Check out the epic infographic on the Stockton bankruptcy from the Boston Review; this is only the first 20% or so of it! :

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click for full graphic

Category: Credit, Digital Media, Legal

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

19 Responses to “Stockton Goes Bust: An Epic Infographic”

  1. constantnormal says:

    “… Stockton is only the latest …”

    Not so, as San Bernadino followed suit on Tuesday … perhaps Meredith Whitney merely misjudged how long and drawn-out this situation has become …

  2. cn–

    as has been, previously, and notoriously noted, before..~”‘Extend and Pretend’ can be hard to Time..”

  3. JohnnyVee says:

    Its a nice piece, but only half the story. Stockton, like just about every municipality, increased its employee salary and benefits to unsustainable levels. It cannot provide services to Stocktonites and fund its retirement obligations. The purpose of its bankruptcy is to discharge and renegotiate its union contracts. Capital outlays are finite, while its employee and benefit obligations are eternal. Thats why Vallejo filed BK protection–its union employees were stunded that a Federal Judge could break their agreements and, basically, force the unions accept large reductions. I am not against unions per se, just making the point.

  4. JohnnyVee says:

    The long cycle down should put gov’t salary and benefits back at historical levels, i.e., low wages, decent retirement. Today, such salaries are above private sector with very good retirement in terms of monthly payments and medical benefits. Who knows, maybe even retirement benefits will be eliminated, as they have been, for the most part, in the private sector.

  5. Union Agitator says:

    The 1% have been driving down wages for ages, now they point at gov’t employees and say eek! they make too much money! So the path to prosperity is screwing cops and teachers and librarians and garbage truck drivers out of their retirement. This is madness.

  6. MidlifeNocrisis says:

    As an aside….. the Federal Government went a long way towards reducing federal employee retirement obligations when it eliminated the Civil Service Retirement System in 1983 (except for those employed prior to that date).

    Where I live, in the Midwest, there are some State and Local employees that today have much better benefits than federal employees. Some folks are not aware of this. Easy to see how local governments can get into trouble.

  7. Global Eyes says:

    Trickle down economic theory’s latest example is Stockton, California where 31 years of National Debt expansion has infected municipalities to the point where their unknowing leaders are prompted to declare bankrupcy.
    It was President Reagan who deliberately abandoned direct printing (inflation) for direct borrowing (National Debt).

  8. chancypants says:

    As a local gov employee, I will lay some unvarnished truth on you.

    The thieves that run finance, and now also the government, created an artificial bubble economy based on fraudulent credit. The boom was great, and now the bust in great. During the boom, all levels of government were deluded into thinking it was real. From Clinton’s surpluses based on fake capital gains, to the fake housing bubble. So governments increased their benefits and are having a hard time bringing them back in line with reality. Those that can’t manage their personnel expenses down to reality will go bust. Simple.

    The fake boom economy left a real residue of debt, unemployment, and an over supply of houses and goods, therefore lack of demand. Some of the varied financial frauds are beginning to unwind, but we are still at the beginning of that process. The system is so rigged against the middle class and poor, it is really tough to stomach.

    If you a private CEO making 500 times your average employee, you are doing fine. If you are not C-level, you better ride one of the remaining over compensated areas in the economy to prepare for the coming storm. That includes Fed student loan fueled education, some MIC jobs, and some state/local government jobs. If you can’t, you have my sympathies.

    The politics of plenty during the boom are over. We are watching the politics of scarcity play out in Greece, Spain, Stockton, San Bernardino, Harrisburg, Jefferson County. It’s ugly.

  9. machinehead says:

    ‘During the boom, all levels of government were deluded into thinking it was real.’ — chancypants

    Personified by ‘Mad Al’ Greenspan, who publicly worried that Treasury debt would disappear as endless surpluses trimmed the national debt to zero.

    Not coincidentally, the deluded clown Greenspan helped finance not only the Tech Bubble, but the early and middle stages of the housing bubble.

    How this dirty old lizard can look at himself in the mirror is a mystery that modern science cannot explain.

  10. BR David says:

    @constantnormal,

    Mammoth Lakes also declared bankruptcy. It’s hard to do a graphic story that will keep up with breaking news.

  11. dsawy says:

    There are many other cities and perhaps even counties in California who will be following Stockton and San Bernardino into Chapter 9.

    When the tax revenues were fat in ’98, ’99 and ’00, California government at all levels when on a spending binge, the likes of which had never been seen before. Too many political hacks thought that the tax windfall from Silicon Valley stock options would last forever. They didn’t. Now these idiots can no longer kick the can down the road and there’s going to be a hard reckoning.

    BTW, a criminal probe has been started into San Bernardino’s local government:

    http://latimesblogs.latimes.com/lanow/2012/07/criminal-probe-adds-twist-in-san-bernardino-bankruptcy-drama.html

    As someone who used to live in California, I could see this crap coming from a long ways away – all that way back to the dot-bomb recession of 2002. The way the political hacks and public employees didn’t want to admit that the dot-com tax windfall was just and only what it was – a temporary windfall – told everyone who was paying attention that this day would come.

  12. ilsm says:

    Insolvent governments is for busting unions.

    When the US goes broke do they “walk” from SS and medicare which were filled with trillions in payroll tax’ cash, or do they walk from DoD and OPM retirement trusts filled with congress’ IOU’s?

    In 1984 the pentagon’s military retirement fund went off the annual DoD appropriation and on an intragovernmental “trust fund”, which was “appropriated”, no cash, an initial credit balance. Each year the congress puts more “appropriated” no cash money in the mil retirement trust fund. There is not a cent of cash put in that trust fund, unlike SS and Medicare. At the time the treasury assumed a half trillion in military rettirement planned outlays. The current balances 28 years later is around $326B, all non cash appropriations.

    Each year congress appropriates enough cash to pay retirees and adds funny money to the trust fund.

    When the all volunteer force iplementation raised military pay nearly 25% the new enlistees went on a 20 year 40% retirement, down from 50%. However, in 2005 to recruit for perpetual wars of occupation the percent was raised back to 50% at 20.

    I have not seen an estimate of the current exposure of the DoD retirement trust fund, but congress has to raise the cash each year.

    The OPM retirement trust fund is similarly filled with approriations with no cash. Current trust fund balance is $795B, with each year congress raising cash and appropriating non cash to increase the trust and pay interest. Unlike DoD OPM gets 3% of wages, and matches 3%. So it has a tiny part employee money.

    Half of OPM retirement is for DoD workers.

    When they talk about SS going broke in 37 years, they ignore that DoD and OPM retirements funds get almost all their cash raised at the instant needed from $1,200B balances never collected from the treasury or employees, all funny money.

  13. MidlifeNocrisis says:

    @ilsm:

    SS, Medicare, and all OPM retirement obligations will be met unless new legislation is passed that changes (reduces) those obligations. Why? Because legislators determine what will be paid and the Federal Government is the creator of dollars. There is no solvency issue here, only the potential of changing the laws that affect benefit disbursements.

    In other words, there is no problem “raising cash” when you are the monopoly creator and issuer of cash. Just say’n…..

  14. 873450 says:

    Damn those greedy public school teachers for still holding onto the same healthcare and pension benefits successful businessmen like Carl and Mitt stripped away from the private sector middle class 25 years ago.

    Damn them for still affording mortgage payments on the same middle class homes their outsourced neighbors are getting foreclosed out of.

    Damn them for still being able to dine out in luxury at Burger King when so much of the middle class is falling into poverty needing food stamps to feed their families.

    Damn them for believing governors and mayors negotiating contracts with them would actually make pension fund contributions they were obligated to make.

    If Carl and Mitt can use junk bonds to make billions stripping away my healthcare and pension benefits, and then outsource my job to their factories in China, then I want John Christie to do the same thing to public school teachers. (Outsource the students to charter schools.) It’s just not fair teachers still have something of value stripped away from me. It really doesn’t bother me so much that I’ll never see, or even get close to, any of Carl and Mitt’s 14 houses, but what really bothers the hell our of me is getting foreclosed out of my middle class house and looking across the street to see a public school teacher still living in their middle class house.

    Something is very wrong if the disappearing middle class can be convinced their precipitous economic collapse and accelerating income inequality should be blamed on those still in the middle class.

  15. 873450,

    it is something like that, no?

    maybe, We could remember that, this http://search.yippy.com/search?query=Beggar+thy+Neighbor&tb=sitesearch-all&v%3Aproject=clusty

    writ Micro-

    is, sometimes, known as ‘Divide and Conquer’–previously ‘A House, divided, cannot Stand..’

  16. victor says:

    The CA budget shows a deficit of $16.5B to $19B depending on who’s doing the counting. Three terms Gov. Jerry Brown’s prop. 30 is on the Nov. ballot to address the deficit. Polls are 66% favorable, fight is only among Democrats the Republicans are irrelevant. The deficit will be fixed by increasing the state income taxes on incomes above $250k and increasing our already high sales tax rate. Additional jobs will be created via a high speed rail system to cost a mere $90B as unemployment still stand wells above average national level, second only to NV.

  17. blackjaquekerouac says:

    should surprise no one if there is a wave of defaults actually. the corruption in US politics is so total the collapse will be epic indeed. since there is no inclination to address the “fiscal cliff” my guess is on an October Surprise of epic proportions in state and local governments. “if it can happen in California it can happen anywhere.” the only places to be spared will be from Texas heading due North and due East. the catalyst will be the collapse the EZ trading bloc, catastrophic failure of a Japanese bond auction and the realization that “the near zero cost natural gas revolution is the biggest disruption in the history of economics.”

  18. StatArb says:

    As painful as this process may be , the residents will all be better off as time passes

    More white elephants , over-budget projects , and unfunded pensions will be wiped out , and their creditors should lose their money as well

  19. AnnaLee says:

    873450

    Yep, and you can see some of this in these comments.