Vallejo, California, Plans to File for Bankruptcy; Hardball In Vallejo, No Balls In D.C. - Mish Shedlock
And so it begins...
Vallejo, California, Plans to File for Bankruptcy
"May 7 (Bloomberg) -- Vallejo, California, officials voted to file for bankruptcy because the San Francisco suburb isn't able pay its bills after costs for police and firefighters soared and the housing market's slide cut into tax revenue.
The city council's unanimous decision last night will make Vallejo the largest California city to file for bankruptcy and the first in the state to seek protection from creditors because it ran out of money to pay for basic services. The decision came after it failed to win salary concessions from labor unions.
The city of 117,000 is facing ballooning labor costs and declining housing-related tax revenue that have left it with a $16 million deficit forecast for the year starting in July. In bankruptcy, creditors will be kept at bay while officials devise a plan to balance the books. City services would still operate."
"HARD HIT....1994 after former Treasurer Robert Citron's wrong-way bet on interest-rate derivatives lost $1.6 billion.
The area has since been one of the hardest hit in Northern California by the housing market slump. Home prices in Solano County, where the town resides, dropped 19 percent in January from the year before, according to DataQuick Information Systems, a firm which tracks real-estate markets in the state.
There are currently 1,214 ``real estate owned'' homes in Vallejo, meaning that the homeowners have been foreclosed and their lenders now own the houses, according to Irvine, California-based RealtyTrac, which sells data on foreclosures. Another 1,014 properties are in the foreclosure process, and 464 houses are scheduled to be auctioned."
My comment: Vallejo is filling bankruptcy. I think it will be one of many cities to file bankruptcy to restructure its' current pay and pensions programs. Cities unlike the FED have to balance budgets they cannot print endless amounts of money to cover their spending short falls.Hardball In Vallejo, No Balls In D.C.
Mish Shedlock has writen on the issue:
"Cities and municipalities have been promising government workers more in salaries and pension benefits than can possibly be met. Unfunded liabilities are mounting and the ticking time bomb finally went off. What had to happen, did. Vallejo California Declared Bankruptcy."
Mish comments on DC are on target also:
"No Balls In D.C.
It's a game a union hardball in Vallejo, but there are No Balls In D.C.
Please consider this Pentagon Threat: If Congress doesn’t act, soldiers will go unpaid.
Pentagon Press Secretary Geoff Morrell briefed the press, starting with a statement about the Global War on Terror budget supplemental request, which is slated to go before the House this week. He said that currently the military is borrowing form Army payroll accounts in order to fund the wars in Iraq and Afghanistan and that if the Congress does not act the Defense Department will not be able to pay soldier, including those in Iraq and Afghanistan after June 15, 2008. He said the only options available if Congress does not pass $108 billion in war supplementals would be for the Defense Department to petition Congress to allow certain “re-programming” of other funds so that soldiers don’t’ go without pay.This is not about paying soldiers, this is about inappropriate spending. And Congress does not have the balls to do what needs to be done: Balance The Budget.
If the US government was required to have a balanced budget then this stupid war would not have been fought in the first place.
This is what I want Congress to do.
Keep paying the soldiers.Stop paying themselves until they pass a balanced budget that includes future liabilities.
If Congress wants a war or war funding then fine. At least have the balls to raise taxes to pay for it. If we want to station troops in Europe and Japan, same thing. If taxpayers were given a choice to invade Iraq, station troops in Europe, and raise taxes, or not station troops in Europe and exit Iraq, it is perfectly clear how everyone but the neonuts would vote.
Want a bridge to nowhere in Alaska? Fine. Hike taxes or cut spending elsewhere. There would be some easy choices if Congress just looked at things like a household budget instead of money growing on trees.
Ball-less neocon chickenhawks started this mess, but they do not have the balls to pay for it. Ball-less Democrats keep giving in to Pentagon threats such as the one presented above for fear of being accused of not supporting the troops.
The reality is the only way to support the troops is to bring them home. The way to bring them home is to cut funding for the war and balance the budget. There is no balls in Congress to do either.
Mike "Mish" Shedlockhttp://globaleconomicanalysis.blogspot.com"
My Comment: Mish has one of the best Econ/Finance blogs on the web and IT IS FREE: http://globaleconomicanalysis.blogspot.com/
He also has some very literate and savy readers, who make good comments on his posts.