This page has been archived and commenting is disabled.

It Begins: Harrisburg Files For Bankruptcy Protection

Tyler Durden's picture




 

We are confident the spinmasters will spin the first major domino in the muni crisis as bullish: after all it "removes uncertainty." Bloomberg reports that "The city of Harrisburg, Pennsylvania, facing a state takeover of its finances, filed for bankruptcy protection following a vote by the City Council, according to a lawyer for the council.Mark D. Schwartz, a Bryn Mawr, Pennsylvania-based lawyer and a former public finance banker for Prudential Financial Inc., said he filed the documents by fax to a federal bankruptcy court last night. The filing couldn’t be confirmed with the U.S. Bankruptcy Court in Harrisburg.The state capital of 49,500 faces a debt burden five times its general-fund budget because of an overhaul and expansion of a trash-to-energy incinerator that doesn’t generate enough revenue. “This was a last resort,’’ Schwartz said in an interview after the council voted 4-3 to seek bankruptcy protection. “They’re at their wits’ end.’’While bankruptcy would mean the loss of state aid under a law passed in June, it would be preferable to a proposed recovery plan, said Councilwoman Susan Brown-Wilson." Well, at least Jefferson County will not have the dubious legacy of being the first muni to push everyone else over. And now that the precedent has been set (yes, Virginia, it can be done) watch as tens if not hundreds of other cash-strapped towns, cities, localities and other entities follow suit promptly to quite promptly.

More:

“We’re not incompetent,” Brown-Wilson said. “We’re just not going to let you run us over with the train anymore,” she said, referring to state officials.

 

Jason Hess, the acting city attorney, told the council members before the vote that they didn’t follow procedure and their action wouldn’t be binding. The members went ahead anyway.

 

Preparing for bankruptcy is going to mire the city in litigation it can’t afford, said Councilwoman Patty Kim, who voted against it.

 

“The problem still exists that we still don’t have money, and we still haven’t moved one foot forward,” Kim said.

Harrisburg, the seat of Dauphin County, needs $310 million to make bond payments, restructure debt and repay the county and insurer Assured Guaranty Municipal Corp., which made payments the city skipped on the waste-to-energy facility. Schwartz said he expects Assured Guaranty will reduce the value of its debt.

 

“Why should they be first in line?” he said.

 

In an opinion article published yesterday in a local newspaper, the Patriot-News, the four council members who voted for bankruptcy said Assured Guaranty and bondholders should forgive at least $100 million of the debt.

 

They also said there should be a countywide sales tax of 1 percent to help pay off the debt. Schwartz, in the interview, said that could forestall asset sales.

As for the historic details of what is the biggest muni bankruptcy in a long time...

In a copy of the Chapter 9 petition provided by Schwartz, the city lists both assets and debt of $100 million to $500 million. According to the copy, the city has 49 or fewer creditors.

The Pennsylvania Senate is scheduled to take up legislation next week that would make Harrisburg the first municipality in the state to be placed in receivership.

 

The council in July and August rejected fiscal rescue blueprints from consultants hired by the state and Mayor Linda Thompson, triggering the legislative response.

 

The bill would let Republican Governor Tom Corbett declare a fiscal emergency in Harrisburg and name a receiver who would develop a recovery plan. The manager would be able to sell assets, hire advisers and suspend the authority of elected officials who interfere. Unlike in Michigan, the receiver wouldn’t be able to change union contracts.

And now, spin time.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 10/12/2011 - 07:27 | 1764886 papaswamp
papaswamp's picture

Bullish Bitchez!!! Rally time.

Wed, 10/12/2011 - 07:33 | 1764906 HoofHearted
HoofHearted's picture

Damn Meredith Whitney...I bet they find some way that this is her fault. And if not, we know who scapegoat #1 is...

Wed, 10/12/2011 - 07:37 | 1764913 trav7777
trav7777's picture

fuckin cities got to stop borrowing money...

Wed, 10/12/2011 - 07:43 | 1764925 Harlequin001
Harlequin001's picture

Ok, so can someone explain to me how the Federal Government being the head of a bunch of bankrupt states, subsequently funded by a bunch of bankrupt Muni's is any different to Europe with its bunch of well, bankrupt states?

Wed, 10/12/2011 - 07:49 | 1764949 Oh regional Indian
Oh regional Indian's picture

BINGO Harl E Quinn. It's the same game plan. Much easier, less planning and all that sort of thing.

Where "they" could, they set up a mess like India or the US, Large nation, myltiple states and a horrible definition/division between State and Federal/Central jurisdictions.

In Europe, they did it with the EU. The parallels are actually quite stunning world over. Good observation.

ORI

The Perversion of Language

Wed, 10/12/2011 - 07:56 | 1764964 Dr. Richard Head
Dr. Richard Head's picture

Harrisburg needs a Ben Bernanke. Printing money and taking on debt will solve this all dontcha know.

Wed, 10/12/2011 - 08:42 | 1765061 Sabibaby
Sabibaby's picture

They should call it a Harrisburg note.

Wed, 10/12/2011 - 09:52 | 1765333 Dr. Richard Head
Dr. Richard Head's picture

You know the old saying, "Ain't worth a Harrisburg."

Wed, 10/12/2011 - 09:01 | 1765103 brew
brew's picture

fire up the helicopter...

Wed, 10/12/2011 - 09:30 | 1765201 end da fed
end da fed's picture

but when the housing market turns around...

Wed, 10/12/2011 - 12:03 | 1766044 Harlequin001
Harlequin001's picture

Yes ORI, you could say we are all in deep shit...

It will be interesting to see how this all pans out in the end, whether centralised government can survive or if all multi state 'federations' devolve to individual states again...

That I believe would be a very dangerous situation to have...

Wed, 10/12/2011 - 07:53 | 1764954 Popo
Popo's picture

They're both totally bankrupt.

Europe puts on a better dog and pony show, pretending that there is some magical, heretofore unannounced policy that can somehow prevent defaults.    

In both cases the defaults are 100% inevitable.  

The only questions are:  

1)  Who specifically eats the shit sandwich?

2)  When does said shit sandwich get eaten?

 

And a follow up to question #2 is:  How much currency damage will be tolerated before a decision gets made on question #1?

 

Wed, 10/12/2011 - 08:12 | 1764983 falak pema
falak pema's picture

the general thesis in 'hegemonical regulatory capture'; which is what an Oligarchy system is, as it feeds in the name of and at the expense of, those it is supposed to serve; is to delay the final countdown to Doomsday. In this actual case as far down the road as possible. Which will allow the Oligarchs to avoid taking haircuts, painful, in their own lives, or so they reason. The pot of gold at the end of rainbow they sell their people in this enterprise is : ...Mega growth is just around the corner. Through innovation and new developments we will absorb this huge deficit. As in the face of future world-wide growth it will appear puny in comparison once the growth engine starts churning...

We all know that debt has to be recognised or wiped out by growth, aka post WW2 Europe for USA and its mega debt of that age. There is no peaceful third  alternative in history...

This 'hope in growth' has always been the theory in all ages. Not always been historical experience. Tipping points in civilization are quite common. In fact, they are the norm.

Wed, 10/12/2011 - 08:13 | 1764994 Mr. Mandelbrot
Mr. Mandelbrot's picture

Why do these states/munis need to borrow so much money?  Because they like to pay their bus drivers six figure salaries (plus pensions, benefits, etc.) as the issue in the state of Wisconsin a few months ago revealed (six state bus drivers make six figure salaries).  Government at all levels needs to be chopped down at the knees . . .

Wed, 10/12/2011 - 09:51 | 1765329 Harlequin001
Harlequin001's picture

and therein Mr Mandelbrot lies the solution; smaller government and balanced budgets...

and an intermediate return to gold as money to build a solid reliable basis of commerce upon which to build from.

Wed, 10/12/2011 - 16:56 | 1767146 r00t61
r00t61's picture

Assuming that this isn't just a /sarc rhetorical question, the Federal Government can legally print up money whenever it wants to. 

States cannot.

Therefore, the Federal Government can never technically run out of money.  Of course, the value of that money could go to zero, but that's a story for a different day.

Compared to Europe, the ECB cannot issue a Eurobond, the way that the US government can issue a Treasury. The EU cannot also affect fiscal policy in any of its member states - read: raise taxes, whereas the US government can always raise current taxes and/or create new taxes that affect people in all of its states.

Wed, 10/12/2011 - 08:38 | 1765046 Confuchius
Confuchius's picture

Oh dispenser of useless "advice" : zerohedge needs to put trav7777 and its' passive-agressive icon in with Harrisburg's trash burner.

 

Wed, 10/12/2011 - 09:37 | 1765195 RKDS
RKDS's picture

And from the area, there're a few issues that the media will conveniently forget to mention.

 

1.  The incinerator debacle is to blame for an overwhelming proportion of this current debt problem and lots of people now wringing their hands over it were complicit, including "da mayor" herself as head of city council for years and years before Reed was ousted.

2.  There were shady/illegal dealings in regards to financing said incinerator and every effort is being made to not investigate it further.  Those bond holders, many being NY banking interests, also don't want to be subject to the risks of investing and expect to collect every last cent they think they're entitled to in spite of aforemented inpropriety and the economy in general.

3.  Most of the so-called "plans" involve a fire sale of city assets with no write-down on the debt.  So, basically, Harrisburg owes say $500 million and they want to give away everything (the incinerator, parking garages, parking meters, City Island, etc) for an embarassingly low amount of money like $50 million.  Most of those assets generate revenue, by the way, revenue that won't be available to pay the remaining $450 million.  You tell me how the city digs out of massive debt with no revenue generating assets and half of the property tax-exempt due to state government offices and fraudulent charities (including da mayor's).

 

Communter tax of at least 3% is coming (to punish working people), massive property tax hikes are inevitable, and this may be the crisis that finally lets these clowns push the sales tax to 8% or beyond.  Bankruptcy will still hurt the city but at least the banks will have to share some the pain for once and the city might actually be able to recover a few years from now.

Wed, 10/12/2011 - 10:15 | 1765498 MachoMan
MachoMan's picture

ok...  so...  why does the city need revenue when it has no infrastructure/employees?  Why do taxes need to be increased from current levels to pay for non existant infrastructure?  Won't increased borrowing rates place a ceiling (ok, I'm trying not to laugh at this one) on the city's future expansionary prowess?

So through this bankruptcy, there won't be a cut of costs/staff?

I realize there is a minimum maintenance cost involved...  road maintenance, sanitation, police, fire, etc.  But I can't fathom that there is any point to filing for bk protection when you're just going to fall back into the same hole.

If the city sells its assets to non-charitable private parties, then by definition those assets won't be exempt from property tax...  if charities are fraudulently circumventing the tax code, then they need to enforce their collection regulations...  and WHY THE HELL DOES THE CITY NEED REVENUE GENERATING ASSETS?  The damn thing isn't a business...  it's a dead ass loss for tax payers, i.e. the "revenue generating assets" of every taxing authority.

It doesn't have to be a bad thing...  I'm sure many of the laid off public workers can join a nearby union and get back to half assing it.

Wed, 10/12/2011 - 14:31 | 1766543 RKDS
RKDS's picture

Well, if you read some of the privatization plans, the revenue-generating assets (specifically the parking garages) that are to be given away STAY TAX EXEMPT as part of the giveaway.  So basically once the city pisses away the chump change they get up front, and they will, they're back in the same hole except they don't have the asset anymore.

The incinerator's almost in the same spot, except it supposedly generates its profit because other municipalities pay to burn their junk there (it's just not enough to keep up with the crooked financing).  When they give it away, the people of Harrisburg will be hit with the triple whammy of losing that little bit of profit, paying more for trash disposal, and being forced to pay, in perpetuity, for a facility that somebody else now owns.

I don't get why some parts of governemnt can't run a profit to cover other parts that don't, especially with how high pitched the shrieks get when any budget goes the slightest bit into the red.  It's precisely this kind of short-sighted stupidity that produces the "use it or lose it" budgeting that wastes millions of taxpayer dollars each year.

Harrisburg is run by idiots and taken advantage of by theives.  Between them, they'll make it impossible for the city to recover.  People and jobs are already fleeing what stands to be a 3rd world slum in short order.

Wed, 10/12/2011 - 17:16 | 1767212 MachoMan
MachoMan's picture

So you have to give tax exempt status to the purchaser of the assets in order to sell them?  This makes no sense to me...  unless they were getting the present value at a preferred discount rate of the future tax stream tacked on to the sales price...  and then, only if it would put them above water with creditors...

If you're going to give these types of concessions, it makes no fiduciary sense to give future tax revenues away when they could be expunged in bankruptcy...  if you want to buy shit in our city limits, then be prepared to pay our taxes...  if the taxes are too burdensome for you, please move some place else (and they will).

Wed, 10/12/2011 - 07:37 | 1764915 falak pema
falak pema's picture

She has a strong head and I'm sure Teflon nipples so she can handle their shark bites. 

Wed, 10/12/2011 - 07:45 | 1764936 The Deleuzian
The Deleuzian's picture

That Vanity Fair piece really makes California's crumbled fall into the Pacific ocean plausible...

Wed, 10/12/2011 - 07:38 | 1764917 HelluvaEngineer
HelluvaEngineer's picture

This is so damn bullish it made me crap my pants.  Time to do a few lines and play ping pong with shares of NFLX all day, until I pass out in a drug induced coma around 4PM.

Wed, 10/12/2011 - 07:48 | 1764946 Bobbyrib
Bobbyrib's picture

Which major investment bank do you work for?

Wed, 10/12/2011 - 07:29 | 1764888 HamyWanger
HamyWanger's picture

I wouldn't worry about it. This is an isolated event, far from being the harbinger of a muni armageddon that so many redneck silverbugs long for. 

In a week or two it will be forgotten, and the DOW will continue its route to its final destination: 18,000.

Wed, 10/12/2011 - 07:30 | 1764898 papaswamp
papaswamp's picture

Hamy!!! Where ya been? You mean transitory?

Wed, 10/12/2011 - 07:39 | 1764919 HelluvaEngineer
HelluvaEngineer's picture

At 18,000 does it just explode?

Wed, 10/12/2011 - 07:51 | 1764953 The Deleuzian
The Deleuzian's picture

Hamy, I don't know what you want?  A green or a red!  So I'll just keep going through more articles this morning!!!  Zero Hedge is the only blog I can really roll around the floor from laughing 5 minutes after I wake up!!!

Wed, 10/12/2011 - 07:28 | 1764890 Ruffcut
Ruffcut's picture

"I'm broke bitchezz, BROKE!"

Wed, 10/12/2011 - 07:30 | 1764899 Cassandra Syndrome
Cassandra Syndrome's picture

Nash Equilibrium Bitchez

Wed, 10/12/2011 - 07:31 | 1764902 wombats
wombats's picture

"trash-to-energy incinerator that doesn’t generate enough revenue. "

What happened?  Did they run out of paper fiat to burn?

Wed, 10/12/2011 - 07:40 | 1764923 Janice
Janice's picture

My question is who sold them the "trash -to-energy" incinerator? Why isn't that party strung up? Who voted & approved the crap, and why were they so ignorant that they didn't realize it wouldn't generate enough money? It's easy to recklessly spend taxpayer money, hard to get to back once the taxpayers are broke or left the jurisdiction. Screw the incompetent thugs.

Wed, 10/12/2011 - 07:50 | 1764952 tniutnia
tniutnia's picture

someone made a money on that deal....

Wed, 10/12/2011 - 08:04 | 1764978 Henry Chinaski
Henry Chinaski's picture

Green industry is an oxymoron.  The planet won't be saved by the government throwing money at projects that no private investor would buy.    

Wed, 10/12/2011 - 09:12 | 1765126 mr1963
mr1963's picture

We expect all your posts to be in the form of a poem Chinaski

Wed, 10/12/2011 - 09:12 | 1765129 prole
prole's picture

"Doesn't generate enough revenue"

Hmm... I wonder if any feather-plucking Yankee can explain exactly what that means?

Wed, 10/12/2011 - 09:16 | 1765141 Vergeltung
Vergeltung's picture

^^^^thread winner

Wed, 10/12/2011 - 10:48 | 1765681 falak pema
falak pema's picture

Rip van winkle...I'l wake you up in 20 years when they will have proved to all massively the contrary of what you just affirmed, as the economic mantra of the times.

Government seed money for future energy bend is a valid concept to kick-start a new trend. Then let innovation and economy of scale bring us down the curve in a peak cheap fossil fuel age. 

Wed, 10/12/2011 - 09:21 | 1765154 krispkritter
krispkritter's picture

Don't know who managed that. The one down here in Pinellas always seemed to generate funds. Aside from all the tree-hugging, green-clad nitwits protesting everything it barely makes the news normally. Old clip: http://www.sptimes.com/2007/01/24/Tampabay/615M_deal_okayed_for_.shtml

Wed, 10/12/2011 - 07:35 | 1764908 New_Meat
New_Meat's picture

Whitney comes through.

Wed, 10/12/2011 - 07:36 | 1764909 KlausK
Wed, 10/12/2011 - 07:36 | 1764910 Mae Kadoodie
Mae Kadoodie's picture

Occupy Harrisburg?

Wed, 10/12/2011 - 08:34 | 1765037 cossack55
cossack55's picture

Won't happen, the OWS folks target only those places that actually have some money.

Wed, 10/12/2011 - 07:38 | 1764918 j0nx
j0nx's picture

Sounds bullish to me. The futes are already up 100+ on China/US trade war so I'm guessing we will be up 200 now with the imminent default of this municipality and many others soon to follow.

Wed, 10/12/2011 - 07:40 | 1764922 Volaille de Bresse
Volaille de Bresse's picture

Countdown to munibonds demolition in 10 9 8 7...

Wed, 10/12/2011 - 07:42 | 1764926 pepperspray
pepperspray's picture

But the guy on the radio hawking munis on his Saturday morning infomercial said Meredith was wrong.

Wed, 10/12/2011 - 07:42 | 1764928 JOYFUL
JOYFUL's picture
stop this nonsense immediately: call David Kotok, & the Bond Girl,
http://www.zerohedge.com/contributed/david-kotok-bond-girl-michael-lewis...
they will straighten you, and the whole mess out, by using their army of "hundreds of municipal bond market professionals that understand these matters on a granular* level" ...tempest in  tea pot!

*could he have meant glandular level?!? Guy must have been having hot flashes...talk about bad timing!

Wed, 10/12/2011 - 07:45 | 1764934 mtremus
mtremus's picture

I just saw some guy on CNBC  a few minutes ago saying "nows the time to buy mini's"

Simpley incredible!!!

Wed, 10/12/2011 - 07:50 | 1764951 HelluvaEngineer
HelluvaEngineer's picture

Yes, indeed.  Time to buy them from him.  Thanks.

Wed, 10/12/2011 - 08:19 | 1765007 Pumpkin
Pumpkin's picture

LoL!  I saw that idiot too.  I thinks the engineer is right.  Buy them from him!

Wed, 10/12/2011 - 08:39 | 1765048 brew
brew's picture

was it the treasury sec from illinois?  that will be the first state to default...

Wed, 10/12/2011 - 07:45 | 1764935 UnpatrioticHoarder
UnpatrioticHoarder's picture

Oh Harrisburg oh Harrisburg, the county's melting down....

http://www.youtube.com/watch?v=LTdcwb3Bch8

Wed, 10/12/2011 - 07:46 | 1764937 Global Hunter
Global Hunter's picture

Picking up trash and putting it in a dump is a basic function in a civilized society, for starters its an easy unskilled process (pick up garbage bags, put in truck, release contents into dump), we've been doing it for centuries and it keeps the number of bubonic plague cases to a minimum.  

Along comes the typical idiot progressive politican who decides to fuck up a simple process and bankrupt their city over it.  Complete retards.

edit: obviously they incinerated some money on some other stuff too and the garbage oven is the fall guy.

Wed, 10/12/2011 - 07:48 | 1764942 youngman
youngman's picture

I would love a little more history of this...whos fault was it...Consertatives or Liberals..so the sheeple can learn from this mistake...that is how we progress.....why can´t the union contracts be changed..that seems a little strange...I would assume the Unions are a big part of the budget...they should be reduced...Pensions too...

Wed, 10/12/2011 - 08:33 | 1765036 end da fed
end da fed's picture

im a government worker (please forgive me) who is forced as a condition of employment to be a member of the union. since housing prices were always supposed to rise (property taxes) and wages were always supposed to increase (income tax), government debt burden wasn't supposed to get this high. well, since so many people are still buying that load of shit about recovery or double dip recession, spending hasnt been curbed by the govts like it needs to be. and yes, unions are a huge problem, they piss and moan about cutbacks to their members wages, benefits, etc. because they are buying the line of crap about recovery too. the govt are bound by contracts at this point so they legally cant just make cuts to their employees benifits/wages, so govt budgets are fucked. don't get me wrong, its not just the unions. there is plenty of waste, fraud and abuse going on with taxpayer money by the local municipalities themselves.

Wed, 10/12/2011 - 09:59 | 1765383 RKDS
RKDS's picture

Imagine that, a contract is a contract.  Hey, I have a great idea!  Come pave my driveway or fix my transmission for an agreed upon price.  When you're done, I'll pay whatever I feel like.  Only a union stooge would find fault in that arrangement, right?

Wed, 10/12/2011 - 10:07 | 1765449 end da fed
end da fed's picture

i completely agree with you: "a contract is a contract", but unfortuantely, the govts aren't going to have the money to hold up their end of the bargain unless they start selling their assets (ie privatizing) and the unions dont want that to happen either. its a bad situation all around. the best solution for govts and unions is to sit down and be reasonable as to what can be cut. ive worked in govt under a union for 13+ years and ive never seen that genuinely attempted

Wed, 10/12/2011 - 10:18 | 1765504 RKDS
RKDS's picture

We're almost on the same page really, nobody wants to be reasonable.  What they've done instead is turn the screws on low-level management employees who are in the same income range as, but aren't covered by, the union.  That still doesn't address the point that the politicians and their friends screwed up and now want someone else to pay.  Public employees or taxpayers, doesn't matter so long as it's not them.

Wed, 10/12/2011 - 10:45 | 1765664 end da fed
end da fed's picture

all i know is that i'm willing to feel the pain of cuts now and personally help those who can not deal with those cuts so that my kid doesnt have to foot the bill (the "bill" being inflation, higher taxes, anarchy, and/or more corrupt politicians) when he grows up

Wed, 10/12/2011 - 14:46 | 1766659 RKDS
RKDS's picture

That's all well and good _if_ the cuts go towards that purpose.  Every time people who actually work get suckered into giving a little back, the politicans and their friends grab more for themselves and raise taxes anyway.  If I had kids, I'd open a savings account or something off-the-books for them long before I'd give one red cent back to government.

Wed, 10/12/2011 - 15:00 | 1766723 end da fed
end da fed's picture

amen to that. my "of-the-books" savings for him is shiny!

Wed, 10/12/2011 - 10:21 | 1765545 MachoMan
MachoMan's picture

Bingo.  Deflation = a hirer's disney world.  The choice is take it or leave it and either way, shut the fuck up about it.

Don't fret, we'll unionize when our backs get sick of the whips again.  And the debt bomb will be rereleased like a bad hollywood sequel/remake...   

Wed, 10/12/2011 - 10:01 | 1765407 kaiserhoff
kaiserhoff's picture

There are many good people in bad institutions.  I was one, but the problem is that you and others are obscenely overpaid, and yes, contracts can and will be broken.  As long as the cake government jobs are overpaid, there is no reason on god's green earth for anyone to do an honest day's work.  Do you see the problem, now? 

Wed, 10/12/2011 - 10:11 | 1765469 end da fed
end da fed's picture

im on board with you 100%. and i see first hand "no reason... for anyone to do an honest day's work" first hand

Wed, 10/12/2011 - 10:20 | 1765538 RKDS
RKDS's picture

Ain't that the truth!  The harder I work, the more layabouts I have to cover for.  I don't even mean welfare, I mean people in the office who spend the entire day sorting 100 pieces of mail and chatting on the telephone.

Wed, 10/12/2011 - 11:56 | 1766013 riley martini
riley martini's picture

 Honest days work that shit went out with moral hazzard. The county gov. I pay my taxes to was defrauded by Goldman Sucks to the tune of $140,000,000 . The county executive that bought the fraud was made a cabinet member sec. of housing . That would be the Abacus fraud government -corporate team work my taxes are due at the end of the month.

Wed, 10/12/2011 - 07:50 | 1764950 Schmuck Raker
Schmuck Raker's picture

Well, thank god the state is going to get involved. It's about time. They'll fix this.

May I suggest employing the ol' Good Harrisburg/Bad Harrisburg scheme.

Wed, 10/12/2011 - 07:52 | 1764955 mtremus
mtremus's picture

LOL

Wed, 10/12/2011 - 07:52 | 1764956 MiningJunkie
MiningJunkie's picture

Of course it is massively bullish - bad news = good news and provides the ultimate excuse for debasing the purchasing power of cash. Short cash, go long anything tangible - yeah - including the E/S in sizola which is the right side of the trade.

Wed, 10/12/2011 - 07:53 | 1764959 kaiserhoff
kaiserhoff's picture

Markets climb a wall of worry.  I've never seen one climb an avalanche of debt.

Wed, 10/12/2011 - 07:55 | 1764962 Schmuck Raker
Schmuck Raker's picture

This is the work of the WORLD WIDE AMISH CABAL I've been writing about here on ZH since 2003.

I was right. I WAS RIGHT!

You see? YOU SEE?!

Wed, 10/12/2011 - 08:16 | 1765001 kaiserhoff
kaiserhoff's picture

Dear Schmuck,

You seem to be suffering from a Yoder deficiency.  Try wearing some Oshkosh and letting your chin whiskers grow.  If that fails, try the Jewish thingy, wear a funny hat so everyone will laugh at you.  Please keep us posted on your..., er, progress.

Wed, 10/12/2011 - 08:18 | 1765003 HelluvaEngineer
HelluvaEngineer's picture

This is why I don't trust anyone with a beard.

Wed, 10/12/2011 - 07:57 | 1764969 The Knights Who...
The Knights Who Say Ni's picture

Instead of Buffett paying the higher taxes he so clearly wants to pay, maybe he could just send Harrisburg the $500 million they need. Problem solved for Harrisburg, at least for now. Next time they need money someone else can step up to the plate.

Added bonus - the taxman will surely be happy to cut the contributers a deal on any taxes they may have forgotten to pay in the past.

Added bonus 2 - Buffett's dream of paying more will have been achieved in one fell swoop.

 

Wed, 10/12/2011 - 08:04 | 1764973 Wakanda
Wakanda's picture

"yes, Virginia, (New York, New Jersey, CT, ME, MA, HI, OK, CA, NV, TX, TN, AL, AK, OH, IL,...) it can be done"

5 days until Black Monday II

Wed, 10/12/2011 - 08:03 | 1764977 Cone of Uncertainty
Cone of Uncertainty's picture

Can I get my Harrisburger well done please?

Wed, 10/12/2011 - 08:11 | 1764992 Wakanda
Wakanda's picture

At this point it is well done but not done well.  Let's hope to avoid burned, blackened, charred to a crisp, carbon residue, or nuked a la Hiroshima.

Wed, 10/12/2011 - 08:15 | 1764999 SilverIsKing
SilverIsKing's picture

Want cheese?

Wed, 10/12/2011 - 08:06 | 1764980 Its_the_economy...
Its_the_economy_stupid's picture

Little that happens in PA sets legal precedent. PA isn't actually a State, but rather a Commonwealth...something akin to a Shire.

Wed, 10/12/2011 - 08:13 | 1764995 Wakanda
Wakanda's picture

Mordor has occupied the shire and the hobbits are broke.

Wed, 10/12/2011 - 09:37 | 1765247 Dapper Dan
Dapper Dan's picture

God Bless the Molly Maguires!

Wed, 10/12/2011 - 08:12 | 1764993 jez
jez's picture

"The state capital of 49,500 faces a debt burden five times its general-fund budget . . . “This was a last resort,’’ Schwartz said in an interview after the council voted 4-3 to seek bankruptcy protection. “They’re at their wits’ end.’’ "

(Not a very long journey, I would imagine.)

"“We’re not incompetent,” Brown-Wilson said . . ."

(. . . but we are admittedly in a position where we have to deny being incompetent.)

"Harrisburg, the seat of Dauphin County, needs $310 million . . ."

So, $310 million in the hole. I make that over $6,200 per resident, or about $25,000 for a family of four. And that's "not incompetent" according to Mrs Brown-Wilson. What would be the threshold of incompetence, do ZHers suppose?

Wed, 10/12/2011 - 08:20 | 1765008 -Michelle-
-Michelle-'s picture

$6203/resident.

Wed, 10/12/2011 - 08:31 | 1765030 Vincent Vega
Vincent Vega's picture

"what would be the threshold of incompetence?" Answer is: $174,739 per citizen; $662,685 per family (the U.S. figures according to debtclock). Harrisburg is a rank amateur.

Wed, 10/12/2011 - 09:23 | 1765166 luigi
luigi's picture

And you don't count in the local debts... If the U.S. debt would be accounted for the same way european public debts are accounted for it would be much higer yet.

Wed, 10/12/2011 - 08:19 | 1765006 SilverIsKing
SilverIsKing's picture

From http://harrisburgpa.gov/

WELCOME TO THE CITY OF HARRISBURG
The City of Harrisburg is a dynamic, vibrant and diverse city that is on the move. We are a city of warm, wonderful people committed to a common vision of mutual respect, personal responsibility and civic pride. It’s a great place to call home!

Wed, 10/12/2011 - 08:28 | 1765027 jez
jez's picture

Wonderful find, SIK.

"The City of Harrisburg is . . . on the move."

. . . down the shitter and round the bend.

"We are a city of warm . . . people . . ."

That's because of your wonderful trash-to-energy incinerator!

"committed to a common vision of . . . personal responsibility . . ."

$310 million in debt but "We're not incompetent" says Mrs Brown-Wilson.

"It’s a great place to call home!"

Apart from the bankruptcy proceedings, of course.

Wed, 10/12/2011 - 09:00 | 1765099 RSloane
RSloane's picture

Hahaha.

Wed, 10/12/2011 - 08:20 | 1765009 end da fed
end da fed's picture

"Meredith Whitney is a fear monger." umm, yah, okay, sure... go stick your head up your ass a little longer. you'll figure it out when your Public Employee Retirement System is bankrupt

Wed, 10/12/2011 - 08:22 | 1765014 Everybodys All ...
Everybodys All American's picture

I feel sorry for the people of Harrisburg and all the future problems that they are likely to face. That said I believe it could very well forecast the eventual situation we will all be in because of the government's fiscal irresponsibility. Could you imagine having to get rid of your own garbage? Clear your own street of snowfall. Etc. Who knows what other problems result. What it will effectively point out is how totally bloated and messed up local, state, and federal governments have become here in the united states.

Wed, 10/12/2011 - 08:23 | 1765020 Watson
Watson's picture

Bag End has been repossessed.

Wed, 10/12/2011 - 08:36 | 1765032 PaperBear
PaperBear's picture

Lindsey Williams on GoldSeek Radio

http://sgtreport.com/2011/10/lindsey-williams-on-goldseek-radio/

Lindsey Williams can be my pastor any day of the week.

“The elite want to create massive debt before they have a crash”

You mean national debts are not high enough already and the $1,500 TRILLION derivative debt is not high enough already ?

“The elite want to buy the bonds of Greece knowing the Greeks will default and then the elite will own the country of Greece.”

“The elite want every bank in America bankrupt.”

This will be repeated in every country in the world.

 

Wed, 10/12/2011 - 08:43 | 1765065 I am a Man I am...
I am a Man I am Forty's picture

Vallejo, Harrisburg, and Birmingham have been bankrupt for years, pick a city besides these three, these are the go to cities for all the muni gloom and doomers.  People have been writing about these cities for YEARS.  And Birmingham is broke because of crooks and JPM.  That's less than one city per year in biggest recession of our lives.  And Vallejo is just irresponsible and said we aren't going to pay our bills, we aren't taking pay cuts.  

Wed, 10/12/2011 - 08:44 | 1765067 SwingForce
SwingForce's picture

Did you guys read the part about the council "not following proper procedures" according to the attorney? Sounds like amateur hour just like my condo board, except these retards get paid for being stupid. And there's insurance that covers their stupidity, stay tuned, this one's just getting started.

Wed, 10/12/2011 - 08:57 | 1765096 Taterboy
Taterboy's picture

I thinking really cheap vacation homes in downtown Harrisburg.

Wed, 10/12/2011 - 09:35 | 1765236 aerojet
aerojet's picture

I'm thinking you have never visited that gray, rust-belt nightmare.  I had to spend a week there in the mid-90s for some job training and it sucked then.

Wed, 10/12/2011 - 09:10 | 1765121 RSloane
RSloane's picture

Somewhere in the cloud, Meredith is smiling down on us.

Wed, 10/12/2011 - 13:00 | 1766296 Tidewater
Tidewater's picture

From a cloud somewhere? Try 57th Street, above a Mangia. (I recommend the tuscan meatloaf.) There's a fresh&co across the street but it gets crowded.

Short of dozens more Harrisburg-sized bankruptcies, Whitney's reputation will be unsalvagable. She forecasted hundreds of billions of dollars in municipal defaults. As has been pointed out, Harrisburg was especially defectiv -- though I know more than one economist who still managed to be surprised by the filing. (And I think that whether the court rejects it or not is academic, the city would still need to raise money that it appears it can't and won't.)

Based on the size of Harrisburg's expected defaults, we'd need to see 160 more of these to reach HALF THE LOW END of Whitney's forecast.

So it's game on, but not game over.

Thu, 10/13/2011 - 00:47 | 1768469 Isotope
Isotope's picture

If  you listen to the Sixty Minutes interview, she didn't say that there would be 50-100 defaults within the next 6-12 months. She said that the problem would become apparent in that time frame. She talked before that about the spotty quality of information published by local and state governments, so I doubt that she would put herself in the position of trying to predict that tight of a time line. It sounds to me like people are trying to misrepresent what she said.

Mon, 10/24/2011 - 13:04 | 1804884 Tidewater
Tidewater's picture

If you read my post... I didn't say she said there would be 50-100 defaults within 6-12 months.

I didn't mention any timeframe because I don't hold her to that or any specific timeframe, really.

But she's on the record in more ways than just the 60 Minutes interview, like her research piece that inspired the interview ("The Tragedy of the Commons").

I'm sure people are trying to misrepresent what she said, but Tyler's post didn't mention any timeframe; and no one in this message stream is talking about any timeframe but you.

Wed, 10/12/2011 - 09:12 | 1765128 JP McManus
JP McManus's picture

Trash to energy incinerator?  Didn't Doc Brown have something called a Mr Fusion in Back to the Future I, II, or III that did exactly that? 

When will Government stop getting ideas from Hollywood??

Wed, 10/12/2011 - 09:15 | 1765137 krispkritter
krispkritter's picture

I lived in Harrisburg in the 70's and was recently back there for a family thing. It's like it's frozen in time and it was no picnic when I was there early on. The opening on their webpage is written by the same guy about every city I've seen a webpage for. They need to move the capital to Philly or Pittsburgh, at least they are out of the stone age...

Wed, 10/12/2011 - 09:27 | 1765178 Tinsu
Tinsu's picture

Does anyone know if the Bankruptcy Court can change (ie. reduce) the pension and health obligations for municipalities? 

Wed, 10/12/2011 - 09:28 | 1765181 skam
skam's picture

http://www.nytimes.com/2010/05/21/us/21harrisburg.html

 

$7.8 million for a "Wild West" museum!  Way to manage those funds.

Wed, 10/12/2011 - 09:42 | 1765273 Believable-Hypocrite
Believable-Hypocrite's picture

"They're at their wits end."

 

Are they talking about the Wit brothers in the city council? Nit, Dim and Half.

Wed, 10/12/2011 - 09:45 | 1765288 RSloane
RSloane's picture

As someone above said it was a very short trip.

Wed, 10/12/2011 - 09:48 | 1765306 Seasmoke
Seasmoke's picture

when they finally spin all the upcoming bankruptcies as bullish, they will be praising Meredith as a genius

Wed, 10/12/2011 - 10:41 | 1765641 snowball777
snowball777's picture

"The per capita income for the city was $15,787"

@50k citizens == $790M.

@50k * 1-2% * $140k == $70-140M.

Think they could use the $500M that went to Solyndra to shore up their budget?

Art Cashin Quiz:
A city had 100% population A and 80k people, and later had 30% population A and 70% population B with 40k people.
How many of the leaving 68k of population A (80k -> 12k) have irrational fear of the 28k from population B?

Will it hurt the job creators when all their employees and customers move on?

Jack up Wal-Marts taxes, get the Feds to make it rain, and fix some potholes!
Or not...I hear they have brown people there.

 

Wed, 10/12/2011 - 22:35 | 1768197 Buck Johnson
Buck Johnson's picture

Meredith Whitney is on it again, she knew as did everybody else but she elected not to be silent about it. 

Do NOT follow this link or you will be banned from the site!