1 Yes, please.

2

How do we prevent the Republican Squishes from giving in to the unions in bankruptcy negotiations?

3 Both these guys are dead to me.  But I'll read it anyway.

4 Couldn't a bankruptcy judge raise taxes? If so, the law would have to have some limits on what they could do which would then politicize the whole process. I'm not saying I'm against the idea, but the law of unintended consequences needs to be taken into consideration.

5 States with sensible policies are going to rake it in. Please don't make the mistakes that we did.

6 I am of the opinion that states that go bankcrupt should not have full representation in Congress. Like Guam, they can observe as non-voting members.

7 A point I make constantly. REALITY favors conservatism.


Liberal ideas ALWAYS run up against the wall of reality.

8 Bring the heat, Meat.

9

 These states are still controlled by Democrats and will be for the foreseeable future. So let the Democrats explain to their union stooges why they're reneging on all those promises they never should have made.

It's not win-win b/c that is not what will happen.  What will happen is all of those union pensions will be protected, but every individual who owns municipal bonds will get screwed - including lots of retirees who invested in those "safe" investments for their retirements.  It will be just like GM - everyone will get screwed but the unions that caused the problem in the first place.

10 Couldn't a bankruptcy judge raise taxes?

Can they?  Can a judge order you to get a better paying job in a personal bankruptcy?

I thought they had to take things as they stand and work from there.

11 Let's roll back the unions and their pension to 1998.

12 Maybe the House will but I will say one thing, screw Newt and his AGW couch. I no longer believe a damn word he says.

13 And I don't trust Jeb a whole lot either.

14 >>>Couldn't a bankruptcy judge raise taxes? Based on that Weekly Standard article I linked last week, no, because the Constitution requires the states to be sovereign, and a judge cannot be given the power to order states to do most anything against their will. The bankruptcy protections will be voluntary, tools the states (as sovereigns) CAN take advantage of, if they wish. Biggest thing: They can renegotiate contracts and force cramdowns (whatever that means) in bankruptcy. The WS author believes to pass constitutional muster the code must be carefully written to avoid any suggestion that a federal judge can order a sovereign state to do anything.

15

This is an idea that makes sense and works within our laws.

Which is why The Vapid One™ will oppose it.

We are well and truly fucked.

16 4 Couldn't a bankruptcy judge raise taxes? If so, the law would have to have some limits on what they could do which would then politicize the whole process. I'm not saying I'm against the idea, but the law of unintended consequences needs to be taken into consideration.

Posted by: Dr Spank at January 27, 2011 01:03 PM (1fB+3)

Sure. Federal Judges have ordered tax increases before, but such a move would very likely result in a loss of tax revenue. I'm certain that all these bankrupt states are already on the dwindling side of the Laffer curve.  Of course these are Democrat states, so the people there don't even know what the Laffer curve is.

17

As long as we don't bail them out, we are OK.  Theoretically, I suppose the state legislatures could pass state constitutional amendments that reduce the size of their pension payments.  That probably won't happen unless the states actually  started to default on their payments to pensioners and current state employees.

As the states get closer and closer to default, I think they will proceed as follows:

First, services will be cut.  (Parks closed, librarys and pool hours reduced, road repairs put off, etc.)

Second, bond holders will get stiffed/take a haircut.

Third, retirees will stop getting paid.

Finally, current state employees will get laid off/stop getting pay checks.

18

  It will be just like GM

Worse, I fear. 

 The Rule of Law was still an illusion when that happened.  Since then, the Supremes have thrown the Rule of law out the fucking window.

19 I think a new prerequisite for being a politician should be having to complete a game of Sim City successfully without using any cheat codes

20 the war between current public sector union employees and public sector union retirees will begin. they'd have to invent death panels if they hadn't already.

21 They can renegotiate contracts and force cramdowns (whatever that means) in bankruptcy.

Posted by: ace at January 27, 2011 01:07 PM (nj1bB)

Cramdowns are where creditors (in this case, including pensioners) will be given less than promised, ie $85K per year pension instead of $100K in the case of the poor Californian pensioners.

22 These pension shortfalls are a drop in the bucket compared to the whole Fed chicanery. I have a feeling we're already picking up the yearly tab for (selected) state pensions. When you're already printing money, what harm is an extra batch for your friends?

23 Based on that Weekly Standard article I linked last week, no, because the Constitution requires the states to be sovereign, and a judge cannot be given the power to order states to do most anything against their will.

Posted by: ace at January 27, 2011 01:07 PM (nj1bB)

Ace, I hate to tell you this, but didn't a Federal Judge in Kansas order a tax increase to pay for minority dominant schools? This was quite a prominent issue a decade or more ago.

The lesson everyone took from this was that "Yes, a Federal judge CAN order a tax increase."

24 >>>It's not win-win b/c that is not what will happen. What will happen is all of those union pensions will be protected, but every individual who owns municipal bonds will get screwed - including lots of retirees who invested in those "safe" investments for their retirements. This is a very good point. HOWEVER, a judge has to approve this sort of thing. There are rules in bankruptcy about this sort of thing, treating classes of creditors utterly differently. New rules would have to be worked out in state bankruptcy cases but I do not think a state could just fuck over one group of creditors while giving another group everything. But you do have a point -- certainly states will do what you say *to the extent they're permitted*, and they will be permitted a fair amount of leeway here. There is little doubt that bond investors will take it a lot harder than unions. But I do not think it will be deemed fair or proper to use bankruptcy protections in such a plainly unfair way. The unions, I think, will have to take a haircut too, even if the pain winds up being distributed 2:1 as far as investor/union. That's still not fair, I guess, but what are you going to do? We are looking at a bunch of bad possibilities. The only upside is that a state that punishes bondholders in this way will never ever be able to sell bonds again at any rate of return that isn't exorbitant.

25 20 I think a new prerequisite for being a politician should be having to complete a game of Sim City successfully without using any cheat codes

And have had a job in the private sector.

26 Does anyone know if the President has executive powers which allow him to bail out states by fiat? Some sort of emergency powers we never hear about because they are never used? Something like that?

27 >>>Cramdowns are where creditors (in this case, including pensioners) will be given less than promised, ie $85K per year pension instead of $100K in the case of the poor Californian pensioners. okay I thought it meant mostly that. A haircut, then.

28

The unions, I think, will have to take a haircut too, even if the pain winds up being distributed 2:1 as far as investor/union.

What about the vendors? People to whom the state owes money for past services.

29 So, the leftism will be exported to previously healthy states, driving them into the ground. 

Posted by: iknowtheleft at January 27, 2011 01:08 PM (G/MYk)

Something I'm very concerned about. It's been happening to Colorado for a long time now. The State used to be reliably conservative, but it's had far too many California transplants.

Too bad we can't put billboards on the highways leading to the various sane states. "This state can count. Leave your stupid liberal ideas behind! "

30 Oh, boy, two sideline-sitters dispensing sage Words of Wisdom©!

The Newt and Baby Bush are meaningless to anyone but political junkies. In the real world, they have no more authority than anyone who comments here.

Just as bad, the libs who have put the states most likely to go BK in their current positions will make sure their pals escape any discomfort. Unions and government employees (except police and fire departments, which will be slashed in revenge) will keep their ill-gotten gains; only the poor simps who voted for/invested in the bond issues, massive giveaways and assorted pigshit will take it up the rump.

Time for someone with authority to step up and say what the fat fence-sitters say.

31 27 Does anyone know if the President has executive powers which allow him to bail out states by fiat?


TARP 3?

32 I have a feeling this one is already won.

Where the Republicans are concerned, never, ever, say it's won. The Republican Party will, without fail, do its damndest to pull defeat from the jaws of victory every, single, time.

33 What about the vendors? People to whom the state owes money for past services.

More bankruptcies.  It's a ripple effect, and a boon for bankruptcy lawyers and accountants.

Stimulus!

34 Does anyone know if the President has executive powers which allow him to bail out states by fiat? Some sort of emergency powers we never hear about because they are never used? Something like that?

Yes it's the I Won clause.

35 So let the Democrats explain to their union stooges why they're reneging on all those promises they never should have made.

Sarah Palin's fault!

36

Could judges order raised taxes?  Of course they could.  They've done it in the past.  A federal judge (Russell Clark) did just that in Kansas City, Missouri to fund public schools.

Also, I assume a state judge could do the same.  Let the legislature reduce payemnts to retirees (due to legislation or simple default) and the retirees could sue in state court for their promised benefits.  Then some state judge could just rule in their favor.

 

 

37 >>>Ace, I hate to tell you this, but didn't a Federal Judge in Kansas order a tax increase to pay for minority dominant schools? This was quite a prominent issue a decade or more ago. yes, right, I forgot that, I was repeating what this guy said. My explanation (reconcilation) would be, I guess, that that judge claimed he had the right via the constitution (13th, 14th, 15th amendments) that specifically create an exception in this category, that is, treatment of descendants of slaves. I am not saying I BUY that, I am guessing that that is why that exception was claimed to exist in the general rule.

38  but every individual who owns municipal bonds will get screwed - including lots of retirees who invested in those "safe" investments for their retirements. 

Posted by: monkeytoe at January 27, 2011 01:05 PM (sOx93)

Hell I'll go on record now and predict that municipalities will tell bondholders that when their bonds mature they can either take 5-20% on the dollar (like some already have) or that they can continue to receive interest after their bond's mature date and the municipality just keeps the principal (which is long gone in reality).  

This will alleviate the pesky need for issuing another set of bonds to pay for the previous issue as many municipalities are won't to do (taking their cue from Uncle Sam of course).

Laws=movable goalposts these days

39 And is at least verifiably a "Citizen." 

40 Based on that Weekly Standard article I linked last week, no, because the Constitution requires the states to be sovereign, and a judge cannot be given the power to order states to do most anything against their will.

They sure as hell did that with Kansas City a few years ago Ace.

41 I don't think Baary will allow this to happen, he needs the Union money for re-election. I expect a tarp-like bailout without congressional approval.

42 And have had a job in the private sector.

Posted by: Kratos (Ghost of Sparta) at January 27, 2011 01:12 PM (9hSKh)

Ooopppss. Something went wrong in my previous post.

And is at least verifiably a "Citizen."

43 This is not a win if these states start over with the same leadership that has been unwilling to change anything in the face of obvious and inevitable disaster.  What good will come from granting California a do-over while leaving the state legislature in place?  Without structural change in government, this is no different than a bailout.  It's just a different set of people paying for it.

44 Does anyone know if the President has executive powers which allow him to bail out states by fiat?

I wouldn't think so, as the President cannot distribute money that Congress has not allotted. 

But what do I know?  I'm just following the Constitution. 

45 Posted by: Ben at January 27, 2011 01:14 PM (wuv1c)

State vendors? Totally and completely screwed. The mom & pop businesses that grew up around state spending will fail. The larger companies; primarily construction, will struggle, and some will fail.

46 a Federal Judge in Kansas order a tax increase to pay for minority dominant schools

I remember the case.  Did the State actually appeal the ruling?  Or they more than happy to be forced to raise taxes?  Put me some knowledge please.

A bad ruling is only bad if someone appeals it.

47

Let the states who have been living high on the hog with borrowed money slide around for a round of hind tit, I say.

48

What about the vendors? People to whom the state owes money for past services.

Posted by: Ben at January 27, 2011 01:14 PM (wuv1c)

They get hosed.  Or, in California, script.

49 State vendors aren't getting paid now.

50

It's hard to take these two seriously.

51 With respect to California, the Legislature is Full Democrat, the majority of the judiciary is Democrat. There is no reason to believe that the powers that be will allow a B/R judge to administer this matter without some type of scurrilous under the table vetting by the Dems and their union pals. The unions will be left undamaged, the remaining citizens will be taxed further and the bondholders will be left with worthless paper.

Nothing short of a Federal invasion will disrupt the California union gravy train. Nothing.

52 LOL, now I see everyone jumped on the Kansas City thing. I remembered that one because I often wondered why they didn't fight it all the way to the Supreme Court.

But then I remember that they actually liked the ruling.

53 I remember the case.  Did the State actually appeal the ruling?  Or they more than happy to be forced to raise taxes?  Put me some knowledge please.

A bad ruling is only bad if someone appeals it.

Posted by: toby928™ at January 27, 2011 01:21 PM (itFee)

Others have pointed out it was "Kansas City" Missouri. I didn't follow the case closely at the time because I considered the details unimportant. The salient fact was that a JUDGE ORDERED A TAX INCREASE.

Like I said, since I considered the headline to be complete bullshit (in principle, not reality.) I didn't bother to delve much into the details.

54 44 This is not a win if these states start over with the same leadership that has been unwilling to change anything in the face of obvious and inevitable disaster.  What good will come from granting California a do-over while leaving the state legislature in place?  Without structural change in government, this is no different than a bailout.  It's just a different set of people paying for it.
Oh, I think it is. Stop making payments on your car and house and declare bankruptcy, then see how life changes.  

55

Posted by: Ben at January 27, 2011 01:14 PM (wuv1c)

State vendors? Totally and completely screwed. The mom & pop businesses that grew up around state spending will fail. The larger companies; primarily construction, will struggle, and some will fail.

 

 

I think there are a decent amount of businesses who do work for the state as part of their client base. Specifcally IT, software, etc types.

They aren't people who are entirely dependent on the State, but a large enough loss in accounts receivables could cause them to collapse. So then you aren't only destroying state dependent vendors/businesses, you are destroying companies that have a percentage of their business with the state.

This isn't an argument for bail out, just pointing out that the ripple effect is going to be large

56

45 Actually he has taken on all kinds of extraconstitutional powers, like "defunding" Yucca which I don't think he is going to get away with in the long run.

Think of this guy as a dictator in the making and no one willing to stop him.

57

We need to wall in the populations of California, Illonois, and New York before we start this process.

If we can throw away some parts of the Constitution, why not the 'Free and Unencumbered Interstate Travel'?

58 Illinois...

59 Well, my attitude all along has been: insolvency is a state of nature, not a legalism. Many states are bankrupt, whether some judge declares them to be so or not. If the states cannot find some way to get out from the onerous pension and benefit contracts they have with public-sector employees, and wean themselves off of debt-financed spending, a hard rain's gonna fall. The usual reply to my doom-mongering is that there is no way a state will default on its' bond debt; that the states will use their tax-power and other powers to ensure that bondholders are made whole. Well, think about what that means: sky-high taxes for reduced services, a crumbling infrastructure, and a moribund job-market for years, maybe decades, to come. Bond default starts to look a little more palatable when you think of it in those terms. Bond-default is not the end of the world. (And as a free-market guy, it offends me when deadbeats renege on a loan.) However, you can't squeeze blood out of a stone, and at some point you have to accept the inevitable and give the debtor some realistic (and legal) way to get out of the jam. Bankruptcy is that option. Otherwise, you opt for a) magical pixies who sprinkle their miracle-dust on the problem and somehow make it okay; or b) years of griding austerity and a stagnant (if not recessionary) economy.

60 and those states' citizenry (who will be considered some sort of new-fangled collateral).

Not really all that new fangled really and unfortunately we kinda already are for the state currently.

61 We should all do all we can to accelerate the process. And not just states: the blue stronghold cities should go under and tip their states over. If you spend any amount of time at street level in "sanctuary" cities, as I do, you will be amazed at the number of people who seem to subsist only off the government and/or crime. You'll marvel at the size of the zones where English is not heard commonly.
It should get just bad enough, for just long enough, to get all the Auntie Zeituni's to leave for home, or to go on the support of their legal families only. Then, let tax reform unleash the enormous private generosity of the American People. It is time to consider what good we'll do with the money we now send to Washington, and to corrupt unions.

62

It's hard to take these two seriously.

Posted by: dagny at January 27, 2011 01:22 PM (0Hp4r)

I wish the both of them would just SHUT UP! There was a time I respected Newt Gingrich, but since 1994, he has put his foot into matters more than he has helped. SHUT UP NEWT!

As for Jeb Bush, I have nothing particularly against him, he's probably the more sensible of the Bushes, but I, and I think the country at large, has a low threshold of tolerance for any more pronouncements by members of THAT family.

63

I remember the case.  Did the State actually appeal the ruling?  Or they more than happy to be forced to raise taxes?  Put me some knowledge please.

A bad ruling is only bad if someone appeals it.

Posted by: toby928™ at January 27, 2011 01:21 PM (itFee)

From what I remember, politicians didn't fight this.  They got the extra taxes they wanted, but got to point all the blame at the Judge.  Citizens would complain and the politicians would say, "Hey, I agree with you, but....unfortunately, my hands are tied.  Blame the unelected federal judge."  And then said politicians pumped said moneys into the school system and the teachers and unions were greatly pleased with the moneys.

64

This can't end well. And it looks like while everyone will get screwed by the bankruptcy, the union members will be the least screwed.

I don't see how the democrats let this happen. They will pull out all the stops.

Keep in mind the Public Unions aren't only their core voting base, they are their main stream of campaign funding.

I'm sure they hatching plans on what can be done and I'm sure they are targeting Republicans who will go along with them.

Do you think the Republican representatives or senators of these states will be able to vote against a bailout?

Really? Do you see Republicans in Illinois, New York, or California voting against a bailout package that will directly affect their constituency?

65 But the SCOTUS already decided that classes of creditors means nothing.

I don't think that ruling made it to SCOTUS. The circuit court and appeals court refused to grant standing and I don't think they took it any higher. At the time I suspected that Obama made a deal with them under the table. (State of Indiana). 

66 Can't we just put ALL the liberals in California and make them secede?

67 What will happen is all of those union pensions will be protected, but every individual who owns municipal bonds will get screwed - including lots of retirees who invested in those "safe" investments for their retirements.  It will be just like GM - everyone will get screwed but the unions that caused the problem in the first place.

Posted by: monkeytoe


Case in point, Valleho California, which is currently in bankruptcy.  Although the city won a court case to unilaterally reduce union employee salaries and pensions, they haven't done more on that front than play at the margins ,with increased employee contributions, reduced salaries for new hires and the like.

The folks who are really getting the shaft are unsecured creditors.  They're getting as little as 5 cents on the dollar.

See Business Week: http://tinyurl.com/4ab8zhc

68

This can't end well. And it looks like while everyone will get screwed by the bankruptcy, the union members will be the least screwed.

Posted by: Ben at January 27, 2011 01:28 PM (wuv1c)

From what I can see, the debt is overwhelmingly from pensions.  I don't see how even wiping out every other class will solve the problem.

69

Really? Do you see Republicans in Illinois, New York, or California voting against a bailout package that will directly affect their constituency?

Unlikely, but we had that idiot Dem here in AZ that called for a boycott of his own state, and still managed to get re-elected.

70 The usual reply to my doom-mongering is that there is no way a state will default on its' bond debt; that the states will use their tax-power and other powers to ensure that bondholders are made whole. Well, think about what that means: sky-high taxes for reduced services, a crumbling infrastructure, and a moribund job-market for years, maybe decades, to come. Bond default starts to look a little more palatable when you think of it in those terms.

Monty, you're exactly right. And those conditions trigger the flight of businesses and residents from the state (think Michigan).

It's awfully hard to raise taxes when there's nothing left to tax.

The idea that Californians, Illinoisans, etc. will just sit there and take it ... dutifully ponying up to perpetually feed the machine ... is ludicrous.

71 The Newt and Baby Bush are meaningless to anyone but political junkies. In the real world, they have no more authority than anyone who comments here.

Once again, you read this incorrectly.

The point is that this isn't Rand Paul and Paul Ryan, this is Jeb and Newt.  I.e., it's squish-approved.  If they're jumping on board, there's no opposition to the right of Steny Hoyer.

72 Smelly, ancient sock.

73 They are not talking about "bankruptcy" in the colloquial sense -- ie, let them go broke -- but in the legal sense -- ie, let them file for legal protection from creditors. Legal protection from creditors for state governments is just wrong. Good stewardship of public monies must be enforced; there must be no easy way out. Let the politicians fix the problem by showing fiscal restraint, or let the markets enforce their own discipline. No bankruptcy for state governments.

74 Are RIOTS in our future? I think so.

75 What makes us think that it will be the unionized public employees that their pensions that take it on the chin? They will be made whole and the bond holders will take it on the chin, just like in the GM bankruptcy. State BK is another opportunity to spread the wealth around from bond holders to pensioners.

76 Keep in mind the Public Unions aren't only their core voting base, they are their main stream of campaign funding.

Ironically, they're the easiest ones for a state to screw.  Screw anybody else and they leave the state.  But public employees are stuck.

77 77 Are RIOTS in our future? I think so.
If they burn Detroit to the ground it would be an improvement.

78
 I have to admit I'd be okay with this, if there were some way to exclude the undeserving from the bad effects. Don't see such a thing, though.

 We're going Galt as far as practicable, in the event New Fucking York shits itself. Not sure how badly we'll be hit, but I don't feel too optimistic, even up here in the boondocks.

79 OT, but most of the YouTube Qs for TheOne in his followup online Q&A, deal with the legalization of weed.

What if Boehner & Co rammed through a legalization bill, and somehow it made it through the senate, and Bozo did it in with the veto pen?

80 38 >>>Ace, I hate to tell you this, but didn't a Federal Judge in Kansas order a tax increase to pay for minority dominant schools? This was quite a prominent issue a decade or more ago.

Missouri, please. Kansas City is in MISSOURI. Maps are cheap.

81 Bankruptcy, the true reset switch, with stability as the everlasting counterargument.

82 Missouri, please. Kansas City is in MISSOURI. Maps are cheap. It's your fault for naming your city after a state it's not even in.

83 LOL, now I see everyone jumped on the Kansas City thing. I remembered that one because I often wondered why they didn't fight it all the way to the Supreme Court.

Actually, they should have ignored it. Completely. Courts have no power to set taxes, nor the federal government to set state taxes.

State officeholders have every bit as much an obligation to enforce the Constitution, in areas were they are lawfully given powers, as federal officeholders.

84 If Californians were given the opportunity to do an end run around the politicians in Sacramento and vote to reform their state government under the U.S. Bankruptcy Code, it would almost certainly trigger a proposition fight. In such a circumstance, the proposition could provide that a yes vote would trigger the cancellation of all state government employee union contracts.

Jeb/Newt



Which is a meaningless threat, since the California Supreme Court routinely overrules voter initiatives if they don't fit in with liberal sentimentalities.

85 Warning do not follow link if you have a bad heart unless you have your nitro pills handy

The story of the Kansas City school case

The school didn't appeal because they are the ones bringing suit to begin with. Since the school can not sue itself the judge switched them out for the NAACP.

This is one sordid episode in corruption. And the main problem today? This shit is STILL ongoing.

86 And as a free-market guy, it offends me when deadbeats renege on a loan.

Yep. But even in the best of economies this is going to happen. Establishment of a uniform bankruptcy system is critical to the functioning of the free market. Since creditors know they are going to extend credit to some entities that fail ... they need to know how they'll be treated up-front. This legal framework reduces the cost of capital for the entire economy by making the risk better quantifiable.

Every time I hear someone say "GM Bankruptcy" I want to slap them. GM got bailed out. Its bondholders, who had carefully crafted and perfected their security interests in GM's assets as part of the lending arrangement, got screwed by the federal government in a brazen act of looting by the Dems on behalf of the UAW that was like something straight out of Atlas Shrugged.

87

86 Missouri, please. Kansas City is in MISSOURI. Maps are cheap.

It's your fault for naming your city after a state it's not even in.

Posted by: Monty at January 27, 2011 01:44 PM (4Pleu)

True dat.

88
This is one sordid episode in corruption. And the main problem today? This shit is STILL ongoing.

Posted by: Vic at January 27, 2011 01:46 PM (M9Ie6)

Oh, and I'll add in a sane world the judge would have been impeached the moment he granted standing.

Consider for a moment exactly what this was- an American judge declaring that taxation without representation is a fundamental Constitutional precept.

89 Let them burn.  I look forward with great enjoyment.

90

Missouri, please. Kansas City is in MISSOURI. Maps are cheap.

Posted by: City Literate at January 27, 2011 01:41 PM (xs5wK)

Kansas City is in both fucking states, whizkidz.

One city split in to two separate ones by a state boundary.

91 81 77 Are RIOTS in our future? I think so.
If they burn Detroit to the ground it would be an improvement.

Posted by: maddogg at January 27, 2011 01:37 PM (OlN4e)

I say this in all sincerity and seriousness. I WORRY about this. Judging by the quantities of ammunition sales in this country in recent years, I would say a lot of other people are worried about this as well.

Collapsing states demanding higher taxes and driving industry into the ground seems tailor made for stoking riots. The future looks grim.

92 Missouri, please. Kansas City is in MISSOURI. Maps are cheap.

Somebody better tell those mapmakers there's not also a Kansas City in Kansas.

93 It's your fault for naming your city after a state it's not even in.

Posted by: Monty at January 27, 2011 01:44 PM (4Pleu)

I live in a smart, state-aware city that continually votes NO whenever MO comes begging with a bi-state/metro tax proposal. Schools are good here.

94 Bond-default is not the end of the world. (And as a free-market guy, it offends me when deadbeats renege on a loan.) However, you can't squeeze blood out of a stone, and at some point you have to accept the inevitable and give the debtor some realistic (and legal) way to get out of the jam. Bankruptcy is that option. Otherwise, you opt for a) magical pixies who sprinkle their miracle-dust on the problem and somehow make it okay; or b) years of griding austerity and a stagnant (if not recessionary) economy.

Latin American countries have been defaulting on debt pretty regularly for 200 years.  You have a corrupt class of rulers that live well on the backs of an impoverished society.  Sure, the cost of borrowing for them is high, but who cares if you can just declare the debt illegal and default again (as Ecuador did last year).  I don't have any pity for the lenders, they should know better by now.  However, I do hope for more out of an American state.  If we want to be a collection of Ecuadors and Venezuelas a good way to start would be by allowing states to confiscate the wealth of bondholders to protect political leaders and their pet class of citizens that vote the right way.

95 Let the politicians fix the problem by showing fiscal restraint, or let the markets enforce their own discipline. No bankruptcy for state governments.

Posted by: Ken at January 27, 2011 01:34 PM (3ar4L)

Once bankruptcy is on the table, many states will never be able to successfully issue a bond again except to fools.  The market will force them to live within their means.  Anybody who loans money to a blue-state government will deserve to get fleeced.

The other nice thing is that this may force the Unions to go to a plan where the individual worker owns his retirement money, like a 401k or such like.  No state worker will ever trust the government to pay them again. 

96

I say this in all sincerity and seriousness. I WORRY about this. ...

Collapsing states demanding higher taxes and driving industry into the ground seems tailor made for stoking riots. The future looks grim.

Posted by: DiogenesLamp at January 27, 2011 01:50 PM (/G5LI)

Who do you think will be the ones rioting?  As long as food is distributed and the heat/electric & water stay on, there will be few riots, if any.  The welfare scum just want to be taken care of, and the rest of us are too law-abiding.  We'll be working 16 hours a day in the black-market/barter economy and too tired to riot.

I'm not saying you shouldn't arm up - you should. I'm laying in cartidges and magazines in quantity.  But I don't think that riots are the reason to do it. 

 

97 Once bankruptcy is on the table, many states will never be able to successfully issue a bond again except to fools. Luckily, suckers are born all the time. Seriously -- Russia defaulted on their debts on a decade ago, and they're having no trouble placing bonds now (nor are they paying particularly high interest rates, given their history). And Venezuela has chumped the suckers several times in the last century, but somehow they manage to re-enter the bond markets again. As for US states being comparable to third-world banana republics: how else can you describe a state like Illinois or California, really?

98 Yeah. I visited some friends in Kansas City Kansas, we decided to go slumming in KC, Mo to the track.

99 East St Louis is in Ill. if you're interested.

100

I'm not saying you shouldn't arm up - you should. I'm laying in cartidges and magazines in quantity.  But I don't think that riots are the reason to do it. 

Posted by: Reactionary at January 27, 2011 01:57 PM (xUM1Q)

The Welfare scum will burn anything they don't own to the ground. (and probably a lot of what they DO own.)  The National Guard will be called in, and the justification for Martial law will be in place.

It is my understanding that hoarding is illegal, and the anti hoarding laws will be used against those who prepared by laying in food and other stores. That portion of the public that is distressed will see the seizure of individuals food stores and property as legitimate, and it becomes the many against the few, property rights be damned.

I fervently hope it doesn't go that way, but I see that scenario as plausible.

101

I say this in all sincerity and seriousness. I WORRY about this. Judging by the quantities of ammunition sales in this country in recent years, I would say a lot of other people are worried about this as well.

Collapsing states demanding higher taxes and driving industry into the ground seems tailor made for stoking riots. The future looks grim.

Been there. All stocked up.

102

Is the Kansas City School Case about Curtis getting slapped?

103 Can't we just put ALL the liberals in California and make them secede?

Before doing this, at least give me a chance to get out first.

104
okay so states can't go bankrupt but what if municipalities all across a broke state declare bankruptcy? what if towns and cities from north to south and east to west go down all within say a year's time???

105 "Once bankruptcy is on the table, many states will never be able to successfully issue a bond again except to fools. The market will force them to live within their means. Anybody who loans money to a blue-state government will deserve to get fleeced. The other nice thing is that this may force the Unions to go to a plan where the individual worker owns his retirement money, like a 401k or such like. No state worker will ever trust the government to pay them again. Posted by: Reactionary " But that will happen automatically with a state in fiscal crisis. With bankruptcy protection, though, states will also be able to legally renege on (or "restructure") some of their debts. They should not be able to do that, and there is no reason for it except to make it easier on the politicians.

106 Sorry, about the above, I don't know how to quote here. oops

107 How come no one ever mentions the sale of state assets during a bankruptcy? lots of land and lakefront property out there.

108

Another projected tactic - the state stops paying its electric and natural gas bills but keeps getting the juice.

When the state stops paying, the state public utilities commission will order the utilities to not pull the meter but to post the state's unpaid bills to a default account that the utility will recoup through higher rates to private customers.

You heard it here first, folks - another backdoor tax.

109

You heard it here first, folks - another backdoor tax.

Posted by: Whitehall at January 27, 2011 02:49 PM (FmPSC)

The city of Columbia, SC actually did something similar to this to fund their bankrupt bus system that was already getting a huge subsidy.

110 How come no one ever mentions the sale of state assets during a bankruptcy? Because as someone already pointed out, sales are generally one-offs. Also, states often end up just leasing the property back from the owners (as when they sell public buildings), so the net effect of a sale is really zero (or a net loss if the lease rate exceeds the value of the property over time). When you think about it, the average state doesn't own much revenue-generating or net-positive stuff that a private individual or corporation would want to buy. Even the land is heavily encumbered, even if sold (you couldn't buy a park, for example, and just put a golf course or condos on it without probably decades of legal wrangling).

111 I don't even know what a bankrupt state would look like.What kind of economic or social carnage if anything will be noticeable to the naked eye that may arise from it. Any clues?

112

State Asset Sales

Here in Calfornia, the state is selling a lot of its office buildings.  But to whom?  No one knows.

What a deal!  Buy an office building at fire sale prices during a time of low interest rates then lease it back to the state at what will be VERY reasonable lease terms I'm certain.

http:// www.burbed.com/  

 2011/01/15/

whos-buying-all-them-state-buildings-nobodys-sayin/

A win-win!  Both kick the can down the road AND enrich your buddies.

113 Methinks this is just a federal power grab and/or cover for more bailouts. States are sovereign; if they want to stop paying pensioners they can just do it. Or they could levy a 70% tax on pension payments. They don't need a federal judge to tell them to.

114 6 I am of the opinion that states that go bankcrupt should not have full representation in Congress. Like Guam, they can observe as non-voting members. I would think that conservatives who constantly harp on the Constitution would actually read the damn thing and understand what can be done and what can't be done.

115 With respect to California, the Legislature is Full Democrat, the majority of the judiciary is Democrat. There is no reason to believe that the powers that be will allow a B/R judge to administer this matter without some type of scurrilous under the table vetting by the Dems and their union pals. The unions will be left undamaged, the remaining citizens will be taxed further and the bondholders will be left with worthless paper.

Nothing short of a Federal invasion will disrupt the California union gravy train. Nothing.

Posted by: 4thGenerationBuck at January 27, 2011 01:22 PM (AtjNL)

Arnold "forced" several unions to renegotiate right after the recall and his election. It doesn't seem impossible for the Democrats to do the same thing in these circumstances.

This chicken little stuff is tiring.

116 I don't even know what a bankrupt state would look like.What kind of economic or social carnage if anything will be noticeable to the naked eye that may arise from it.
Any clues?

Posted by: Drider at January 27, 2011 03:25 PM (HaJD9)

I think quite a few states went bankrupt in the early republic when some of the more grand public works projects didn't pay off.

117 okay so states can't go bankrupt but what if municipalities all across a broke state declare bankruptcy? what if towns and cities from north to south and east to west go down all within say a year's time???

Posted by: A Rogue Wave Called Bruce at January 27, 2011 02:21 PM (coiZf)

They are different entities, so I don't see how City A going bankrupt affects the state of the contract between Union Z and the State.

118

"Win, win, win."

Is that before or after the rioting and civil unrest that's sure to follow?

119

@14: "because the Constitution requires the states to be sovereign, and a judge cannot be given the power to order states to do most anything against their will."

Might want to remind Kansas (I think) of that.  They had  judge take control of the education spending.  See also Desegregation, bussing, etc., most of which was done by judicial fiat.

120

@115: "You heard it here first, folks - another backdoor tax."

No, no, no.  I said I was gonna tax dat azz.  Totally different thing.  Totally.

121 Ace, Here in Illinois, there sits approximately $5-6 Billion in unpaid liabilities to vendors and others. At one point, the state owed my company close to $5M, but has paid it down to just over $2M in the last 6 months. There is very little realistic hope that the State of Illinois' pension and other union obligations will ever be renegotiated - in large part because the state constitution forbids it (how do you like them apples?) Also, this is Illinois, after all, and the entire state is infected with the greed, graft, and corruption of Cook County and Springfield. BTW, Mr. Emanuel will be the next mayor or Chicago (just sayin'.) And yes, the bond holders will lose almost all value on their holdings, debt holders will go unpaid, and the taxes on the productive will continue to rise, while the quality of life here continues to worsen. There is no Hope. Just sayin', again.

122 I don't see how some of the states can avoid it. They have to reorganize the debts they are burdened with. It is certain that the unions will not give any ground. The Feds do not have money to bail out the states which have combined deficits of over 1 trillion dollars. ($1,000,000,000,000). These states are in this position through their own doing. I read somewhere with benefits a trash collector in New York City makes about $144,000 dollars. I was a robotic machine programmer, and Metrology Lab engineer and I didn't make half that much!

123 Otherwise, you opt for a) magical pixies who sprinkle their miracle-dust on the problem and somehow make it okay;
Posted by: Monty at January 27, 2011 01:26 PM

Who leaked my budget plans to you?

124 In 1967, they did burn down Detroit. Over a police raid on a blind pig.

125

This post confuses me.  Absent adding states to the bankruptcy code, a State cannot go bankrupt.

It can, however, go broke, become insolvent and/or illiquid, not be able to pay its bills, etc.  But "going bankrupt" means Bankruptcy Court.

126 altın çilek - fx15 - leke kremi - yudali - zayıflama hapı - ozon yağı

127 Turkey also from each other with beautiful transvestites travesti transvestite escort on this site want to meet you on our site, please visit our web site transvestites transvestite hakýndaki their way of life what they have done travesti all the unknowns and the unknown aspects of social life and can learn a lot more like people travesti and transvestites who are social, but the pain of view of society are forced to make a very limited thing, travesti but ultimately transvestites human and like everyone else in their lives trying to pursue, porn but for some reason, the criminal, travesti who is regarded a moderate society, much?