Mandeville, LA – Exclusive Transcript – If you think of yourself as a sow and you’re a major city and you actually had to withdraw yourself from the federal trough and had to pay and manage and take care of your own finances the old-fashioned way, most of this stuff would not happen. Many of the things that occur in major cities would not happen because there would not be the underlying promise there that the federal government is always there with a hand out with programs. Check out today’s transcript for the rest…
Begin Mike Church Show Transcript
Mike: Yesterday Moody’s downgraded Chicago’s credit rating from Aa3 to A3 because of the city’s pension problem.
Moody’s Investors Service says it’s making the move because of “formidable legal and political barriers to pension reform” in the state. The downgrade affects $8.2 billion in debt and means it will cost the city more to borrow money.
Mike: Good. Municipalities need to stop borrowing money. They’re broke. They’re gonna get a bailout, aren’t they? No, they’re not going to get a bailout. We’re broke. Everyone is broke. There is no money. Then if I go back to Mish’s report on this:
With the bankruptcy of Detroit and numerous cities in California, it will not be long before the rating agencies downgrade city debt en masse.
Mike: Here’s a list of zombified cities. These are cities of the walking financial dead.
Zombified Cities [Mike: These are recent headlines you might have missed.]
Philadelphia: 5th Largest City in US is Effectively Bankrupt; Mayor Holds Closed Meeting with Wall Street to Discuss Asset Sales
Houston: CPAs state Houston is Bankrupt
LA: Mayor of Los Angeles Says “Bankruptcy is Not an Option” (Of Course It Is)
New York Cities: Public Pension Ponzi Scheme – New York Cities Borrow From Pension Plan to Make Contributions
Baltimore: Time for Baltimore to “Pull a Vallejo” and Declare Bankruptcy
Miami: Miami Commissioner Says Bankruptcy is City’s Best Hope; Chris Christie Says New Jersey Careens Towards Becoming Greece
Chicago: Chicago’s Mayor Daley Discusses Bankruptcy For City Pensions
Harrisburg: Pennsylvania State Capital Files For Bankruptcy
There is absolutely no way Chicago, Oakland, Baltimore, Philadelphia, LA, Houston, and numerous other cities can meet pension obligations without a major restructuring of promises.
Mike: You know, folks, the unions don’t compromise. They don’t bargain on these things. The only way you’re going to get anything done is to declare bankruptcy. This is on the radar screen. This story and issue is not going away anytime soon. There are a couple other points on this. Did the borrowers who recently loaned Detroit, Michigan money, did they know the status that the city was in? Was that disclosed? Ditto that for all the other major cities. Are cities disclosing how bad things are? We did the story on Friday about how Detroit is floating the idea of building a $640 million hockey arena, for crying out loud. You’ve got money for a hockey arena but you can’t meet your pension obligations? Something’s gotta give here. Something has to give.
There are other assorted stories out here. For example, the president was asked on Friday whether or not the City of Detroit was going to get a bailout. Obama’s response was “I don’t believe that that is going to happen.”
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