A City of Los Angeles bankruptcy could be nearing, with the city a victim of the same unfunded public pension liabilities that are crippling municipalities like Stockton and San Bernardino across California, and elsewhere as well.
A Stanford study sums up the dismal figures. The percentage growth for spending on pensions is greater than that for public safety.
Who could have possibly predicted a City of Los Angeles bankruptcy??? Former LA Mayor Riordan, that’s who…
But the tired game of pretend and extend continues, with the mayor and city council pretending all is fine while using accounting tricks and loans to extend the problem further down the road.
Forget fiscal sanity, we need to spend millions of dollars and hour and hours of debate over harmless houseplants.
What we need is cities to stop giving these enormous pension benefits to new government employees. I mean ok, there are promises made on the past that really shouldn’t have been made, but they were, so I don’t begrudge those people their promised pensions when they retire. However some of the same benefits are being promised to new hires. We can’t afford to keep this going on like this. It’s not fiscally sustainable and the only solution is for the city to go bankrupt and screw people out of their pensions. Oh wait, then it’s the State that will have to pick up the tab, right? Eventually the state will have to file for bankruptcy too. Oh but there isn’t anything in the bankruptcy code for that, is there? Even if there isn’t, trust me, all that will change when the California government shuts down completely. So I don’t necessarily agree with you @Conspinner that we don’t need to spend millions of dollars and hours of debate over (virtually) harmless houseplants (aka marijuana), but at the same time it would be helpful to legalize the plant fully and tax it or else people that depend on their pensions to retire are going to have to go back to work when the state of California eventually shuts down. At a time when we need more jobs and not less, can we really afford to spend billions on fighting marijuana for recreational use when we can tax it and help stop cities all over the state of California from going bankrupt? I mean ok, let’s give the marijuana debate a reprieve for discussion for a while, but why not discuss industrial hemp which can’t get you high and makes wonderful products like plastics and rope and clothing and paper? Costs less to grown than trees, takes less time to grow than trees, is better fiber than trees, and creates more yield per acre and requires no pesticides, unlike cotton. Not to mention that if you spread around industrial hemp, everybody that has outdoor illegal grows of medicial marijuana would find their crop turn into industrial hemp in 1 to 2 grow cycles. Great for stopping the illegals from crossing the border and growing in our national forests if industrial hemp was growing all over the forests too. Talk about the costs you could save by planing industrial hemp in the forests instead of trying to find these illegal gardens. Let nature take care of the problem. 🙂
The pensions are locked in, the only thing that can dislodge them is a bankruptcy judge.
Does that mean if the California government shuts down it’s up to the federal government to pay up for these pensions? And what happens to California if shuts down? Does it disband from the Union?
Sweet dreams are made of this. But no, according to a SCOTUS case (Texas v. White) a state can only secede through revolution or through consent of the other states.
This wouldn’t be a succession, it would be The state is broke with no money in their accounts. The police won’t go to work because they won’t be paid. All government programs and services will be shut down. No fire fighters, no nothing to do with government. The nightmare that almost happened many times before would actually happen this time. What would happen then is what I’m asking. Would the Federal government step in and take control of California?
So far as I know there’s no mechanism for that – it would be a direct violation of the Constitution, but these days that’s a regular occurrence. So, would CA be left to fend for itself, likely falling into some kind of chaotic warlordism, or would it be nationalized? Neither possibility bodes well for the future of the nation. Or would it be sold to the highest-bidding corporation? That is perhaps the most frightening possibility of all – not just corporatocracy, but government by corporation!
But if these corporations you speak of were traded on the open market then anybody could buy stock and own a piece of the state. I guess that since nobody has ever though of that day coming where any state no longer had a government to run it, there really are no provisions for it. Well if this keeps up much longer we just might find out what exactly our federal government will do if anything at all, or if they even can do anything.
Nobody knows what would happen. There’s no mention in the law about states filing bankruptcy. California would probably settle with bondholders for pennies on the dollar.
The only real answer is that the bondholders take it in the shorts.