Vallejo, Stockton, San Bernardino, Scranton, PA. Everybody seems to be jumping on the BK (Bankruptcy) bandwagon. We thought San Diego was going to be the next victim. Uncertain economic times can create issues of governance. John Moorlach proved all that back in 1994. When you think about it, Bob Citron probably was involved in some of the first Derivative manipulations going. It took Bill Clinton in 1998 to finally do away with Glas-Steagal so that “Citronese” could become part of the growing lexicon of “phony baloney economic investments”. Oh, we are pretty sure CALPERS and CALSTRS were already on board and into the Merrill-Lynch cook book….even back then. The thought of making 20% a year on your investment portfolio …..was just too lucrative!
It has been interesting to watch little towns like Vernon self-destruct. These folks were not the sharpest tools in the shed, but they thought they were. The City Manager figured he could use City money for anything he wanted. He soon became a “short term – long term” lending source for his prospective girlfriends and real estate pals. Hey, so things didn’t work out……he and the Police Chief got big, big pensions, retirement plans and health insurance…..for life! Well, of course we haven’t been watching the criminal proceedings recently, so we can’t say whether the right folks will get life!
San Diego, El Cajon, Escondido or Santa Fe Springs, Cudahy, Stanton or who else…maybe the next victims in testing their ability to offer more than they could or can deliver to either Public Employees or the Citizens of the City! What happens when the City Credit Cards are turned down at the local Starbucks? Normally, the “Cover Ups” start immediately. Everyone goes into hiding. The Finance Chief goes on a long vacation. The City Manager suddenly becomes unavailable for meetings with almost anyone. The Police Chief goes out of town to take a Law Enforcement Seminar! The excuses come in droves! No one knows much of anything….until it is announced at a City Council Meeting that – the lights will be turned off – Friday!
We have an idea. Whenever a City or County goes into Bankruptcy…..there should be an investigation by the State Attorney General’s office. There should be a lesson learned. There should be a definitive list of reasons for the failure of public confidence. Each and every member of the City Council or County Board should submit their immediate resignations. No excuses…..no Retirement or Separation Pay. No more Health Insurance…ever! No, it is just about time that when the Public confidence has been breeched – there should be ramifications. There should be meaningful consequences. California or any State Legislators need to take responsibility for serious penalties and criminal proceedings against the wrong doing electeds! Bad Luck? Sadly, these things do not take place overnight because of a lightning strike. Bad things happen..because of only one of two reasons: (1) Wrong Doing! or (2) Not paying attention!. Either behavior is totally unacceptable with results that should be memorable! Without a suitable penalty for failure…..there is every chance that the behavior will be repeated.
In Scranton, P.A. the Fire Fighters and Police are getting minimum wage pay checks. The City fathers failing to identify the problem, just woke up one morning and said: “We can’t afford to make payroll!” “Let’s just pay everyone minimum wage….and see if they notice!” Who are these folks? How did they get in control on anyone’s life. Do they need a flashlight on their forehead and an Indian Guide….to get home at night? Just submit your resignations and move out of town folks….no one is going to miss you….that is for sure! Bankruptcy should be the absolute LAST ACT before you shut off the lights and go home….forever!
Suddenly, the concept is that “Well…..if they did it…..we can do it too!” No fellas and gals….Wrong! Whatever they did…needs to be punished. If you do it too….you are worse than they are. At least they came up with it first. You didn’t even think of it – until they did it. You are both dumb and dumber! Congratulations!
New Dominos? Please don’t……do it!
I’m with you on this one. It’s pretty disgusting that big oil and gas can go to Pennsylvania and create havoc on the environment with fracking, pocket huge profits, and pay no taxes on it.
It is estimated that the Keystone State will loose 24 billion over the next 20 years, if they don’t pass legislation like W. Virginia has.
Meanwhile, state employees get poverty level minimum wage.
Big business as usual.
Sing with me: “It’s the end of the world as we know it”
Cook…..uh huh…..or maybe…..”too many stupids spoil the stew!” This was not by
Skeeter Davis…by the way!
I have been following posts in the Pennsylvania Craigslist, especially the city of Scranton regarding the paycut for city employees, and most of the posts are anti-unions. Most of the comments are from those who work in the private sector and think unions are the causes of all our financial woes. Of course there is always the bigot who likes to blame minorities adding his comment to the mix.
My question would be this, did the Mayor and City Council drop their pay to minimum wage? I don’t see anyone asking that. I think I will call City Hall tomorrow and find out for myself. I enjoy reading the ‘Rants and Raves’ section of Craigslist in the city where something big like this happens because the comments are prertty raw since the author can hide behind his/her comments. It cuts through all the political correctness and people say how they really feel.
What I find interesting is that their complaints are pretty consistent with Americans who work in the private sector. They point the finger at each other instead of asking more questions of their representatives. I wonder if other cities are waiting to see what happens to Scranton and if city workers keep working, minimum wage might be happening all over the country.
Again, an excellent Winship post. If you look for a common denominator among the California cities going belly up, what you find is a long train of bad business decisions by the cities’ so-called leadership. Vallejo was in trouble before the recession ever hit because of some very bad and short-sighted financial designs. In Stockton, it was years of floating bonds for huge economic development projects, hoping the inflated housing market would keep going and provide the revenue to pay off the loans. In San Berdoo, it appears a few unscrupulous top mangers and some Council members colluded to mask the city’s true financial state, to jusify their projects (buying a defunct shopping mall?), until it was too late to fix it.
The most disingenuous part of this is that the employees are being made the scapegoats. SB’s mayor sounds like he tore a page out of Costa Mesa’s playbook, blaming the employees for the mess. But according to the LA Times article yesterday, rising pension costs added only about $1 million to the city’s $45 million deficit. Employees have already coughed up $10 million in concessions.
Like I said in reply to a Winship post a week or so ago, the preferred way to handle a problem these days is to find someone to blame (minorities, gays, unions, public employees) for the country’s woes. Its a heck of a lot easier than actually doing the hard work it takes to solve the problems.
From what i read about the Bob Citron investment fiasco with the county of Orange, I heard a bit about him loosing it all because of some mysterious “psychic adviser” but not that much about the Myrill Lynch derivatives pool until recently. So which was it? some psychic advisor or some other investment advisers? if I were Merrill Lynch hot shots, I think I would pay to blame it on some psychic adviser also. Does anybody know more info about this scapegoat distraction,”Psychic Advisor”
My Psychic Advisor is the same one who advised Nancy Reagan when she lived in the White House; thanks to her I am living the dream.
Who was that? are you saying that you said no or yes to drugs? Because those drugs with the anti oxidants and sulfites and red coloring are kicking me into high gear right about now!
Double Eye…. In response to your question:” Does anybody know more info about this scapegoat distraction,”Psychic Advisor”
*A Psychic Advisor usually tells you “When to Buy”…..they are not really good at telling you “When to Sell” or “What to Sell”.
Merrill-Lynch loves to buy and sell – because they make their brokerage fee either way.
Merrill-Lynch loves to sell stuff “they can make brokerage fees on”……then they do it again….as often as possible…
Hope this helps…..your understanding of “Citronese”….. As you might remember he kept betting that the “Junk Bond Market or Derivative Hedge Funds” were going to rise…..ooops! The Interest Rates stay up…..the Interest Rates fall……ooh..oooh…
Mr. Bill. Gambling again via “Citronese and Merrill-Lynch”.
*From the Roundup –
Jul 16, 2012
The bankruptcies of San Bernardino, Stockton and Mammoth Lakes are raising questions about whether other California cities are confronting the same fate. Stockton’s filing had been discussed for months, but San Bernardino’s caught the public by surprise. The question is, how many other communities face insolvency?
From the Chronicle’s Wyatt Buchanan: “An additional eight California cities, including Fairfield, which declared a fiscal emergency in April, have officially notified the municipal bond market this year that they are facing significant financial hardship, according to Matt Fabian, managing director ofMunicipal Market Advisors, which conducts independent research on the municipal bond industry.”
“The notifications don’t necessarily mean these cities are headed for bankruptcy court, but they do signal real adversity.”
“Along with Fairfield, the other cities include Arvin (Kern County), El Monte (Los Angeles County), Grover Beach (San Luis Obispo County), Lancaster (Los Angeles County), Monrovia (Los Angeles County), Riverbank (Stanislaus County) and Tehachapi (Kern County).”
The cities’ financial stress is being caused in part by the familiar mix of dwindling tax receipts, the impact of overly aggressive borrowing during boom times and the obligations to municipal pensioners, such as retirees’ health care.
Interesting. There was a page one article in yesterday’s L.A. Times saying there probably won’t be a huge avalanche of bankruptcies despite the hard times. I think this is more a test of some cities’ ability to manage their long-range finances responsibly. Those cities and their leaders who depended on shaky assumptions are reaping the result. Those that have been more conservative will survive. The advice from Vallejo’s city manager to other cities considering bankruptcy: “Don’t”. It causes a lot of long term problems most people don’t think about. I’ve seen some opinions that suggest bankruptcy is being used as a threat for political gain (e.g. trying to break contracts). If it’s true some politicians are willing to jeopardize a city’s future to score political points, that would truly be appaling.
But surely that would never happen in Orange County! At least not in North Orange County!
I sense a touch of sarcasim, Greg. Have you been reading the FFFF site again.