's picture

after the tuna article ...I am looking at getting yellow fin tuna in bulk to can..networking now with fishermen.  Trial balloon was the blue fin but wayyyy to much $$$$$ per pound.  Just when I think I am out of the normalcy bias I get caught again back in it. Should have known better with the tuna since I can practically anything.

Mon, 04/01/2013 - 19:11 | 3397669 kito
kito's picture

make sure the cans are bpa free

Tue, 04/02/2013 - 03:44 | 3398546 valley chick
valley chick's picture

kito, it is glass but the only lids out there that i know of that are bpa free are tattler. 

Mon, 04/01/2013 - 16:21 | 3397136 ebworthen
ebworthen's picture

Meredith alive and well talking her book on C.N.B.C. whenever she gets the chance.

Were you thinking of Ayn Rand?

Mon, 04/01/2013 - 15:30 | 3396890 More_sellers_th...
More_sellers_than_buyers's picture

The first of many.  I wonder how many of the bonds are owned by the public pensioners.  They are fighting themselves hahah

Mon, 04/01/2013 - 15:33 | 3396905 Bastiat
Bastiat's picture

Public pensions don't buy tax exempt bonds, generally.

Mon, 04/01/2013 - 19:08 | 3397654 Matt
Matt's picture

Are the tax exempt bonds subordinate to the non-tax exempt bonds?

Mon, 04/01/2013 - 15:35 | 3396913 short screwed
short screwed's picture

Yes, are they the evil creditors who "didn't negotiate in good faith"?

Mon, 04/01/2013 - 15:33 | 3396899 comrade rally monkey
comrade rally monkey's picture

Aaa insured cept for the fine printed clause.

Mon, 04/01/2013 - 15:33 | 3396902 Bastiat
Bastiat's picture

Bondholders and Bond Insurers?  I believe it was bond insurers who brought this case to court to avoid performing on their bond insurance policies. 

"About half of the $700 million of debt issued by bankrupt Stockton, California, is insured."

 

Mon, 04/01/2013 - 15:39 | 3396932 earnyermoney
earnyermoney's picture

Hope it's insured by AIG.

Mon, 04/01/2013 - 15:45 | 3396956 Bastiat
Bastiat's picture

Most of the insured market in the last 20 years was:  FGIC, MBIA, AMBAC.  They all go into the shit for shinola asset back securities game, providing their AAA credit stamp.  they were all essentially busted and the ratings were lost on all the bonds they insured.  So the bondholders AAA became  A- or whatever, instantly. These markdowns were more than offset by ZIRP however.  So the insurers or their half-zombie successors aren't eager to perform because, hey, they haven't got much money.  Not only that but without strong ratings, the insurers have no real way to make money going forward.

Mon, 04/01/2013 - 15:34 | 3396903 Lost Wages
Lost Wages's picture

My parents' financial advisor has them in a muni bond fund and an international bond fund. Nice that retirees have such safe, low-risk investments available to them with such decent yields.

Mon, 04/01/2013 - 15:34 | 3396906 LynRobison
LynRobison's picture

Stockton has fallen from the grandeur it enjoyed in those heady days of Victoria Barkley and her three sons Nick, Jarrod, and Heath, along with with daughter Audra. Barkleys! Stockton needs you again!

Mon, 04/01/2013 - 15:34 | 3396908 Sudden Debt
Sudden Debt's picture

Maybe I'll add it on our sightseeing route this summer.
THE KIDS WILL LOVE IT!!
LOOK KIDS!! BANKRUPT AMERICANS!!
don't throw cookies to them Ruben... they might bite your hand off and they're dangerous... and close down the window...

Mon, 04/01/2013 - 15:35 | 3396909 firstdivision
firstdivision's picture

If Stockton is broke, I'm pretty sure Sacramento isn't too far behind.

Mon, 04/01/2013 - 15:43 | 3396951 Jena
Jena's picture

You'd be right except Sacramento has the advantage of being the political center of the state.  Anyplace that attracts that many politicians and lobbyists will always be a little protected economically.

Mon, 04/01/2013 - 15:52 | 3396999 comrade rally monkey
comrade rally monkey's picture

Ie;harrusburg!

Mon, 04/01/2013 - 16:03 | 3397046 10mm
10mm's picture

Harrisburg,a shithole of maybe 50k population,that's what is fucked up.

Mon, 04/01/2013 - 16:02 | 3397047 Pure Evil
Pure Evil's picture

Didn't work for Harrisburg, PA.

Bankruptcy

Mon, 04/01/2013 - 16:46 | 3397230 Jena
Jena's picture

True enough.  Sacramento local is like California lite:  Corrupt, inept and biding its time.

Mon, 04/01/2013 - 15:38 | 3396925 kito
kito's picture

everybody remain calm, its all part of dalios BEAUTIFUL DELEVERAGING!!! EVERYBODY GETS WIPED EXCEPT THE BANKERS!!!!  

Mon, 04/01/2013 - 15:38 | 3396930 gdiamond22
gdiamond22's picture

I heard they are brining in Trioka for that 'adjustment process' in Stockton, but I think they should print their own quintillion dollar coin to get out of bankruptcy.

Mon, 04/01/2013 - 15:39 | 3396931 jt
jt's picture

Having watched the turmoil created by the bankruptcy of little Central Falls, Rhode island (19,000 people, one square mile of territory) from the next town over, this should be really interesting.  Expect that democracy will be the first and last victim as the city residents loose their rights to judges, masters and trustees while the remaining value of thier real estate takes unintended haircuts, much in the style of the recent Cypess-EU bail-in.

Mon, 04/01/2013 - 15:40 | 3396937 Lost Wages
Lost Wages's picture

Chalk one up for the unions!

Mon, 04/01/2013 - 15:43 | 3396950 Ostapuk Ivano
Ostapuk Ivano's picture

Trish Regan looks amazing today. Almost reminds me of that sorority girl back at the TKE house during rush week. Yum.

Mon, 04/01/2013 - 15:43 | 3396952 NoTTD
NoTTD's picture

It's a shame somebody has to win this one.

Mon, 04/01/2013 - 15:44 | 3396957 OldPhart
OldPhart's picture

What California city is next to go?  Los Angeles, Victorville, Sacramento, Modesto?

Mon, 04/01/2013 - 15:48 | 3396985 whisperin
whisperin's picture

I think ZH needs an intrade type thingamajig so we can all bet on the next contestant!!!

Mon, 04/01/2013 - 16:13 | 3397100 earnyermoney
earnyermoney's picture

Bankruptcy bracket.

 

Let's see, Molesto looks like a number 1 seed.

Mon, 04/01/2013 - 16:26 | 3397158 malek
malek's picture

Oakland.

Mon, 04/01/2013 - 17:36 | 3397386 shovelhead
shovelhead's picture

Tiajuana.

Mon, 04/01/2013 - 15:45 | 3396965 virgilcaine
virgilcaine's picture

Haircuts coming.

Mon, 04/01/2013 - 16:05 | 3397065 krispkritter
krispkritter's picture

Start with the bankers and politicians and at the shoulder level...

Mon, 04/01/2013 - 15:45 | 3396969 Meat Hammer
Meat Hammer's picture

They all voted to keep spiking the punch bowl and now they get to battle each other for the hangover remedy.  This will be fun to watch.

Mon, 04/01/2013 - 15:47 | 3396973 1971
1971's picture

At one Stockton school, Stockton Unified School District routinely checks third graders for weapons with metal detecting wands. I've seen it happen while subing there.

Mon, 04/01/2013 - 15:50 | 3396988 yogibear
yogibear's picture

Even Detroit was saved by the state. Detroit has one up on Stockton.

Maybe Stocktoin can bulldoze the homes and grow vegetables to become more Detroit-like.

The people can saw down the light poles and sell the scrap metal.

Lots of steel in manhole covers as well. Then all the copper wiring under the street.

Have at it.!!!

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