1-14- update: “As the financial struggles of cities and states become ever more worrisome to investors, the market in their debt has hit its lowest level since the financial crisis, the Wall Street Journal reports.” see CITY DEBT MARKET HITS WORST LEVELS SINCE THE FINANCIAL CRISIS posted below
“…warning comes as local governments contend with painfully depreciated tax revenue, which in some cases threatens to ruin budgets. In the wake of the worst financial crisis since the Depression, cities and states have had to severely cut back their spending, even as the need for their services has grown. While official bankruptcy remains rare (Vallejo, California, is the most recent example), experts say there’s trouble brewing.
Different cities have different problems, but one thing remains constant: there’s not enough money coming in. Often, revenue isn’t enough to cover even the most basic of services.” William Alden CITY BANKRUPTCIES WILL INCREASE (complete article below).
Calling all Molalla “leaders”: did you UNDERSTAND the above quote?
“CONTEND WITH PAINFULLY DEPRECIATED TAX REVENUE…”
“CITY BANKRUPTCIES WILL INCREASE…”
As fake Molalla “planner’ Potter drives a city plannin’ deficit toward $400,000 and fake “manager” Atkins prepares to squander urban renewal funds to “study” the “possibility” of a pipe dream truck bypass road Molalla doesn’t need and will NEVER GET and they both join with fake mayor Clarke to cater to local land speculators’ “need” for 2,400 acres of land no one would touch with a ten foot pole in this real estate market, I read the FACTS about what the REAL future holds:
“CONTEND WITH PAINFULLY DEPRECIATED TAX REVENUE…”
“CITY BANKRUPTCIES WILL INCREASE…”
That’s the REAL grim future – especially for poorly sited, badly planned, developed on the cheap, ineptly managed and barely funded backwater bergs like Molalla. It’s already grim for many big cities. When will the FAKE LOCAL “LEADERS” see the “DISASTER AHEAD” writing on the wall at City Hall?
Or are they just willing to sell out the citizen investors – pretend all is well – until the financial crisis in Molalla is so bad that there is no hope and then beg for TAX BONDS? Except, guess what – muni bond ratings are tanking as financial experts agree that American cities don’t have sustainable funding.
So hold on tight and let’s see how the Molalla’s big three foolish spenders – Clarke/Atkins/Potter – manage the coming crash. With gas prices heading toward $4 a gallon and Molalla’s low quality of life (thanks to the no SDC policy), you can be sure that financial disaster will strike city hall sooner rather than later. Urban Decay is far more likely than urban renewal!
I had a telling chat with a Fire District official about the theft of Fire District funds so Atkins can have play money for urban renewal. I am alarmed about the Fire District’s inability to buy needed equipment – while Atkins proposes to blow a bundle on an insane Forest Rd. bypass “study”. It certainly makes one want to vomit, since Atkins has been sitting in the same ODOT meetings with me and heard that there is NO MONEY for even needed and important new road projects (and the key words here are “NEEDED AND IMPORTANT”). According to ODOT, Molalla has zero congestion.
What on earth do Atkins and TEAM think they can attract in terms of new business? What do they think that insane road study will do but feather the nest of yet more expensive – and WORTHLESS! – consultants while further draining the city coffers?
But hey, Atkins DOESN’T LIVE HERE – what does he care if houses burn or citizens can’t afford fire insurance because there isn’t enough funding for tanker trucks? Atkins only works for the rich land speculators and business owners. He’ll be long gone when the city is bankrupt and in ruins.
Meanwhile, the honest working citizens will have their fire insurance rates climb through the roof because the Fire District can only afford one tanker truck. How gross that urban renewal has impacted fire safety services. YUCK! I took the time to say “HELL NO” when Atkins proposed his crappy urban renewal – it would be bad enough in any case – but to fund a fantasy study that surely will show a Forest Rd bypass is totally out of reality is GROSS.
Hey City Council, it’s now or never to change course for the good of your citizen investors – you know, the “little guys” who voted you into office. That is a literal assessment of the coming disaster for city services all across the nation: it is time NOW to face the depression. The Molalla City Council can continue to be a herd of Clarke puppets and ignore market forces – or it can wake up and fight against the profligate deficit spending for land the city doesn’t need and couldn’t afford infrastructure to serve and demand that any of the ill-gotten urban renewal monies ONLY be spent on projects that enhance the here and now quality of life in the existing city.
There is no more boom – there IS the coming BUST. Molalla better get its head out of the deficit spending hole and see that the fake “leaders” can’t – or won’t – confront reality.
Read on for the FACTS about the crashing cities:
CITY BANKRUPTCIES WILL INCREASE
The Huffington Post | William Alden
As cities across the nation face increasing budget strains, the vocal group of experts warning about municipal defaults has gained a powerful member: Jamie Dimon.
The JPMorgan CEO said he expects to see more U.S. municipalities declare bankruptcy, Bloomberg News reports. His concerns echo those of Meredith Whitney, the analyst who has said the next major financial crisis will come from a wave of local government defaults, and those of famed investor Warren Buffett, who has called the municipal debt situation a “terrible problem.”
“If you are an investor in municipals you should be very, very careful,” Dimon said, according to Bloomberg.
His warning comes as local governments contend with painfully depreciated tax revenue, which in some cases threatens to ruin budgets. In the wake of the worst financial crisis since the Depression, cities and states have had to severely cut back their spending, even as the need for their services has grown. While official bankruptcy remains rare (Vallejo, California, is the most recent example), experts say there’s trouble brewing.
Different cities have different problems, but one thing remains constant: there’s not enough money coming in. Often, revenue isn’t enough to cover even the most basic of services.
- In Detroit, the problem has gotten so bad that a new proposal would deprive a fifth of the city of basic municipal services, like trash collection and police protection.
- Neighboring Hamtramck has run out of services to cut, and expects to spend its last dollar early this year.
- Prichard, Alabama, in a desperate response to depleted coffers, has illegally stopped paying its pensioners.
- Newark has cut 13 percent of its police force.
- Camden, N.J., one of the nation’s most dangerous cities, has begun a process of cutting about half of its police department.
“It’s a frequency issue,” Whitney said on CNBC Wednesday morning. When host Andrew Ross Sorkin asked her to name the three municipalities most at risk of default, she refused.
“Too dangerous a game,” Sorkin admitted.
Indeed, the bond market tends to punish the weakest cities. As ratings agencies downgrade municipalities, and as investors get nervous, yields on muni bonds rise, meaning it’s more expensive for cities to borrow money.
“It’s a downward spiral,” George Rusnak, national director of fixed income for Wells Fargo, told the Wall Street Journal.
CITY DEBT MARKET HITS WORST LEVELS SINCE THE FINANCIAL CRISIS
William Alden First Posted: 01/14/11 09:34 AM Updated: 01/14/11 09:34 AM
As the financial struggles of cities and states become ever more worrisome to investors, the market in their debt has hit its lowest level since the financial crisis, the Wall Street Journal reports.
It’s been a dismal few months for local governments. The market in their bonds fell every day this week, the WSJ reports, capping a nine-week stretch of net selling, an indication of investor pessimism. As investors get skittish, and as ratings agencies affix downgraded labels, cities and states will find it increasingly more difficult to resolve their financial woes.
In a sign of local governments’ worsening plight, it became even more expensive for them to borrow money Thursday, as yields on 30-year high-rated debt rose to 5.01 percent, the first time that figure has broken five percent since the financial crisis.
Some experts believe a large-scale crisis in the roughly $3 trillion municipal bond market isn’t possible, given the long-term nature of local government debt. But a growing group of veteran players says municipal budget strains could plunge the country into another financial crisis. JPMorgan CEO Jamie Dimon this week echoed analyst Meredith Whitney, investor Warren Buffett and others, as he said he expects more cities to declare bankruptcy.
“Be very, very careful,” Dimon said, according to Bloomberg.
Many investors don’t need telling. Whitney, perhaps the most prominent voice warning of a coming municipal crisis, refused to name the three cities she believed to be in the worst shape, when she appeared in CNBC on Wednesday. Naming names was simply too dangerous.
After deals with Wall Street firms helped many local governments juice their revenue in the years leading up to the crisis, and even in the years after, many of those deals are now having the opposite effect. In just one example, states and cities have had to pay over $4 billion to Wall Street firms since 2008 to exit $500 billion worth of complicated deals, known as interest rate swaps, that went sour, Bloomberg reported.
As other deals run their natural course, local governments will lose Wall Street support, the WSJ says. About $109 billion of debt guarantees are expiring this year, meaning many governments will be left with sizable portions of debt more at risk of going bad. The advantage of exiting Wall Street deals is that it means fewer fees, but a drawback is that it could leave governments more vulnerable.
Facing weak investor demand, a New Jersey agency slashed the size of a debt sale this week to $1.1 billion from $1.8 billion, by nearly 40 percent, according to the WSJ. In Texas, a strapped public agency struck a new deal with JPMorgan that requires it to pay back a 30-year bond over the next three and a half years.