What happens when a state goes bankrupt?

As far as I know., there is no BK process for a state. I don't know what they'll do when they can't pay their bills, but BK isn't an option.

Incorporated cities and towns are different. I know that Villejo, CA (sp?) declared BK some time ago. In a major precedent setting case, I believe the judge voided the union contracts. That was almost a year ago. Don't know what's happened since.
 
Quote from ralph00:

As far as I know., there is no BK process for a state. I don't know what they'll do when they can't pay their bills, but BK isn't an option.

Incorporated cities and towns are different. I know that Villejo, CA (sp?) declared BK some time ago. In a major precedent setting case, I believe the judge voided the union contracts. That was almost a year ago. Don't know what's happened since.
More...
IF they can get State Dist. Judges to void State Employee Union contracts AND health bennies, it'd be a good start.
But I don't think even that would fix it.
CA isn't just broke, they're in the hole for untold billions of dollars in unfunded retirement/health ins. bennies.
 
I agree with earlier poster that Prop 13 DID NOT cause this. The problem CA faces is caused in large part by a conentration of taxes collected from a very small segment of the poplulation. Cailfornia is a microcosm of where this country is headed. Over 40% of all working Americans pay no income tax (they do pay FICA). The top 10% of income earners pay nearly 65% of all taxes. The top 50% pay just over 96% of all income taxes. When you concentrate the tax revenue across a very small segment of the population, you are going to see wild swings in revenues as the economy goes up and down.
 
Quote from Scataphagos:

Venture to say the REAL problem has rarely been "not enough taxes", and often been "too much spending"..
More...

Indeed! And also I might add, failure to agree on prioritizing expenditures, and making proportionately larger cuts in low priority items. You end with gridlock and bankruptcy or other crises. As is the case with the US government, both sides of the political spectrum are to blame; not radical "liberal" spenders alone or radical "conservative" obstructionists alone.
 
Quote from BSAM:

I love California. It is truly sad to see what the so-called leaders in CA have allowed to happened. There is simply no excuse for this. The leaders/bureaucracy have, in a certain way, destroyed this once great land.

Again, there is no excuse for what is happening in California. Period.
More...

Isn't California one of the most democratically accountable states in the union? Maybe you should bame the voters who elected these politicians.
 
Yes! Exactly. The liberals want to spend, spend, spend, but the people rejected this, and put a stop to it. Now, because the judge and the politicians just want to take from those who work and give to those who don't, they drove CA into a pitt. What a mess that DID NOT have to happen.
 
Back in 87' we didn't have a housing crisis like we do now, and that is a Huge difference since banks use houses as collateral. Soon the world will grow wise to the FED printing money to keep interest rates suppressed at the Treasury Auctions and things will unravel quickly. Water, Food, and Guns will be top priorities soon :(.

Quote from adadadog:

I remember Mr. Gobalchev said the direct reason the Soviet Union broke up was the central government ran out of money. I think U.S. is different, U.S. dollar is pegged by a lot currencies. U.S. can print to transfer the burden of debt to foreigners if it becomes desperate enough. But I do not think situation is that bad. I just finished reading Market Wizards book (third time), I found some of the Wizards (e.g. Martin Witze) had exact same sentiment after 1987 crash as current doomers.
More...
 
People like to scapegoat everybody but basically, California can't EVEN afford to pay the retirements racked up by the union workers. That is the real problem. There is no way, ever, they can do that but they will keep on borrowing and doing whatever they can do until the state is OVER WITH FINANCIALLY. That is what Unions do, they did it to GM and were demanding stuff right into the bankruptcy... they have the political clout to do that and they don't have to be rational now, or ever... I'd love it if the Fed never bails them out and the Union Retirees have to just suck it up at some point but probably that won't happen...
 
I think paying for illegals' welfare, health costs, police costs, and school costs have to be MUCH, MUCH more than retirement for workers. If we got the illegals out, we probably could have sustained the retirement for public workers.
 
You must log in or register to reply here.
Back
Top