MSM and Politicians can’t tell you who’s going bust next

Because they don’t know.  This is what comes of not covering council meetings or looking at (much less examining) budgets.  Even ratings agencies (like S&P which had San Bernadino bonds as investment grade last week) aren’t any help.

Accounting fraud is alleged in San Bernadino and yet nobody reports the details.  The mainstream media is ill-equipped to understand anything more arcane then poll numbers and the public face of these municipalities, their elected officials, come off as innumerate incurious figureheads who get any real information on a need-to-know basis.

Based on the most reliable source I came across (Al Jazeera) and my own research, these (in a slideshow format that I’m experimenting with) are the next big (over 500,000 people) municipalities likely to go belly-up:

Bankruptcies to come

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The first four I got from this video:
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The last one comes from hard experience.  When you’ve been raiding your Open Space trust fund and looking for projects that can be bonded for so you can siphon off part of that bond money to use in your budget, it’s only a matter of time before you get busted, even in New Jersey.

6 responses to this post.

  1. Maybe 1,000-year muni bonds are the answer, John. If you wonder why Moody’s is in a hurry to impose fairly realistic pension accounting, just consider the ratings some of these cities and counties going bankrupt have enjoyed based on phony numbers. Pensions are the biggest scam anybody has found so far, but looting capital accounts and bonding for ongoing expenses could be worse. Toss in the penumbra of toxic derivatives, shorted “self-insurance” funds, Medicaid pass-throughs they no longer can pass through, etc., and you get an idea how fast this municipal and state fiscal bubble could pop. The worst thing is right now there is no credible way of determining which ones are about to crash and which might make it. Buckle up citizens, here we go.
    http://www.statebudgetsolutions.org/blog/detail/public-pension-infinite-amortization-puts-taxpayers-in-debt-forever

    Reply

    • Frank,,

      In Union County you can also add grants (state and federal) that the county is using to pay salaries and regular expenses that are now drying up.

      It took me about 10 minutes to see that governments were playing games with their defined benefit funding (seeing contributions less than payouts in a mature plan) but the accounting chicanery took a lot, lot longer and the stuff Union Count is doing is fiscal hocus pocus. Every year they come up an additional bonding scheme to inflate revenue by passing it on to future taxpayers that, if legal, should shame the regulators in the state who made it legal.

      Reply

  2. Heck, there was some kind of “spreadsheet error” in Pittsburgh on the eve of 2011 that I have never gotten the story on, though I tried to find someone who could tell me….

    And to reply to Frank, the rating agencies only have their credibility right now as they have theoretically had their regulatory power taken away. So they don’t have so much interest in playing nice with governmental bodies.

    I look forward to see what happens when Moody’s new approach goes official in the fall.

    Reply

    • The truthful explanation to a lot of these gimmicks/errors would run something like:

      “We did this because we had to come up with the number politicians liked and, doing it this way, we were pretty sure we wouldn’t get caught.”

      which is not something you’re likely to see accountants or actuaries ‘fess up to.

      Reply

  3. Posted by Javagold on July 15, 2012 at 9:49 pm

    This is the END my friend !!!!…….and it’s only just the beginning…… Prepare now while they still leave you some time

    Reply

  4. Posted by TREEeditor2 on July 16, 2012 at 12:47 pm

    believe in the 3 G’s: gold, guns and get as far away as possible

    Reply

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