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California is toast

Discussion in 'Politics, Elections & Legislation' started by wireguy, Aug 18, 2012.

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  1. wireguy

    wireguy TS Member

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    From CALIFORNIA POLITICAL REVIEW

    Moody’s Warns of Mass California Municipal Bankruptcies
    August 18, 2012 By Chriss Street

    The klaxon horn went off this evening for California municipal bondholders when Moody’s credit rating service issued a report stating that the plummeting financial condition of many California counties, cities, school districts and other government agencies will soon result in large numbers of municipal bankruptcy filings. Concerned about their own potential liability for providing high ratings that encouraged conservative elderly Americans to invest in risky bonds; Moody’s announced they will undertake a wide-ranging review of municipal finances because of the growing insolvencies.

    The Moody’s report comes just two days after we reported that “CALIFORNIA SALES TAX REVENUE NOSE-DIVES BY 33.5%.” Stock brokers have often recommended California municipal bonds as very safe investments, due to historically low default rates and relatively stable finances. But Moody’s said that outlook is changing after the Chapter 9 Bankruptcy filings of Stockton, San Bernardino and Mammoth Lakes.

    Moody’s is especially concerned with the growing attitude among many cash-strapped cities that filing bankruptcy to avoid paying bondholders, is politically more advantageous than cutting spending. As a result, Moody’s will re-assess the financial condition of all California cities, which issues about 20 percent of the municipal bond volume nationwide, “to reflect the new fiscal realities and the governmental practices.”

    The Moody’s report said the credit rating service will also examine the outlook for municipal bonds in other troubled states. Robert Kurtter, Managing Director of public finance at Moody’s, would not say which states they will review, though Kurtter mentioned Michigan and Nevada as possibilities.

    Tonight’s report noted that many cities across the nation are in financial distress, but emphasized that agreater share of bankruptcies are expected to come from California. Local officials were quick to try to downplay this grim forecast. Chris McKenzie, Executive Director of the League of California Cities responded: “Moody’s has an obligation to review changing circumstances, but we would just suggest that their assessment of the framework and ground activities is perhaps exaggerated.”

    Tom Dressler, spokesman for California State Treasurer Bill Lockyer, cautioned against overacting to only three bankruptcies from California’s 482 cities: “No city’s going to blithely skip into bankruptcy court to avoid its obligations.” Mr. Dressler called the report “a little hyperbolic.”

    Moody’s detailed that over 10% of California cities have already declared fiscal crises, with the most troubled areas lying inland in the middle of the state and east of the Los Angeles area. Mr. Kurtter said the declarations of emergency were “a reflection of the broader fiscal stress in the state” and went on to warn that Moody’s may issue an “across-the-board rating revisions are possible following a review of our ratings on California cities over the next month or two” for all California cities. Chris McKenzie acknowledged that such a move “would have a terrible impact on taxpayers.”

    Moody’s highlighted growing doubts that cash-strapped cities are willing making good-faith efforts to pay their bonds debts in full. Former Treasury official Paul Rosenstiel, a Principal at DeLaRosa & Co municipal bond investment-banking firm in San Francisco stated: “Credit analysis is based on the ability to pay and the willingness to pay. Investors have historically assumed that cities are willing to pay their debts because they want continued access to the bond market” … “What is being considered is whether the willingness to pay is something that needs to be factored in more than in the past — and if so, how would you measure it?”

    California cities already pay higher interest rates to borrow money from municipal bond investors because the state has the second lowest bond rating in the nation, only Louisiana is lower. But if any city’s credit rating is cut to the “junk bond” level, rates would rise so high that the city would be forced to file bankruptcy. Most cities are already are financially deteriorating, because of a steep drop in tax revenue.

    The Moody’s report is raising alarms for city leaders who fear it may trigger a market panic. ”Every city in the state is looking on with some concern,” said Dave Vossbrink, spokesman for the city of San Jose. ”Governments of all kinds borrow money, usually to build infrastructure that lasts a long time. It’s like getting a mortgage to build roads, a sewage plant, whatever it might be.” Mr. Vossbrink emphasized that San Jose has cut laid off cops and closed libraries. Residents also recently voted to cut public pension benefits for city workers, but those cuts may not be enough prevent a downgrade.

    Moody’s said it will conduct in-depth financial stress tests for all California cities in the coming weeks and issue appropriate downgrades in September. The timing of the Moody downgrades may be especially devastating for the California state budget. Governor Jerry Brown kicked off his drive this week to save the state’s solvency by encouraging voters to pass an $8 billion tax increase initiative on the November ballot. But bad press and rising bankruptcies is sure to undermine voter support.
     
  2. Jerry Parr

    Jerry Parr Member

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    Thanx for the info wire, but California has been toast for over 5 years. Now, it is officially BURNT toast! Vegas is right on its heels, with the rest to follow..........Sad.
     
  3. halfmile

    halfmile Well-Known Member

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    Stockton, Mammoth Lakes, San Bernardino, and Vallejo have already filed.

    Are thesse guys part ostrich?

    My granddaughter could have foretold this.

    HM
     
  4. crusha

    crusha TS Member

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    Well...OBVIOUSLY, the bond-ratings people are biased batshit-crazy teabagger types who have always harbored a grudge against the better sort of life Californians have created for themselves, and are now willing to stiff the WORKING CLASS FAMILIES of the Golden State to make a political point in this election year.


    Yeah. (Clap, clap, clap)..."You didn't make that!!!" (clap, whistle, cough...clap).
     
  5. Brian in Oregon

    Brian in Oregon Well-Known Member

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    Deplorable Bitter Clinger in Liberal La La Land
    Stick a fork in Commiefornia. It's done.
     
  6. Francis Marion

    Francis Marion Well-Known Member

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    Illinois is right there also. Same problem, same non solution. Greedy public employee unions have bled these cities/states dry. My governor fixed the problem here, and they tried to throw him out of office, via recall.

    Until it happened here in Wisconsin, none of us knew how good the public employee unions had it nor how much they took. When this hit the light of day, most of us were shocked.I always knew they had it good, but the abuses were well hidden. When the stories finally came out about pension double dipping, overtime abuses and such things( no credit to local media, thank talk radio)you would have thought they would have hung their heads and hoped for the best.
    WRONG! They poured more money into a campaign to destroy a good man.

    It will be very interesting when one of these cities actually does go bankrupt. All pensions and benefits are off of the table. Wait for the whining then.
     
  7. wireguy

    wireguy TS Member

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    The union public employees are deeply involved in what is nothing less than conspiracy to commit fraud. As far as I'm concerned they signed on to something that always was mathematically impossible and they darn well knew it. I think you are going to see a lot of those people lose all or parts of their retirements. The math simply isn't there for their golden parachutes to unfurl while they go serenely into a fairy tale retirement.
     
  8. wireguy

    wireguy TS Member

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    I just read an article yesterday that said California's sales tax revenue is down it was either 30 or 33 percent compared to same month last year. That is a hydrogen bomb fiscally speaking.
     
  9. Bisi

    Bisi TS Member

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    Don't worry about it. When Ojackass gets reelected he will bail em out with your money. Hear that swing state Ohio?

    From reading this article it sounds like the plan is to not pay the bond holders, but keep paying the bloated pensions, etc... (learned that from Obama's Chrsyler plan) That will give em a few more years to ignore the real problem.

    Speaking of swing states. If Ojack... gets reelected you have to know his plan will be to bail CA, IL out. That means somebody in Ohio who is 55 to 60 or older still working and paying taxes on an income of 40K will be paying for a CA pensioner who is 50 and making more than they. Yeah go ahead and vote for another 4 years for the bolshevik.
     
  10. crusha

    crusha TS Member

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    Heck, Bisi...that gray-hair in Ohio doesn't need to send his hard-earned money all the way to Callyfornee to support a deserving MIDDLE CLASS FAMILY.


    You see, Ohioans have their own Master Race of Privileged Government Employees to support on the dole!


    Charity begins at home, doncha know.


    Former Buckeye,

    Buzzy
     
  11. 22hornet

    22hornet Well-Known Member

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    I rode my motorcycle up I-5 from Lost Hills to Kettleman City on my way home from work this morning. I-5 is out major north/south interstate. It is nothing but pot holes. In many sections I could see the base gravel. What a crying shame. Our state is a mess, but the democrat legislators that run this state and their idiot governor just signed the bill for a high speed rail boondoggle that nobody wants. Projected cost...70-100 billion. We are 20 billion in the hole, with no end in sight.

    It's time for Cali to fail. There is no other way as long as the democrats keep driving this state into the ground.
     
  12. John Galt

    John Galt TS Member

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    Not to worry, once Governor Moonbeam gets his big tax increase approved by the sheep, things will be wonderful yet again.
     
  13. chuckie68

    chuckie68 Active Member

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    Detroit desparately needs an emergency manager to straighten it out while they can still survive. Mayor Bing, and the "at large" city council (none of them live in the districts they represent) are fighting that tooth and nail. They are afraid of losing control of the money they don't have.

    Anybody seen Detroit lately? Anywhere in the immediate downtown area is OK but if you go into the neighborhoods most everywhere you look is a burned out rathole. The city claims there is no money to tear down the abandoned properties. At one time we had a guy collecting fulltime pay with overtime pay for working full time as the lighting commission head, at the same time he was collecting the same pay structure for running the water department. What it amounted to was well over 200 grand a year and he was supposededly working 20 hours a day. No wonder there is no money to repair the city.

    But you must remember this city has been run by the Democrats since 1972 --- the Coleman young days. One republican befor him and the Democrats back to the 50's. Talk about the progressive party? the only way they progress is backwards. I could go on and on but I think you get the picture.

    Chuck
     
  14. Bisi

    Bisi TS Member

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    buzzy, after Ohio sends Obama over the top with their electoral votes the gray haired "Buckeyes" will not only get to support their civil servants but CA's too.

    I made my first trip to Cleveland (aka - the mistake on the lake) a month ago. I don't know what it says about either me or the city, but I had a great time? I learned some new words sitting out in the cheap seats at an Indians game. Those Tribe fans are quite articulate. Cleveland - Naptown with a lake and an attiude.
     
  15. Don Steele

    Don Steele Well-Known Member

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    PLEASE Re-read Bisi's response, We already know WITH CERTAINTY that Obama will use Taxpayer money to bail out his buddies and BUY SUPPORT:

    Don't worry about it. When Ojackass gets reelected he will bail em out with your money. Hear that swing state Ohio?

    From reading this article it sounds like the plan is to not pay the bond holders, but keep paying the bloated pensions, etc... (learned that from Obama's Chrsyler plan) That will give em a few more years to ignore the real problem.

    Speaking of swing states. If Ojack... gets reelected you have to know his plan will be to bail CA, IL out. That means somebody in Ohio who is 55 to 60 or older still working and paying taxes on an income of 40K will be paying for a CA pensioner who is 50 and making more than they. Yeah go ahead and vote for another 4 years for the bolshevik
     
  16. Setterman

    Setterman Well-Known Member

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    Ohio is more union than you know, Canton, Akron, Cleveland, Toledo, Columbus, Cinci all have strong union base, and heavy minority democrat populations.

    It depends who gets off their fat butt and votes. I have no idea what the population spread is (big city vs everyone else), but I wasn't surprised when Barry took Ohio. We had a loser Governor before Strickland.

    I was a bit surprised when Kasick won the Governor's race.
     
  17. rw993

    rw993 Active Member

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    California is pulling so much crap out of their hat. We are now restricted from applying "loss carry over" on our Cal Corp Tax filings. You have to pay your taxes at full and they will let you know when you can use the carry overs. I am sure it will be sometime this decade...... At least you can take the current year loss. Although no matter what (millions in losses) you still pay a $800 minimum tax.

    If a company showing millions in losses has to pay tax, then even the most pathetic should pay $1.00 a year.

    RW
     
  18. racer

    racer TS Member

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    I like the billion dollar bonds scheme! Get a 100 million now but pay back a billion 40 yrs from now. Can't make this up.... Dan
     
  19. wireguy

    wireguy TS Member

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    That billion dollar bond scheme is a small town just north of me. Anyone who would invest their money in these bonds deserves what they are going to get - default. A school child could see that if they can't come up with 100 million today they sure aren't going to have a billion tomorrow. Really this is all based in corruption. Someone recognizes their ox is about to be gored and they are getting enough money in hand today to pay their retirement benefits and to hell with tomorrow. The level of corruption I see daily in America is stunning. The majority who live within the enchanted 50 miles of the coast here, driving their Bmers and sporting their white framed sun glasses haven't a clue about what is coming down the track headed right for them. I have to think that one day soon the so-cal lifestyle set is going to get a nasty dose of reality.
     
  20. Rick Barker

    Rick Barker Well-Known Member

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    I don't believe California has taxed their residents for 100% their incomes, savings and property, so there is still hope.


    For the last 30 years, I have watched in amazement as voters pass amendments for more taxes and social programs on local election issues. I am sure the people will gladly pass any proposals that seek more taxes.

    Besides California is "too big to fail" and the living example of socialism at it's best, so the other 49 States and Territories will be bailing out California.
     
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