Path for States to Go Bankrupt Discussed

[Petedtom]

Seems the very quiet talk about this is starting to be heard. Looks like it will be sooner rather than later at this point.

http://www.nytimes.com/2011/01/21/bu...html?src=busln

[johngaltfla]

“All of a sudden, there’s a whole new risk factor,” said Paul S. Maco, a partner at the firm Vinson & Elkins who was head of the Securities and Exchange Commission’s Office of Municipal Securities during the Clinton administration.

DUH! Master of the understatement. Oh and this:

[rondaben]

lol, ya. If you have a state pension...

You won't.

[Godwit]

lol, ya. If you have a state pension...

You won't.

Or an employment contract.

[Thinwater]

As this gets louder, muni bonds will be worthless long before the bankrupt filings ever happen. I am sure no one here holds such sorry paper.

[Earl Sinclair]

I'd wager there's some sort of Federal "Insurance" company that covers municipal and state pension funds and stuff, and all those will get sucked into the Fed, and they'll take them over.

No matter what, your gov contract does not constitute a right to enslave me or my children to pay for it.


Earl

[packyderms_wife]

lol, ya. If you have a state pension...

You won't.

A'yup and in states like iowa it's MANDATORY to hand part of your paycheck over to IPERS for your retirement, ask me how I know. It's decreed by law but the little people don't understand this.

K-

[TEA Party Moma]

It seems to me that the states lawfully owe these debts. Many of these debts are contractual. I was quite angry when the Feds stepped in and took over GM and Chrysler and changed the order in which their debts were to be paid. In one fell swoop 200 plus years of contract law went out the window. Stock and Bond holders who should have been the first in line to be paid were placed last along with creditors while the union and its workers were placed first and got the lions share. This was wrong and will be litigated throough the courts for years. Profitable car dealers contracts were tore up and tossed to the wind while their dealerships were closed. This was wrong. A contract should be renegotiated not broken. If you cannot trust contract law here in the US we are no better than Venezuela and Hugo Chavez.

The states need to make cuts in areas that are not contractual. They need to stop pushing the assistance gravy train. The states cannot afford to be giving people assistance who do not need it. This is happening in my state. They go trolling for more people to put on 4squares. My nephew and his wife and kids are getting it and she has a day care that has 6 kids paying $180 a week and he works a 40 hour job making $14 an hour, plus he does side work. They take the assistance because the state will give it to them and it is free. This is wrong. Before the states break contracts and reneg on debts owed, they need to make hard changes. They need to cut everything that is not essential for the operation of the state and the function and security of the states population. This means closing parks, librarys, and anything else that is not necessary. THis wont happen because it will make the voters mad and the voters dont care who gets the shaft as long as their perks dont get cut.

[Indigo]

Bankruptcy is a legal way to deal with contracts when one of the parties is insolvent. Truth is, many of the states ARE insolvent and not only because of pension obligations or "social welfare" programs. It's the total picture. It's "we know there is a problem but we're going to kick the can down the road and let another generation deal with it." It's the entitlement mentality so pervasive in society that we find it welfare recipients (some not all) on one end of the economic spectrum to the politicians in office.

This country has spent more than it could afford to and undermined it's revenue base by making it more economically sustainable for companies to operate outside the United States.

So we have a problem.

When you sit down at the kitchen table and there is not enough money to pay the debt you owe, you have to cut your spending and in some cases you need to restructure your debt.

This country is in financial dire straights and we must not allow politicians to continue to kick the can down the road. We have to face it.

A huge part of the problem is the pension systems in place for public workers. Is it fair for pension recipients to receive less than they were promised? No. Is it fair for me to have to pay more - essentially taking away from my retirement savings - so that those people can remain "whole" while I do not? No. Neither one is "fair."

Life isn't fair. The pain has got to be shared around. Everyone has got to have some skin in the game, as far as I am concerned, in order to have as equitable as possible resolution to this disaster we are facing. This insanity of 45% or so of the American population paying NO taxes is insane. The insanity of union workers expecting to remain whole while the rest of us do not is not equitable. Retiring with full benefits at age 55 (as some public workers can do) is not an equitable solution.
States with their hand out to the Federal Gov't (ie the people living in other states) so that state doesn't have to make the tough choices is not an equitable solution.

We need an honest discussion on ways to restructure debt, cut spending and increase business in this country. We need to stop shifting (and thus hiding) the debt and the financial pain from one group of people to another, from one city to another, from one state to another.

God help us, but states declaring bankruptcy may be the way to go. That will have it's own set of concequences, yes. But this debt has flat got to be restructured.

Indigo