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The Ten US Cities With Less Than Ten Days Of Cash On Hand
As the Detroit bankruptcy hearing heats up following news that the city's unsecured creditors, among them pensioners, are set to recover pennies on the dollar, 16 to be precise, the question of which are the next cities to follow in the footsteps of bankrupt Motown, becomes relevant once again. Courtesy of the WSJ, and the second part of its series on "U.S. Cities Grapple With Finances", here is a list of the US cities that when push comes to shove metaphorically, and when the money runs out literally, will have no choice but to knock on the door of the local regional bankruptcy court and submit that long-prepared bankruptcy petition. Specifically, here are the cities that have 10 days or less in cash on hand available. Because, unless one is the Fed, cash and lack thereof is all that matters.
The list below ranks the top 10 cities in terms of days cash on hand. Needless to say, a city with a low number in this category (such as 0.0) may have trouble paying bills, bribes, lap dances and other core municipal outlays.
Shifting away from the stock, and looking at the flow, as Detroit showed the world the very hard way, cities mired in pension costs will ultimately default and lead to massive haircuts to the retirees. The following 10 cities have the greatest percentage of pension costs as a percentage of the city's general fund.
Of course, cash on hand while perhaps the most important factor, especially if a city becomes a net cash burner, is hardly the only indicator to keep an eye on. Additional consideration must be given to amount of reserves, or the ratio of a city's total fund balance to expenditures, because if this is negative it means the city spends more than is available.
Another relevant factor: taxable real estate per capita - the lower the number here, the weaker the real-estate market, which also means the lower the city's overall wealth and its ability to raise property-tax revenue.
Debt interest costs may not be a factor under the Fed's centrally-planned ZIRP world, but when rates once again go up, there will be blood. The following 10 cities have the highest amount of debt per capita: it may not be a problem now, but it will be sooner or later.
Last but not least is the most subjective indicator, yet perhaps the most forward looking one: population growth. Because if anyone knows the reality behind a city's numbers, it is the people who live there. If people see no long-term opportunities they move somewhere else - simple as that. And the less population a city has, as anyone who has played the SimCity series knows, the less property, income and sales tax can be collected, and the more costs have to be squeezed, resulting in the dreaded evil "austerity" and, ultimately, default.
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sorry to say, but they should'a let New Orleans die after Katrina
just keep the French Quarter around for tourists
One more solid hit and it's gone, French Quarter and all. Those guys are in the cross hairs. Nature doesn't care and nature doesn't fuck around.
French Quarter was built on the "high" ground. The rest of the city is fucked. It took me 7 months to get back into my house in Mid City. My property was at 0' elevation and the high water/mold mark was 8'. You could drive from my olde house toward the Quarter and watch the high water levels on the exterior of the houses. It would take a much worse storm to flood the Quarter. Only way Quarter floods would be if the Mississippi River uncuts its bank and springs up on the other side of the levee. Now that would be catastrophic.
People who would pump money into any coastal city that has been build 33 feet below sea level are morons.
...that, or just have great connections to use OPM.
Dude, it was dead and overrun by parasites before Katrina.
All REAL Mericans know that if you can make the minimum payment you don't have enough bling.
Chrysler 300's with oversized tirers and tattood drivers for everybody!!
Pension costs are set to explode in the next decade. The pensioned public sector boomers are just starting to retire. Many of them retire, take their full pension, and go back to work part time for the cith bringing in extra cash.
So not only do you have to pay a retired teacher $70k to no longer work, but also pay them $30k a year as a part time substitute.
My town has a few hundred teachers, cops, and firefighters set to retire over the next few years. The socialist running for mayor wants to re-staff the police and fire departments and keep them fully staffed 24/7 365. The astronomical cost of that can't be absorbed by the residents of the town.
Pension costs are set to hit 70% of revenue by 2018. People wonder why potholes go unfilled.
Yup, double dipping fucking leeches everywhere and the young don't find any decent paying jobs. Fuck all the public service sector leeches. May their entitlements be paid in Zimbabwe Dollars.
>> have to pay a retired teacher $70k to no longer work,
I think the average retirement pay is less than half that.
Not Illinois.
"For a fair comparison to private-sector retirement benefits, we want to know the pension payments made to full-career teachers who recently retired. The 2012 TRS report shows that the average teacher who retired in the previous fiscal year after 35 to 39 years of service collects a pension benefit of nearly $75,000 per year"
Read more: http://www.washingtontimes.com/news/2013/feb/13/teacher-pensions-sweeter-than-they-would-like-you-/#ixzz2jAaIp4sd
Follow us: @washtimes on Twitter
Who cares? After all, stock markets are all green and that's all that really matters.
Stock market don't pay fo Jerome's partment.
Detroit pay fo Jerome's partment.
If city don't pay, Jerome gonna take dat money from some'n else. Gets me a nice ass car too. Them gonna remember Jerome fo sure.
"nice ass car"
The designers at Cadillac must weep that their Escalade has become a ghetto status symbol. All the subsidized housing in my area has Esclades pimped with 18 inch chrome spinners parked out on the street.
Show me da money.
18's? Weak sistahs.
22's fo sho!
Could be my ghetto is behind the times. I see them selling 22's downtown tho. Look like wagon wheels.
"He gonna fill mah cah!"
To this day I wonder what happened to that stupid ho. I'm sure sucking on the teat of uncle sugar no less.
Detroit going bankrupt is analogous to when Bear Stearns collapsed. Everyone knew the collapse was coming; it was just a matter of when.
When a major city like LA or Chicago files for bankruptcy, it will be the Lehman moment for insolvent cities. At that point, hope you have your popcorn at the ready.
"No cops, no fire trucks, no ambulance, no hospitals.
Burn, Baby Burn!"
--Bath House Barry
I like to think I can har the handle going down now on the turdbowl that is the liberal led "modern" city. As the taxes increase and property values fall, city services decline and people move out making less to harvest by the political class. Then of course come the casinos and tourist dreams hawked by outside salesman/consultants convincing every numbskull local grifter at city hall that outsiders will come in and drop big cash for such tourist destinations as Cincinnati or Toledo, when that fails the carpet baggers gotta go where they can still get $300k as a city manager or school board pres. The fiat based mortgage fantasy now exploded the time is soon coming when every city will have to show its hole cards and it isn't hard to predict the big blue fantasy worlds are about crapped out.
Schumer to Yellen: "Get busy and start buying Munis!"
Don't give these assholes any more money, they already demonstrate that they can't handle what they already have. Can you say felony?
california is a ticking time bomb ...
California is fine as long as the EBT cards still work. If they stop, I wouldn't want to live in San Fran when the zombie hoard invades from Oakland.
The nice thing about LA is all the Asians are well armed and have no problem blowing away looters.
"You try take my liquor, you take .38 to head, now you dead."
That works when there are 2-4 of them coming.
When there are 50+, well save the last one for yourself.
pods
Grew up in LA and experienced the riots up close and personal, drove right into the shit with a friend of mine. We covered up completely so you couldn't tell we were white boys, and walked through the chaos.
I looked SHTF right in the eye, there really is nothing like it.
Breathtaking it was.
The EBT nation, or the Free Shit Nation is closer than you think.
You don't see it, but .gov dependence has spread like a cancer. .gov believes the free shit nation will not bite the hand that feeds it, literally.
I cannot fathom the mindset of people who willingly enslave themselves for food security.
Their very life now depends on the continueance of the lie that .gov will always take care of them.
There's a bad moon on the rise.
I can believe people on ZH, of all people, believe the Detroit bankruptcy lies.
http://realitybloger.wordpress.com/2013/07/20/detroit-the-latest-bankruptcy-lie/
I couldn't suffer through that blathering in proper detail, but it's not really necessary in order to find the error in logic.
While not all liabilities are short term liabilities, not all assets are cash equivalents.
Even ignoring Detroit's valuations of its derivative portfolio and art collection, the fact that Detroit supposedly owns over $1 billion dollars in Detroit real-estate assets exposes the shortcomings of the posters financial acumen. He's correct that Detroit is lying about Detroit's financial condition, but the lies paint a better picture than the truth, not a worse one.
If your not going to bother to read it your comment will be equally ill informed. The skinny is they are counting future liabilities as current ones and counting future assets (income etc..) as non-existant.
"The City claims to have over $10.6 billion in liabilities, which it then “balances” against about $10.3 billion in assets. This leaves a “balance” of assets that gets shown to the people of a negative $3oo million dollars.
Just one problem though…
You see, most people would simply consider this balance as the cash balance of the government, having no clue about the investment scam their government has participated in for decades that funnels taxpayer monies out of the taxpayer base and into governments investment funds.
This CAFR is for the 2011-2012 fiscal year, ending June 30,2012.
But it reports for the fiscal year 2012-2013, which will have ended in the month of June this year (2013), the actual current liabilities (due within one year as of June 2012) – which represent debt payments for that fiscal year that would be paid in that 2013 fiscal year ending June 2013. And that “current” debt for the fiscal year only amounts to about $309 million TOTAL."
If this is true, Detroit won't have any problems raising fresh money. The former mayor liking his bunk with Buba?
Sorry, dinner called, and then I broke a plumbing fixture...
And then I opened the CAFR report and my evening got really bad...
Without going down the rabbit hole of "investment funds" which can currently assign any value they chose above zero on derivative contracts where the counter party is named Lehman... nuff said unless we're talking about a specific fund with idenified investments (which are generally created to paper over other holes in the Detroit debt dyke, and she's one butch bitch)
Go to the government wide Balance Sheet on p.36
Your $300+M current liability figure is actually "off" if you think about it from a "non-municipal accounting standpoint", because what they call a current asset "Current and other non-current assets and deferred outflows of resources" - basically translates into Detroit owed its pensions X millions of dollars this year, but since we couldn't pay it we're going to count that cash we pocketed as an unencumbered current asset and create a long term liability (accruing interest at 8% that we'll pay at some indeterminate date in the future). If Detroit had actually paid its current liabilities this year, there wouldn't have been any cash left over to pay the vulture banks for DIP financing a few months ago and Detroit would actually in much deeper doo-doo.
Taking another look at the article it is also obvious that the author does not understand the difference between cash and accrual basis accounting. Future liabilities are simply NOT included in the balance sheet, what is included is a present value liability calculation of the future value of the cash flow for an expense incurred during this reporting period. A future liability would be salary and pension expense of a future employee of Detroit in the future.
What the author appears to suggest is that Detroit should run an even bigger pension Ponzi than it already is (which is actually illegal, since if there was any way to generate additional banker fees/bonuses by selling "innovation" to the city, they would have done that before letting the City file for bankruptcy. The 300 million liability for this year is low, and a 300-500 million liability for next year is low and would mean not paying the pensions (again) and also incurring 8% on this year's missed payments and also 8% on all the previous pension under-funding.
Detroit is a death spiral of negative compounding interest and negative net cash flow.
-
I'd really like to know how you got to your "translation" from a simple chart. I'll admit I didn't sift through the entire report but I've read enough of these to know the devil is in the details.
Did you happen to notice LONG-TERM Obligations is the largest liability? These are obviously no currently due. That would be the current liabilities row.
No, that's one of the many frauds of municipal accounting, by simply not paying their bills they shifted what was a 200M+ current liability to a long term liability (numbered ps. 44 & 46)
But it's actually worse because, because to clear the REALLY overdue pension stuff Detroit Issued 1.5B in Pension Obligation Certificates on which they still owe 1.1B in principal and interest just to get to the present value of what was due the pensions back in 2004-2005, and that present value calculation was based on the Pension Fund Trustees earning 7.9%-8% in perpetuity on the $1.5B loan from the city in a ZIRP environment.
The scale of the morass is that Detroit is amazing- if you look at p152 and compare the uncollected allowance for receivables to book value of the receivables- only 18% of the budget/book value is real (You can the go to the projected to actual numbers for the previous period and calculate confidence in the 18% is +/- 7% of the 18%).
Pro tip* it's not accounting, it's dysgenics.
Pro tip* it's not accounting, it's dysgenics.
Thanks for your insightd.
Somehow you made me feel more disgusted with elected officials than I already was.
So, for years I've been reading about the municipalities slight-of-hand with CAFR accounts. How all munis crying broke are actually rolling in it. Is this legit? rambling lunacy? or is it the Kings money and we need not talk about it?
At what value was the USS Forrestal carried on the books of the Federal government? Probably slightly more than the valuation realized when they went to monetize the asset - $0.01
Yes, there's slight of hand, unfortunately most don't want the truth and really can't handle the truth
As the Detroit bankruptcy progresses, I predict you will read more and moe about astounding financial "sleight of hand". The financial situation in Detroit is much worse than anybody knows.
This article's group of lists is missing a telling one, the top ten cities who have been funding current expenses by tapping into bond money obtained under the pretense of being earmarked for capital improvements. Detroit would make that list, too. It's been going on for several decades.
It is highly doubtful that any sort of financial plan can be put together for Detroit if its current boundaries are maintained. Huge swaths of the City, unfortunately, pay little revenue and eat up a lot of expensive city services. They are a cancerous net loss that make the city ungovernable in its present form.
When passing through Deteoit keep your eyes shut to avoid having racist thoughts.
How many of these are Democratic Party strongholds---oh, never mind, its obvious
Are any of the mayors of these cities Republican?
Riley, in Chas, is a Demoncrat.
His machine never loses.
He has been mayor for 120 years.
Both Springfields on the "Pension Costs" list ? Is this a Simpsons episode gone awry ?
"Both"? There are more than two.
Springfield, Georgia
Springfield, Illinois
Springfield, Kentucky
Springfield, Massachusetts
Springfield, Michigan
Springfield, Minnesota
Springfield, Missouri
Springfield, Nebraska
Springfield, Ohio
Springfield, Oregon
Springfield, South Dakota
Springfield, Tennessee
I guess it can just go on like forever ...
All aboard.....for Night Train (with new lyrics)
Joe Riley has a stash in the basement of City Hall.
Just sayin'
Fuck it. Who gives a shit. Just have lots of ammo and a few guns on hand.
FAWK is ever going to end ugly.
I want to see the other end of these lists so I can move to one of those cities.
New Orleans data is misleading.
That specific welfare dependent population now stuck in houston and other places was a net drag on the city.
Increase taxes. That'll do the trick. If thats not possible then simply bankrupt the cities. Capitalism demands to do so and thats perfectly OK. We are not socialists. Fuck the infrastructre and fuck the people. They might as well decide to relocate or start a barter society. We cant care for everyone - if we do so the whole society will go bust.
Bridgeport CT representing. Smartest thing I ever did was leave. Dumbest thing I ever did was buy there. Live and you learn. My next property could very well be abroad.
This shit show will end ONLY* when the BRIC+ countries get fed up with swapping their labor for bits of our fiat confetti.
Until then... Same as it ever was, same as it ever was. Plan and hedge accordingly, and don't pop an artery. I'm sooooooooooo beyond caring any more. Hey, look, what a nice sunny Fall day!
* Shouting.
Yep, until then stay invested in index funds. Take profit every now and then. Preserving wealth means getting rich in the new normal.
Bullish Retiree "Accident" Services.
Elo-turn to stone
http://www.youtube.com/watch?v=xFljpJdYRKM (3:50)
~//~
The Truth About Detroit's Bankruptcy
http://www.youtube.com/watch?v=y9sTiB6JAiQ (39:38)
The ChairSatan, eCONomists and the Bwanksters have obviously never played SimCity
poopycock/ ..."...he’s a lecturer in control systems..."
Keiser Report: Silent but Violent Emissions (E515)
http://www.youtube.com/watch?v=zoSuuxb70Ys (25:46)
I played this game before, just shutdown the police station,trains, trollies, hospitals, police force and down-size the fire department.
You cant eliminate the fire department because for the most part fires are accidental.
The police force is almost useless, let people sort their own problems out.
Jails should just be set on fire, with the convicts inside of it.... the fire department might luckily be late to the scene.
Pensions are obviously a huge problem across the country.
And while everyone likes to pick on teachers, not without reason, of course, there is nothing worse than the fucking cops. From their absurd pensions, to their absurd "details" and overtime.
They've gotten more hardware and more toys, but they're still lousy shots that increasingly think they're Marines in Fallujah.
I don't think even 1 in 20 would do anything but follow orders if/when the tinfoil fantasies of FEMA camps and DHS-occupation comes true. Ditto for the military.
Anyway, I think states should, since we aren't really adhering to the Constitution and all, start printing their own money for in-state transactions. Perhaps it sounds crazy, but might it not work in some states? I'm thinking Texas could, in the case of a fairly sudden dollar collapse, just start paying people in 'Alamos' or some shit. And big farming states might be able to be self-sufficient.
As for Detroit - this is a case where I'd like to see if the broken windows fallacy can be a fallacy now and again. Just burn the thing down.
I think ZH had some articles on the wild packs of dogs stuff a while ago- that's no joke. Apparently, packs of dogs essentially rule whole areas of that place. A lot of them pit bulls.
p.s. pretty good column by Justin Raimondo some of you fools might enjoy:
http://original.antiwar.com/justin/2013/10/17/american-apocalypse/
Great post. Most of the cities on that list aren't of national concern. Different story for Chicago. If Chi-Town goes the way of Detroit, look out. That could be the making of a civil war.
Without Federal subsidies, cities that fancy themselves laboratories of social justice will die. Cities that see themselves as service-providers to their taxpaying residents will prosper.
When the dollar dies (and with it, all levers of Federal policy), smart city leaders will bulldoze their welfare ghettos and sell the land to developers. By the next election the inner-city voters will be gone, crime will be greatly reduced, and productive citizens will (hopefully) move in from the suburbs to occupy the new condos and townhouses.
A number of people have been fleeing Chicago for Texas. No wonder Texas has a better climate, is business friendly and lower taxes.
Lots of Midwesterners headed down here, me being one. Totally different from the upper Midwest big city shitholes.
Charleston, SC? What is the primary reason?
Charlestonians!
Charleston SC is a Govt. town. Big Military. Big Govt.
Lots of current and former Vets. Everybody works for or indirectly the Govt. Or tourism.
Coastal cities that are Military bases recieve huge State and Federal subsidies. They would not exist otherwise.
Jacksonville,Fl. recieves $7-8 Billion anually for their Navy base for example.
I'm here in Texas on the lookout for Illinois tags and we're gonna have ourselves a tragic hunting accident. Or two.
Lol, I was getting on I-20 in Arlington this afternoon and had a New York license plate next to me, the urge to run him off the road was overwhelming.
I think some are missing the big picture here.Birmingham was probably within the limits of salvage,then some boofhead designed a state of the art sewerage plan,financed by those great guys at TA DAH! Goldman Sachs. Lawsuits now in progress. Down my way,Stockton,California,tried to get a miniscule haircut from Wells Fargo.No dice.So the unions get Sacramento to pass a law where the city has to wait six months to file BK.Six months for nobody to negotiate with everybody else.Police and Fire stripped to the bone.No drugs detail,or gang detail.You are on your own,Pal,if you are walking around at night without your Kevlar jammies and Uzi.Great future ahead.So Wells fargo grabs a couple of new downtown parking garages as collateral.People always need parking.
THE WHOLE SALES POINT FOR MUNI BONDS IS THEY ARE SAFE AND SECURE AND HAVE A TAX ADVANTAGE.This entire financing model is history.Here,Italy,greece,etc. Just wait until the Cyprus style bail-ins start with the IRA's....
I live in Shelby County, Alabama. My next door neighbor lives in Jefferson County, Alabama. Jefferson County is the 2nd largest municipal bankruptcy in US history.
Allow me to explain, in simple terms, what happened.
Lawyers make millions. Citizens pay more for nothing. Bankers pay peanut fines while small fry go to jail.
Any questions?
Thanks for your info, TMT. Unable to vote you up due to your italicized start of lines ;-)
+1
It was the Morgue this time, not the Squid.
We have a slight ammo problem. www.gunssavelives.net
Last U.S lead smelter closes up in December with NO intentention paying new EPA costs. Scroll down page some. Make shots count.
Not a bad article but you need to see more numbers and how they are trending over time especially the days of cash on hand which can change significantly.
This article was poorly presented either from a visual standpoint too. The graphics suck and look like a newbie PPT presentation.
Intensities in ten cities.... First in? (With regards to Mr Nugent)
Intensities will equal "in tent cities" soon...
Hey maybe they can get the banksters to sell their assets to China or Russia or Somalia.
Nothing here a Keynesian earthquake couldn't put back to rights ... in theory.
If it gets really serious, and still no earthquake, you could still use the USAF to bombard them.
Think of it as an emergency stimulus program ... for both.
WIN-WIN!
Harvesting the fruit of the liberalism religion. ;-)
Nothing to see here, move along folks.
Clearly...here is the true definition of...stupid is...as stupid does.
Sorry king of all the liars in the most corrupted and criminalistic government in the world's history, it is what it is and your puppet masters are pretty stupid to think the American people are more stupid than you to think you don't know shat.
http://www.youtube.com/watch?v=JkpU9MueiOg
Washington D.C. has ZERO cash but they have the military.
All of you believe Frank Zappa's song title, "It Can't Happen Here!"
Look at those charts agaiN, take a whiff of reality and GET OUT WHILE YOU CAN
End of the month. no big deal yet.
GLOBALIZATION and who really pays... send jobs overseas and buy cheap shit at WMT... govt lives beyond their means and rather than solve the problem put debt gas on the fire... and watch the USSA swirl don the shitta.. USSA majority is oblivious of reality and pols dont give a shit enriching themselves and their cronies while giving crumbs to the parasites... USSA is rotting...smell the stench
Truth meets consequences.
Bend over.
I'm going long on the stocks of Tent companies!!!!!!!!!!!!!!!!!