The decision by government officials in San Bernardino, a city of about 210,000 residents approximately 65 miles east of Los Angeles, followed a report by city staff that said the city faced an imminent financial crisis.
The report said the city had exhausted its reserves and projected spending would exceed revenue by $45 million in the current fiscal year which started on July 1.
These are just tremors. The real fun begins when cities like Chicago go belly up and states like Illinois and California go belly up. We are still a couple of years away, but these bankruptcies are coming.
It is very dangerous to own municipal bonds.