They Smell Blood in the Water

(Image: Source.)

Lke it or not, there are lots of savvy operators in the legal and financial industries who, like hungry sharks, are quick to pick up on the scent of blood in the water that can lead them to a meal-(ticket)-in-waiting. So when I read reports like the following, "Restructuring Experts Predict U.S. Municipal Default," from the Wall Street Journal's Bankruptcy Beat blog, it makes me feel reasonably confident that a painful dénouement for many beleaguered state and local governments is not far away.

Indicating how serious a cash crunch many cities and counties are facing, more restructuring professionals expect a major U.S. municipality to default on its debt than predict that a foreign country will be unable to keep its loan commitments, a new survey has found.

In a poll released Monday by consulting firm AlixPartners LLP, 90% of respondents predicted a significant American municipality will default on its debt before 2012. Only 63% of those professionals, however, believe that a foreign country will default in that same period, despite the debt crisis unfolding in Europe.

The survey results likely reflect that there is a willingness among countries in Europe and the Middle East to work together to avoid a debt default, while most believe it’s unlikely that Washington would come to the aid of municipalities, said Peter Fitzsimmons, AlixPartners’ North American president.

“There is very little appetite at the federal level to bail out local governments, and the problems in some cities are severe enough that there will probably be a default,” he said.

A number of municipalities, including Harrisburg, Pa., Detroit and San Diego, have openly discussed their deep financial problems and have even contemplated filing for Chapter 9, the section of the U.S. Bankruptcy Code that governs municipal filings.

Municipalities are struggling in part because widespread foreclosures and commercial property vacancies have caused property values to fall, which in turn limits how much property tax local government can be collected, said Juliet Moringiello, resident scholar at the American Bankruptcy Institute.

“The impact of the financial crisis has trickled up to municipalities,” she said.

AlixPartners, a Southfield, Mich., turnaround firm, polled 91 bankruptcy lawyers, bankers and fund managers earlier this month as part of its annual survey of restructuring professionals.

Comments

[Vote them all out....]

Wait for the elections...

Vote them all out....

"We're An Oligarchy And It's Getting Worse"

http://tinyurl.com/29yepmv

[Sam Stockton]

Employee unions such as teachers, firemen, and police absolutely refuse to even consider modest pay cuts, even though they are handsomely paid, and have unbelievable pension plans.
Average teacher salary in CA is $70,430.per NEA, highest in the nation. Still,in some areas, the teachers are pushing for an additional parcel tax of nearly $1,000. per house, and up to $9,000.per apt. house or commercial building. Why? To fund increases in salary and pension benefits.(A school bond can not be used to increase salary-
a parcel tax can.)
Motto for unions: "It's all about ME!" see
pensiontsunami.com

[sharonsj]

48 out of 50 states are in the red. Cutting budgets might work but the cuts are usually to social programs--I don't see any of the politicians voting to cut their salaries. Meanwhile, my disabled friend in California, who needs part time home assistance, already had his stipend cut. Now they're talking about doing away with all in-home help--yeah, all the people earning maybe $8 an hour less expenses, without which my friend cannot go shopping or get to a doctor. That's really going to save money when they have to put him and tens of thousands into institutions instead.

[roger]

It matters not the 'ism. Power creates Corruptors,
and the corrupted just seize the opportunity.
Trowing the bums out is a knee jerk reaction rooted
in emotion. The question is: who is the corruptors
and how did they get that power,unless there is an
understanding of this dialectical process,we are eternaly
condemned to trow the bums out every 4 years.

[Small Town Gal]

Oh no, we couldn't throw a little money at the states and the municipalities. Hell no! Why? Oh - because we already spent the wad bailing out the banks' bond holders. Their money goes to lobbyists and election campaigns; you give money to counties and you get things like bus service and fire departments. Sheesh. Where's the kickback in that?

I once again mention that if they had just done a credible WPA project at the beginning of this mess - revamped aging water and sewer infrastructure, bridges, electrical grid, etc. - we wouldn't be in this mess. But no - important people would have taken a haircut.

[Κασσάνδρα τριάντα]

"
kickback in that?

I once again mention that if they had just done a credible WPA project at the beginning of this mess - revamped aging water and sewer infrastructure, bridges, electrical grid, etc. - we wouldn't be in this mess. But no - important people
"
~~Roger~

Lot of co-conspirators need to be prosecuted, need to be behind bars. Prosecutors single out one Jewish Guy, Madoff then rest up for a few years. They work for Hitler? Who will prosecute the prosecutors? Our system is collapsing into shards with all top people grabbing then running with fragments, running to the hills with their guns.

Mundus frequens demersus in Cloacam Maximam est dejectus.