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Stockton Becomes Biggest US City To Declare Bankruptcy (It's Official)
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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Ben's 'tower of paper' is coming apart, crumbling.
You mean Benjamin Strong? Bernanke is just putting the antenna on top of it in order to qualify for the record books.
Can Detroit be forced into BK with the state takover? Or does the state takeover in place of BK?
How long until IL finally reaches BK? I love how the guv says SPENDING IS DOWN!!!*
(*except for the pension costs)
Detroit already is bankrupt. They just don't use that word.
they used to call cleveland the 'mistake by the lake', but now that detroit is days away from bankrupcy [tyler post spot-on!] it's all getting too erie?
perhaps chicago is next...
Meredith's chest must be perkier today !
Do the cops keep doing the banks dirty works even when their pensions are all gone ?
Probably , as most of those thugs , just like to beat down on people.
Seasmoke, you misunderstand. This is a battle of who will be paying those pensions - make no mistake there will be no haircuts for the retirees whether they be on the links at age 50 or traveling the world at age 60. Better still taking on a new career in the public sector to top up that six figure pension and gold plated benefits or best of all moving to the private sector.
Never say never. There has to be a haircut. I wouldn't work if I was a young kid paying for those pensions.
Hears THE WHOLE PROBLEM
According to the AP, the $900 million that Stockton owes to the California Public Employees' Retirement System to cover pension promises is its biggest debt. The city so far has kept up with the pension payments, but that had forced them to neglect other debts.
Those GP caused the problem, they should have been FIRED LOOOOOOON AGO.
Oh let's destroy the taxpayer assets first. Aholes!!
Sic 'em, boy!
A city 1/3 to 1/2 the size of Cyprus going bankrupt in the US might have an effect on the US similar to what happened in the EU over Cyprus but does not. Perhaps America is a better system than the EU. Perhaps when Chicago, LA, Newark, Atlanta + Detroit default we will get some action...
I don't think US have any plans seizing people's bank accounts in Stockton. They are not as stupid as Europe.
Defaulted municipal Pensions are future bank accounts. Municiple Bond defaults are haircuts to investment pools. Of course it is not quite as large as Cyprus but it is on somewhat the same order of magnitude of people involved. The size of the mess that a measly 900,000 cypriots have created indicates some real action is coming given an unravelling here.
The many 56 year old people in stockton who spent a illustrious careers playing cards and sleeping at a firehalls (firefighters), eating doughnut's and cruising chicks (city cops), corrupting children's minds (teachers) or perhaps providing low quality health care (city hospital workers) and those dependant on them might just end up as screwed as any Cypriot.
We an only hope
If its broke, dont fix ..uh wait, whats the saying?
Pull Over
http://www.bloomberg.com/news/2012-08-01/police-chief-s-204-000-pension-...
http://www.bloomberg.com/news/2012-12-17/highest-paid-california-trooper...
To be Served and Protected!
He tried his best...
And those fat pensions are why the people should go apeshit on City current and past management. Clawback is the word !!!! Fucknutz
PD oath at swearing in: "We will solve no crime, before there's overtime."
The Fed will print shitty fiat dollars for Stockton?
The Fed will buy Stockton's shit paper?
It will be more subtle. Watch to see who buys some funny paper from the bond insurers when it comes down to it.
Compared to Detroit, ( "Detwaa" ) this CalPERS shortfall is a walk in the park. Detwaa owes 14 billion in pensions and and another 4 billion in retiree health-care. Stockton vs. Detroit... IMHO Detwaa has greater promise with it's international trade and mining coming back to the "U.P." and the question is will they off load Ore's for processing in either Detroit or Canada.
Couple of weeks ago, a friend told me he was moving to Detwaa. I told him he had my deepest sympathies.
CalSTRS (Califonria Public TEACHERS pension) has a shortfall of $72 Billion - so they beat Detroit.
In the late '80s I lived in Gainesville, FL and as a young attorney I found myself at a city coucil meeting for one reason or another. Woven into the discussion was AFSCME and their contract. An older gentlemen with an actuarial bent spoke passionately that the city's "20 years and out" contract was a recipe for future bankruptcy.
The exact issue at hand (which I believe had something to do with annexing areas where the county was already providing city-type services) is long forgotten.
What I didn't forget was that the old man had numbers, charts and graphs to back up his jeremiad. And now it's coming true across the land.
Haha. You actually tried to reason with those marxists at city hall? You'd been a lot better off just greasing palms with bribes or in the case of the current mayor, greasing his arse. That poor old bastard with the graphs would have been wise to spend his time fishing or watching porn. More would have been accomplished.
You just wait sonny, 'til I git my false teeth into them thar' queer bondholders!
They just do not get it. The cities cannot afford the pensions they promised. Yes they promised, but they are broke. So, it needs to change. We are bankrupt, We cannot pay the interest on the Muni bonds we promised you. Yes we promised. But now we are broke, so lets talk, or maybe we will just pay nothing.
This is a problem all over. Nevada is bankrupt, we just have not admitted it yet. We cannot pay these pensions and then hire another to take his place and pay that salary too. We do not have the money. We will never have the money.
Are there any questions? Do I need to take out the crayons and coloring book to make it really simple for all the good union people out there.?
The cities cannot afford the pensions they promised.
Wrong.
In fact, the taxpayers cannot afford the salary, perqs, benefits, and pensions that government workers promised themselves. And, even if they (the taxpayers) could, many are waking up to the fact that they just don't want to because it just isn't 'right' and it's bankrupting themselves for no reason. (Oh, but what will I do without all those 'services'?)
You do what everyone did in Detroit, you leave. Then there is no one left to pay the current overhead that is government and you eventually get no way to even pay the $900 million CALPERS is demanding still be paid without a haircut. Coming very soon to every city in California!
Promising future pension benefits in lieu of current pay raises was a great way to settle municipal employees' bargaining demands without raising taxes.
Issuing municipal bonds to build skating rinks, performing arts centers, sports arenas, etc. was a great way to make civic improvements without raising taxes.
Taxpayers loved the arrangement for several decades, long enough for multiple administrations to come and go. Now, not so much.
"Taxpayers," Kemosabe?
What is amazing is that Meredith Whitney called a lot of this a few years ago, but was dismissed as being crazy. I can actually forgive her for being 'early' on the call, because she could not have predicted the endless flood of QE which delayed these defaults. However, a few months ago she started being bullish on financials -- just as Detroit and Stockton go under. What this shows is that her famous call from several years ago was not better than most talking heads - in other words - a lucky guess!
Crazy, early, wrong, same thing. There are no prizes for being wrong.
Stockton was were the pigs ( police ) did this http://www.youtube.com/watch?v=U_N3YMukjqk now the pigs will get fucked !!!
RIP Kelly Thomas The Stockton police murdered him in cold blood , i hope the pigs dont get a penney in retirement http://www.youtube.com/watch?v=U_N3YMukjqk
Detroit will take that title eventually.
Pick up your bundle of stycks and move to Modesto.
i guess stockton is one third the size of cyprus (300,000 people v 900,000) and more or less the same size as iceland; though i'm guessing cyprus would kill for the kind of light at the end of the tunnel that stockton enjoys once its sorted itself out
Detroit is 700 000 and they are bankrupt...
so i guess we are into the "how" of the write downs coming globally..and the "who pays" and "when"...we all know why
i still cant figure out how its fine to clawback money from pensioners and bank depositors and not fine to claw back bank bonuses and salaries AND tax evasion...
this chit is making organized crime look a lot more honest..but then again..if everyone's a criminal..you have a failed nation state...bleh
Everyone knows records are made to be broken. Stockton will not even get to enjoy their moment in the sun for long , as they will be passed by Fall.
They shoulda bought Bitcoins last year!!! (How is a Bitcoin now at 100.00 and an ounce of silver stuck at 28.00???). You can't make this shit up..... CB
A good friend is a retired teacher from S. Cali. I was rather alarmed for her when I read that Calpers has taken such a big hit on the Blackstone development in Bedford/Stuyvesant,NY ($300 million).
I suggest if they want to invest and lose money on that scale then hire me and I think I could do equally well. Florida also lost big on the deal. But also,why go to the east coast for a shitty RE deal when you can do a crappy deal here in California? I'll just bet it justifies all the flights and hotels,hookers,hot tubs and blow.Nothing like an expense account,fellas.
I think many are missing the point here. Muni bonds have tax advantages and are supposed to be low risk/low yield,which appeals to the retired senior citizen types. SAFETY,SECURITY....
Just remember: The country is bankrupt, every state is bankrupt, and every city is bankrupt.
If a city is to survive it must have growth in tourism,manufacturing,agriculture,etc. Some form of industry to tax to pay for the infrastructure. With real estate projected to take some time to recover to pre-bubble levels,and now the bond market shut off to them (bad credit rating,"you'll never borrow in this town again") I can't see how a society,Stockton or any other, can prosper.
I saw this with the Latin American debt in the 70's and 80's.Bubble,crash,austerity with lots of military( riot control ) purchases. World Bank,"just keep making the monthly minimum,don't default,and we'll loan ya more if ya need it".
How is Stockton (or Cyprus) supposed to grow its way out of this mess?
Sign the whole piece of shit state over to La Raza.
Pick it up for pennies on the dollar at a sheriff's sale in a couple of years.
Louisiana Purchase, baby.
in time grasshopper, in time
One piece of goood news though. The Satanic Tribe gets more hard earned taxpayer dollars:
U.S to increase aid to Israel to $4 billion per year
http://www.councilforthenationalinterest.org/news/the-cost-of-israel-to-the-us/item/2608-obama-to-increase-aid-to-israel-$4-billion-per-year-beginning-2017