Monday, November 26, 2012

HOT: Bankrupt San Bernardino to Halt Payments to Calpers, Bondholders

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.

Reuters continues:
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.


  1. EPJ: "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."

    Is that a big red flag, or wHAt?

    I imagine most every other city/state/national goberment is in that same kind of boat too... dragging each other down like drowning swimmers pulling under their rescuers while lying about not being able to swim.


    When they say, We "Only" owe about $143.3 million, that's code speak for: "We really owe $319.5 million and we can't pay it back. ... Heck, we can't even make the minimum payments."

    I am beginning to be at a loss for words.

    "Here we go", is right.

  2. Wash. Rinse. Repeat 10,000 times for every city, county and state in the US.

    If you depend on a government pension, you need to make contingent plans. If you can negotiate a lump sum payout, TAKE IT!!!!

  3. Let's see if I have this right: Bernanke will play Robin Hood by further debasing the currency to "help" current public servants keep their debased paychecks flowing...and effectively rob retired public servants by paying them off in debased dollars. Am I missing something? Oh yeah, the dollar denominated instrument holding public world wide are gonna get robbed more too. Public servant of the year: Ben Bernanke!

    1. You assume they can "keep it together" that long. Even a tiny rise in interest rates will have catastrophic consequences for government debt. The "race to the bottom by the yen, euro, franc, renminbi and dollar is masking the reality of the debasement. All of the central banks are buying government debt at an increasing rate to keep the game going, and once any single member loses his balance they will all tumble down the mountain.