America's Cities Going Broke?
The spreads between Municipal Bond rates and similar treasuries are the widest in US History.
The insurance companies protecting the bonds are now getting a laughable AAA rating from the ratings agencies they pay to rate them.
The City of Vallejo California could soon become the first city in the state's history to declare Chapter 9.
The rising revenues our municipalities became accustomed to spending from rising property taxes, rising impact fees, and rising sales taxes are now imploding. California's state sales and use tax revenues were DOWN 9.7% in January.
The problem is our country's municipalities were not content with simply their rising revenues, they borrowed trillions against their new found and projected rising revenue streams. Now with revenues contracting, they may have problems paying back the trillions that are owed on the bonds and the pensions promised to their workers.
If you think this is funny, you may want to contact the city counsil of Vallejo or the hundreds of other city boards around the country watching and waiting to see how this works out.
If you work or have contracts with any state or local in America, be prepared to have those contracts rewritten over the next year. If it doesn't happen, at least you are prepared.
In the mean time, just watch what happens in Vallejo some perspective.