Wednesday, June 27, 2012

Stockton, California Set to Become Largest US City to Declare Bankruptcy

Only 13 cities, counties and other government entities filed for bankruptcy protection last year — the highest annual level in nearly two decades. Stockton was the seventh U.S. municipality to file this year and the first California city since Vallejo, which sought protection in 2008, according to James Spiotto, a Chicago bankruptcy attorney who tracks municipal bankruptcies, reports WaPo.

It's only the beginning. It will take some time but states and major cities will also eventually find themselves near bankruptcy.

It makes zero sense to own municipal bonds at this time. Once the threat is broadly recognized for a couple of big cities or states, fear will permeate the municipal bond sector.


  1. Starve the political machine, protect yourself and don't buy government bonds. The Austrians point out that bonds overall will be losers as interest rates rise.

  2. It's also interesting how all these local governments are trying to find more ways to get revenue such as trying to enforce ancient laws against wearing swimsuits and swearing. Not to mention the growing number of police departments using speed cameras to fine citizens.

    It all adds up to a net loss of liberty.

  3. The rehearsal for the coming collapse was when Proposition 13 passed in California in 1978. The usual suspects were yelling "if it passes, we'll have to shut the LIBRARIES!!" etc.

    Of course when it DID pass that was indeed the first thing to go, along with the most useful of gummint services (think garbage).

    Eventually, of course, reality bit them and they laid off cops right and left. Yea!!!!! The change was remarkable. I know how the East Germans must have felt when the wall came down. So think positive!