Here we go.
Bankrupt San Bernardino, California, voted on Monday to present a plan to a bankruptcy judge that seeks to balance its budget through deferring payments to the state's public employee pension fund and to the city's bondholders, reports Reuters.
San Bernardino has already halted its biweekly $1.2 million payment to the California Public Employees' Retirement System (Calpers) since it filed for bankruptcy protection on Aug. 1.
The city calls the halted payments "deferrals," but under the pendency plan it would not resume any payments to Calpers until the 2013-2014 fiscal year. It also wants to negotiate its debt to Calpers so it can be repaid over 30 years.
Calpers, America's biggest pension fund which serves many cities and counties in California, is San Bernardino's biggest creditor. The city lists its unfunded pension obligations to Calpers at $143.3 million. Calpers says if the city halted its relationship with the fund immediately the debt would be $319.5 million.There are many cities, counties and states in financial trouble, some may be years away from bankruptcy, but many are headed that way.
It's bankruptcy or Bernanke prints trillions of more dollars, which would devalue the dollar for all of us, but also makes the debt easier for the state and local governments to pay off. Bankruptcy only screws those who own the bonds, Bernanke inflation will screw all those who aren't well positioned in gold, silver and other assets that will benefit from price inflation.