Wednesday, July 11, 2012

San Bernardino Becomes Third California City Seeking Bankruptcy


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.









10 comments:

  1. So how does one make money here? With Fannie Mae, you could short their stock.

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    Replies
    1. How does one make money here? you flog off any bonds you might have and think "phew, dodged that bullet"

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    2. Assured Guaranty (AGO) is the only company left after 2008 that insures muni bonds.

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    3. You start a private security agency in the city, and start aggressively marketing to residents who are scared because of reduction in cop "services". Of course, the neighborhood doesn't become any more dangerous just because the gang in blue shrinks, so you only need to make your agents visible to provide some peace of mind to the scared sheepie - for which the sheepie will gladly pay. Neither you, nor cops are able to actually defend anyone (that'd require bodyguards and such), but explaining this fact of life to the sheep is not your responsibility.

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  2. So the projected shortfall amounts to about $214 additional loot per person that they don't have.

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    Replies
    1. It will decrease for every person lucky to be a renter who leaves the city and increase for anyone who doesn't.

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  3. While sadly, many will be hurt and even wiped out, it is ultimately the only solution. As the host dies, the leaches have nothing left to feed on. When you build an unsustainable system it is by definition (wait for it) "unsustainable". How's that for profound thinking??? ;-)

    While inane, it describes exactly what the U.S. (local, State and Federal) and for that matter the whole rest of the world is experiencing. The fools in charge will continue to throw gasoline (fiat dollars) on the fire thinking that they are saving the world, when instead they assuring its complete and utter financial destruction. They are unable to see beyond the mess they have created to what comes after - no, and its not the NWO.

    The warning klaxons are sounding loud and clear. if you do not take action, you have no one to blame but yourself and will go down with the ship. Most who read this blog are well aware of these truths, but millions "have no clue". Perhaps the best we can do is to try to gently nudge them awake. Case in point. I have a friend who is a broker, an incredibly bright and accomplished man. Spends his life trading. One evening over martinis I told him his large wall street firm would soon cease to exist. He was not pleased with me to say the least. In less than a year his company was gone - vaporized. He called me and asked, "How did you know?" I laughed and replied, "How could you have not?"

    Please take steps to protect your loved ones. Time is running short.

    Peace brothers.

    "All we are saying is give cheese some pants" Lon Jennon

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  4. How many cities have to declare bankruptcy before a state does? Which will go first, CA or IL?

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    1. State and city finances are not necessarily dependent. I.e. one may live in a bankrupt state but in a healthy city.

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    2. Understood, but have an exit strategy, be prepared to leave and not be held back by a mortgage.

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