Stockton, California was allowed to declare bankruptcy this week. With all the other news, it was overlooked (on purpose or not). It’s the biggest bankruptcy of an American city yet, and it won’t be the last.
Cities and states have been selling bonds to cover their pensions and debt (instead of cutting spending). The Muni bond market is huge. When cities can’t borrow any more, can’t tax anymore, and run out of money they will go bankrupt. Only by actually going bankrupt can cities dispense with their gold plated union pensions. But, of course, unions and pensioners aren’t going down without a fight.
The new battle coming to a city or state near you: Muni bondholders versus union pensions. Unions have bankrupted everything they touch, and now it’s the government’s turn to pay the price. Who get’s the haircut? You decide.
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DelMarVa's Premier Source for News, Opinion, Analysis, and Human Interest Contact Publisher Joe Albero at alberobutzo@wmconnect.com or 410-430-5349
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