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Paul Sancya / AP
Detroit, with $2.4 billion debt, has the lowest credit rating of any big U.S. city.
Of the 7,800 bonds in the U.S. secured by state or local governments, only 25 are currently speculative-grade, or junk-bonds, rated by Moody’s Ba1 or lower. Only municipalities received such low ratings, and the reasons vary. Moody’s report, “A Look at Speculative-Grade Local Governments in the Wake of the Recession,” details the economic issues that have lead each into junk-bond territory. 24/7 Wall St. has analyzed the nine worst cities, whose credit rating is Ba2 and lower.
Each of these municipalities faces a unique situation, Moody’s explains, and the list is not indicative of a greater trend. Most municipalities, Moody’s writes in the report “face deeper and longer-standing problems than investment-grade issuers.” Analysis by 24/7 Wall St., however, reveals a number of commonalities between the lowest-rated areas.
For instance, a number of the municipalities on the list are facing shrinking tax bases possibly exacerbated by the recession and high unemployment. Some cities, such as Detroit and Pontiac, have had their economies devastated by the recession. Their populations have decreased dramatically and struggling major tax-paying corporations have contributed much.
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Other cities have excessive liabilities that they are unable to meet. Central Falls, RI, declared bankruptcy in August due largely to its bloated pension plan. Strafford County, NH, spends two-fifths of its budget on a single nursing home. It funds residents’ Medicaid, but is not receiving full reimbursement from the state, causing multi-million dollar deficits.
Other municipalities have simply made bad investments. Harrison, NJ, built a $200 million sports arena that has not brought in the amount of money the city was expecting. Similarly, Salem, NJ, built a large office building downtown with the intention of leasing office space. But construction delays caused lease payment delays and money has been taken from the debt fund numerous times.
24/7 Wall St. has looked at the nine municipal bodies with the worst credit ratings assigned by Moody’s, not including school systems, rated Ba2 and lower. To get a sense of how these areas are doing, we also included most recent median household income figures from the Census Bureau. This level of credit rating implies a substantial risk of default for investors who bought these bonds with the expectation of being repaid.
This is 24/7 Wall St.’s list of Nine American Cities Going Broke.
9. Camden, NJ
> Credit rating: Ba2
> 2009 revenues: $181,257,000
> 2009 debt: $103,284,000
> Median household income: $25,418
Camden suffers from high unemployment, high poverty, and a weak tax base. The city’s median household income is less than half that of the national median income and is the lowest of all the municipalities on this list. Moody’s notes that “more than half of Camden’s real estate is tax-exempt, hampering already weak tax collections.” The city has had a speculative grade credit rating since 1998. Three out of the past five Camden mayors have been sent to prison for corruption, the most recent in 2001.
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8. Strafford County, NH
> Credit rating: Ba2
> 2009 revenues: $36,204,000
> 2009 debt: $23,866,000
> Median household income: $58,363
Strafford County’s low rating is largely due to a money-losing nursing home, on which the county spends two-fifths of its budget. Just under 85% of the patients at the Riverside Rest Home are eligible for Medicaid, yet state reimbursements to the county continue to decrease, according to Moody’s. Between 2004 and 2009, the nursing home lost $36 million. The county does not expect to recover much of the money it used to cover these deficits.
7. Riverdale, IL
> Credit rating: Ba2
> 2009 revenues: $8,358,000
> 2009 debt: $9,350,000
> Median household income: $40,659
Riverdale has run operational deficits for a number of consecutive years, driven primarily by
a reduction in the amount the village relies on debt financing. “The village funded itself by borrowing money from its sewer and water funds, and now carries an operating fund balance of -52.1% of revenues.” The city, like many others on this list, is extremely small, with a population of just over 14,000.
6. Salem, NJ
> Credit rating: Ba3
> 2009 revenues: $7,059,000
> 2009 debt: $10,098,000
> Median household income: $28,397
Salem guaranteed bonds issued to finance an office building downtown. The city planned to pay for the bonds with revenues earned from leasing office space in the building. However, revenue fell short of what was projected when construction delays caused lease payments delays. “The project’s debt service reserve fund has been drawn down numerous times,” Moody’s reports. “Once the reserve fund has been exhausted, the city is obligated to pay debt service for the life of the bonds.”
5. Detroit, MI
> Credit rating: Ba3
> 2009 revenues: $1,280,791,000
> 2009 debt: $2,449,480,000
> Median household income: $29,447
Detroit has suffered worse from the recession than almost any other U.S. city. The effects of the city’s economic situation are reflected in its credit rating. Many of Detroit’s biggest companies, such as General Motors and Chrysler, declared bankruptcy, placing “significant pressure” on the city, according to Moody’s. Detroit relies on the auto industry for its tax base, and the industry’s contraction has hurt the city immensely. The city became a “habitual note borrower,” relying on investors to close budget gaps.
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4. Harrison, NJ
> Credit rating: Ba3
> 2009 revenues: $32,763,000
> 2009 debt: $92,613,000
> Median household income: $49,596
Harrison “issued a significant amount of debt to foster redevelopment, and continues to collect substantially less revenue from those developments than projected,” Moody’s explains. One of the largest projects is the $200 million Red Bull Arena, which was opened in March 2010 and cost the city $39 million in debt but has yet failed to have the expected returns. To help solve its debt problem, the city, which has a population of 13,620, plans to fire some police officers and firefighters.
3. Jefferson County, AL
> Credit rating: Caa1
> 2009 revenues: $309,440,000
> 2009 debt: $1,337,233,000
> Median household income: $44,718
Jefferson County’s debt, which is the second largest on this list, comes from a $3.2 billion overhaul of the county’s sewer system as well as a series of risky, controversial bond deals meant to help the county pay for the sewer work. A number of city officials have been sent to jail on corruption charges linked to the project. “The county defaulted on almost $3.5 million in 2008 -- the biggest default in municipal history,” according to Moody’s. Worse still, this year, the Alabama Supreme Court invalidated the county’s occupational tax, which accounted for one quarter of the county’s total revenues.
2. Pontiac, MI
> Credit rating: Caa1
> 2009 revenues: $46,183,000
> 2009 debt: $99,115,000
> Median household income: $32,199
The source of Pontiac’s troubles is similar to that of Detroit’s. General Motors, which went bankrupt during the recession, is the city’s largest employer and taxpayer. The city has been in receivership since 2009. Also in 2009, the city sold its Silverdome stadium, which cost over $55 million to build, for $583,000. Such concessions have not been enough to raise the city’s rating.
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1. Central Falls, RI
> Credit rating: Caa1
> 2009 revenues: $17,601,000
> 2009 debt: $18,753,000
> Median household income: $33,520
In August 2011, Central Falls declared bankruptcy largely because of the city’s pension plan, which promised $80 million in retirement benefits. According to the New York Times, the “pension fund will probably run out of money in October, giving Central Falls the distinction of becoming the second municipality in the United States to exhaust its pension fund, after Prichard, Ala." This $80 million is approximately five times the city’s general fund budget.
Leave a Comment:
Three from New Jersey. Isn't that where Gov Christie is from?
IMHO, Christie is governor of the state. The article is about cities going broke, not the states. You do understand the difference between cities and states, right?
Idiot that's why he was elected to change things that the socialist spend happy party did there. NJ was ran into the ground with idiots who were in charge of the state of NJ
The problem with NJ is that they have people from NJ in charge.
If that's the case with cities, don't you think that the country going nearly into a Depression is then corporate welfare deregulating warmongers - Bush and Cheney's fault.
I can still hear Cheney shouting on interview after interview "DEFICITS DON'T MATTER--DEFICITS DON'T MATTER......"
Hey Einstein, take a look, these numbers are from 2009 before Christie was elected. The state of NJ had similar numbers, THAT IS WHY CHRISTIE WAS ELECTED, TO DO SOMETHING ABOUT THE MESS! Also, all these cities going broke have been run by Democrats for decades. Pension obligations, unions, social services, and bad investments seem to be the main driver for the problems. Which party advocates for unrestrained spending like this, hmmmmmmmm? So before you speak, maybe you should put on your thinking cap, turn it on, and let it run for a few minutes, before you start flapping those ill informed gums of yours.
Alabama, what can you say about a state thats been run by TP/Republicans for decades?
They rank in the Top 5 of "The Poorest States In The Country". Alabamans still believe the Civil War isn't over and the South is winning!! They rank as one of the lowest states in Education and they still allow and encourage family inbreeding!!!
However, we have to give them credit as one of the Top 3 States for "Pickup Trucks, Rebel Flags and Rednecks"-ROFLMAO.
So Michael, where are you from? (Ten dollars it's California.) Did you not notice the 3 cities from NJ on that list? NJ was mismanaged to the near point of bankruptcy by the Democrats. Both parties are equally at fault for the financial ruin of this country....I think it's called GREED.
Excuse me, Christie did do something... he REFUSED to make a required Pension Plan payment... so it's business as usual... that's the only thing that saved his budget... and of course, as an "ex" federal employee... guess what "sweet" pension he gets..... nothing like you and I have... and in case you missed it... USA Today showed that the Fed Pension plan is in worse shape... but then that's cause Washington, DC pols get covered by that one....
Michael, post #1.6, demonstrates a good point about the Democrats. They cannot even distinguish between state government and city government. To them it is all the same nanny. My guess would be that Michael would have trouble even finding the city, let alone the state on a map. Birmingham, not exactly a Republican city, is going under.
lisa in houston
You are correct! BOTH PARTIES are to blame
How many of these cities are in right-to-work states? 1?
Notice that 9 of the 10 cities are in union-heavy states that are NOT right-to-work. I would like to see the top 10 broke states and I bet you most if not all are not right-to-work states.
Unions hurt more than they help.
City government, state government and federal government.....all corrupt.
I'm beginning to think that I just want out.
michael 2424, you're the one thats a DA. Enviromental groups shut down the sewer project and the revenue that would have created would have paid for the project. Now the citizens are paying sky high rates with poor service. The greenies cut off their own nose to spite their face. You sound like you'd fit right in with them.
Michael2424 - If it was the TP/Republicans that bankrupted Jefferson County, AL why did 2 Democrats go to jail? Perhaps a little fact checking before spewing nonsense. Here is the illustrious Democrat who is serving a 15 year sentence.
http://en.wikipedia.org/wiki/Larry_Langford
What you mean 2+ years isn't enough time to fix a mess left by the previous administration? hmmmm That isn't what righties keep posting about Obama.
Tam...thats because Obama has only made matters worse in his 2 years. Christie has made progress, Obama has only dug a deeper hole.
For Obama it's 3 years and he made things worse not even status quo!
I am afraid I will have to disagree with that statement. We were in a downward spiral when he took office, we are out of the recession now, and the economy is growing albeit not as fast as I would like to see it.
And it is not 3 years yet.
Last time I checked, America was going broke...that includes a hell of a lot more than 9 cities, but I guess when you put it like this, it just gives the rest of us something to look forward to. On another note, using the phrase "going broke" for this article is a bit of an understatement.
I did a cursory search of the mayors in these nine localities. For the two counties, I took the largest town/city in the county and found the following:
Camden NJ - Mayor - black female (D)
Strafford County, NH. Largest city Rochester, Mayor - White Male (D)
Riverdale IL - Mayor - Black Male (D)
Salem NJ - Mayor - Black Male (D)
Detroit MI - Mayor - Black Male (D)
Harrison NJ - Mayor - White Male (D)
Jefferson County AL - largest city - Birmingham - Mayor - Black Male (D)
Pontiac MI - Mayor - White Male (D) (interestingly enough, the black incumbent mayor was defeated in the primaries and was so mad, he endorsed another black male candidate)
Central Fall RI – four term mayor demoted - White Male (D)
Pretty compelling argument on the failure of nine localities: 44 percent white mayors, 55 percent black mayors, 100 percent democrats.
Yeah Tam...its not Obama's fault is it? Never was and never will be..the part about not 3 years...OK..you got us on that one..2 yrs and 9 months. Pitiful argument.
Wait, TamL...we're out of the recession? What country are you living in?
What we need to do to REALLY get things going again is to get away from "fiat" currency, and go back to a standard like gold, silver, or some other REAL commodity.
Pretty pitiful argument...lol it is the same arguement you guys use all the time. Unemployment was on the rise when he took office, it peaked his first year and inspite of Republican Anti-American stance it is slowly coming back down. It is going to years for a full recovery.
The recessioin offically ended in 2009. That doesn't mean we have made a full recovery.
Definition of recession: A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
we are in recovery are you kidding, we are still in the orignal depression and it's just getting worse. I can't believe people can still believe what the goverment put out and believe it.
Well Christie better not run for President then, because he's got his hands full with NJ according to you guys.
@Steve
*golf clap* nicely done. I was doing the same research. Each of these cities/counties are run by a Mayor w/ that nice little D behind their name. hum..
9 cities/counties...going broke..
9 cities/counties run by Democrats..
hum.. I wonder if theirs a connection?
America saw the greatest economic rise for the middle class in history, during the rise of the Union movement; 1945-1985. Then the great savior Pres. Reagan fired the Air traffic controllers. Then came the start of the Union decline. But, just to be fair, Pres. Clinton's NAFTA didn't help.
The facts:
-- The recession from which the United States is still struggling to recover began in December 2007, 13 months before Obama took office in January 2009. That's according to the National Bureau of Economic Research, the nonprofit agency that tracks business cycles.
Under W and Dick (who famously quipped to then-Treasury secretary Paul O’Neill that “deficits don’t matter”), the Republicans took the largest surplus in American history and turned it into the largest deficit.
Steve
You put the nail on the coffin . However, Democrats always find out the way to spin the truth and blame someone else for their faults.
Our decline was in full swing in the 1980s. The sad part of it is we did it to ourselves. We did not understand what competition meant. Japan started sending Toyota Corollas to the US. People found out it was better built, more efficient, and more reliable. And a bonus, it was much cheaper. I do not know if you owned a US car made in the 80s or not. They were junk even when new.
9. Camden NJ - run by Democrats
8. Stratford County, NH - run by Democrats until 2011
7. Riverdale, Il - run by Democrats (current Rep is J Jackson, Jr)
6. Salem Cty, NJ - run by Democrats
5. Detroit, MI - need I say more?
4. Harrison, NJ - run by Democrats
3. Jefferson Cty, AL - run by Democrats
2. Pontiac, MI - run by Democrats
1. Central Falls, RI - Unknown
Nuff said.
Not a Socialist- I agree with your comment. Its ironic that mostly all the cities that are run by Liberals/Democrats have $$$$$$$$$$$$$ problems even California WHO are all going broke. Keep spending Democrats, thats all you know how to do is SPEND,SPEND,.!!!!!!!!
TamL,
Out of the recession? Why dont you tell that to the close to 20% unemployed. Yes, I said 20%. Only 9% are counted under the 'new math' that both parties are using right now. This 'anti-American' vitrol you are spewing blaming one party for the mess this country is in is typical. Your blind following of anyone with a (D) following his/her name is part of the reason we are in so much trouble. I suggest you take a good hard look at your party of choice before you claim any moral high ground. The FACT is that most of the cities that are on this list are/were run by Democrats. That doesnt make all Dems wasteful/corrupt. What it does mean is these places are in trouble because of the PEOPLE they elected. Life is more than black and white and (D) and (R)
This list will grow exponentially over the coming years.
TAML:
What country are you talking about?? NOT this one! We are heading to a double dip recession. And if the dems have their way a depression.
The list wouldn't have to grow if intelligent beings were elected....oh, wait...yup, you're right. Note that the cities were heavy into unions and democrats, also many were company towns. When a company leaves a company town, there goes the town unless it was able to diversify. Note as well how pensions and entitlements factor in.
To those claiming that the recession is officially over? What alternate universe do you live in? Just because the politicans and the economists claim it is over doesn't make it true, especially when you factor in who they work for. This is the new normal and unless intelligent beings are elected, it will continue for a very long time.
IMHO.. Wow, you don't know for sure? Then you most likely wouldn't know that New Jersey is in the Country where Barrack Obama is President...
After reading the story and most of the posts, I am reminded of something said by the character "V" in the movie "V for vendetta" (abridged):
It would be EXTREMELY interesting to find out how much CORRUPTION is paramount in these cities going bankrupt.
Couple that with all the "goody" pensions the cities gave out and you have a road to disaster.
Yep, vote union....that will keep the budgets balanced. (complete sarcasm)
Apologies. I forgot to include this in my previous post:
The first rule in government is to take care of your own...
THE TWO WORDS THAT EXPLAIN THIS MESS ARE MALFEASANCE (CORRUPTION) AND MALINVESTMENT!!!!
Granted, many of our cities problems are multifactorial in nature the two biggest things we see are the rabid corruption in governments and its intrusion into the private sector in so many ways.
We're all aware of the corruption and criminality in our government. This was made obvious as long ago as 1939 when "Mr. Smith Goes to Washington" first came out on the silver screen. Corruption, graft, bribery, embezzlement, fraud and on and on, nothing has really changed. As I've said many times, "Crooked as a politician" used to be a punch line, today it is reality, and has been for a long time. As our government(s), State and Federal, grow bigger and bigger, so does the corruption. Yet Americans keep hoping it will change. Hope and Change, the two promises the politicians love to lead us by our noses with (current and previous administrations included).
We all know of some sort of criminal activity in our Local, State and Federal government. Yet we insist it's not our fault. Our Founder's and Framer's granted us the greatest and strongest weapon to control our government, our vote. Unfortunately for decades we have abused that weapon based on partisan belief of hope and change. How many of your Local, State and Federal politicians have been in office for 10, 20, 30 or more years? Too many. Our Framer's did not intend politics to become a career. But it has. A very lucrative career. Term limits is a constant topic of discussion. The argument is sound, but it really isn't necessary if we finally start to use our vote correctly. Unfortunately we know in order to make a sound decision we need to be informed. As our education system has deteriorated, the level of corruption increases. Coincidence?
The article highlights a few examples of the malinvestment our government is guilty of. A sports arena in New Jersey that is not profitable. An office building hampered by building and payment delays. Today we have Solyndra. There are hundreds of these malinvestments around the country. The intent is always noble, the results are often disastrous. Government’s role is NEVER to be a nation/state builder. It is to be a nation/state governor. Our Federal Constitution has no Enumerated Power that allows it to be an investor. I'm sure most State Constitutions are similar.
For nearly 100 years our Constitution(s) have been trampled on, misinterpreted and allowed revisionist manipulation to create what we see today. The private sector and free-market has been taxed, regulated and subsidized out of existence. The rule of our Republic has become inverted. This is where we have failed. By inverted I mean we have been indoctrinated into believing the Federal government rules the State government which rules We The People. This is the exact opposite of what our Framer's intended. The Preamble begins with "We The People", NOT ”We The Government". They wanted us to remember that the Constitution was written by the "citizens", not a King or Dictator, to have control of our government. The proper hierarchy of our nation should be We The People rule over State government who rules over the Federal government. Each level of government has its clearly defined Enumerated Powers and nothing more should be demanded or expected of it.
As a Constitutional Originalist I now this irks many people’s beliefs. Too bad. The reason our nation is collapsing economically, socially, morally and culturally is because of these abuses. We can blame the Democrats, Liberal, Progressives, Independents, Republicans and the GOP but we all know We The People are most to blame.
Our government needs to be completely purged at all levels. Constitutional interpretation can no longer be a game between Originalists and Modernists. We are still the greatest Republic in history. We can still be the “Shining City on the Hill”. We must continue what made us great, not what we hope will make us great. The difference is not only essential it should be demanded. Government must be returned to its original intent.
This, and only this, will allow us the Freedom, Liberty and Justice that We The People deserve.
Corruption is everywhere. And here are some reports of corruption in these FAILED CITIES/COUNTIES:
1. Central Falls, RI.
The head of the Rhode Island State Police has brought federal prosecutors into the corruption probe of Central Falls Mayor Charles M. Moreau, in part to alleviate any public perception of a conflict of interest involving the mayor’s friend, Attorney General Patrick C. Lynch.
2. Pontiac, MI.
In early October, one United Auto Workers international representative and two former UAW Local 594 officials pleaded not guilty to federal charges of extortion, mail fraud, and violating federal labor laws.
The charges stem from allegations that the officials unnecessarily prolonged a 1997 strike at the General Motors truck plant in Pontiac, Michigan, seeking payments from GM and jobs in the plant for relatives who were unqualified for their jobs. If convicted of all charges the three face up to 30 years in prison, fines totaling $750,000, or both.
3. Jefferson County, AL.
At 63 years old, Larry Langford, the former mayor of Birmingham, Alabama, has been sentenced by a federal judge to 15 years in prison for a corruption scheme that played a major role in Jefferson County's multibillion dollar sewer debt and could lead to the biggest municipal bankruptcy in U.S. history.
4. Harrison, NJ.
November 6, 2007. Harrison, NJ. On October 22, 2007, the Newark Star Ledger reported in a front page story entitled "Little town a big target in hunt for corruption" various illegal and unethical acts from various Harrison town officials.
5. Detroit, MI.
Public corruption cases keep piling up in a notoriously shady U.S. city that has seen its scandal-plagued mayor go to prison for a multitude of crimes, a deputy mayor and prominent city councilwoman each plead guilty to bribery in different schemes and several public school employees charged with numerous felonies for embezzling education funds.
6. Salem, NJ.
Sometimes public officials are the instigators in corruption cases. Such as the indictment brought this week against a former UMDNJ administrator who allegedly steering millions in work to a contractor who showered him with gifts. Or the guilty plea by a state labor department inspector who took over $1.8 million in bribes.
7. Riverdale, IL.
Mr. Murray frequently under-bid other contractors on Riverdale-area projects, Mr. Gordon said, by as much as 20 percent. His work was technically solid, said Mr. Gordon. But the word in the industry was, "there was something crazy going on with Murray."
Indicted Aug. 5 were Mr. Forde, the head of the Carpenters Union District Council in New York City; John Greaney, business manager and president of Carpenters Local 608; Brian Hayes, a business agent and Local 608 officer; Mr. Brennan, Brian Carson, Joseph Ruocco, John Stamberger, and Michael Vivenzo, shop stewards; and Mr. Olivieri, a benefits fund trustee and the executive director of the Wall, Ceiling and Carpentry Industries of New York, a trade group representing unionized contractors.
Prosecutors also accused contractor Finbar O’Neill of helping to deliver cash to Mr. Forde.
8. Strafford County, NH. Coming soon !!!
9. Camden, NJ.
The south Jersey town just across the Delaware River from the City of Brotherly Love is known far and wide for its operatic levels of corruption in pretty much every aspect of public life
What would one expect if corruption runs rampart in a city/county and not expect to have budet problems because that is where FOCUS is lacking, but how to make quick $$$ is the primary FOCUS.
It could be worse.Have any of you read anything about the Great Depression?Back then the rich gave a damn about this country and actually stepped up to get the country out of it.Now,the rich just keep stealing,paying few taxes and helping themselves.There is corruption in both parties as well as hanky panky.I don't care about who is screwing who.As a nurse,I've seen lots of that going on,and don't care as long as the persons get their work done!The last time we did well was with Bill Clinton in office.Then Bush and Cheney got in,created an unnecessary war so their rich friends could get richer,and threw the surplus away!And as for fixing the mess in 3 years,no one human could do that!I am sorry for 9/11.But we could have used the CIA and others to punish the perps.Would have saved lives of american soldiers,and cost less.I wish the rich would step up like they used to.Now,they just don't seem to care.And we have more corporate welfare,than anything in this country.The small businesses are the ones who create jobs.They need support.And no,I don't own a small business.I am lucky because nursing is almost recession proof.I am burned out though.I feel bad for all Americans,both Democrat and Republican,or whatever who are struggling.I wish we'd argue less and get more done.In my job,no one gives a crap what political party you are.When someone is dying and needs help,that is irrelevant!I have cared for rich,poor,black,white,whatever,all ages.We're all American.Our differences are part of what made this country what it is.I wish everyone could be happy and at least have their basic needs met.But alas,I will never see that in my own country.And I do believe people should have to work if they're able bodied.Yet no one should go hungry here,esp not the children.We have to fix it for them!When we're old and gray,they will have to decide whether or not they want to help us!Let's hope like hell they do!
I was born in NJ and that was a long time ago and it was corrupt back then. Remember the mafia? They had a piece of the action in everything. Also the tax burden on the citizens was high back in the 50s. I can't imagine what it is like today. What is interesting is that NJ creates the most millionaires. They also lose the most millionaires and so it ends up being a wash with regards to tapping into that millionaire tax. They once upon a time had very good schools and frankly it was a wonderful place to grow up in. Oh, great food as well.
Just a reminder here. Obama has spent more than 1 billion dollars blowing up people and infrastructure in Libya. Imagine the good that money could have done for just the above cities that will never be able to dig out. Where are our priorities? When he is weighing the future of Libya and the future of the kids living in Detroit in that mess, how is it that Libyan children won out?
It's amazing today what passes for journalism and what passes in the blogs for critical analysis.
This is only a top 10 list. The article states that 25% of all tax-exempt bonds are rated as "lower quality". There are THOUSANDS of bond issues available on the market (meaning there are at least several hundred that are lower quality). Most of the lowest grade (essentially junk) belong to small towns and cities that don't have as diverse a population (by age, race, religion) and economic (and therefore tax) base. And, who generally gets elected to local offices in this rural and exurban communities. Here's a hint: they are not Democrats.
Although some cities have serious issues due to political corruption and mismanagement, there has been a lot of damage caused by the bad economy created by the Financial Crisis (the ROOT cause). The article does not explore the connections to this seminal event. Pensions and other managed pools of money of many municipalities are under-funded because they have fewer workers paying into it while the layoffs have caused some people to retire earlier than expected and start collecting benefits (this same dynamic is also happening with Social Security). Interest rates have also been lower to ridiculous levels so that the pension plans are unable to generate enough interest income to pay benefits and must draw down capital to do so. And, we have not gotten yet even to the drop off in sales taxes (due to higher unemployment and lower personal incomes) and a dramatic drop-off in real estate taxes due to falling home prices; both make up the bulk of tax revenue for most cities and towns. All of these are tied to the economic mess created by the bloated leverage across the economy during the financial bubble. And, that financial bubble was created by the lack of regulations, the lack of corporate stewardship, the lack of law enforcement and the lack of credit standards.
I was born in Camden NJ, and grew up in the 60s nearby. It has always been a dump. This is not news.
When Obama was sworn in, which was less than 3 years ago, the projected deficit was $1.2trillion and skyrocketing, we were losing 800,000 jobs per month and the economy was in a nose dive. That was the status quo at that time. We are now gaining jobs, albeit modestly, the economy is flat to modestly gaining, and the deficit is roughly the same.
So, your statement is factually incorrect. Things haven't gotten much better, but they have not gotten worse.
for 1.2 trillion and still climbing they could have bull-dozed the whole state and the world would'nt have even noticed.
Why, if Detroit isn't the worst case, do you have to use a picture of "Detroit" in the story? Lazy and stupid
The only thing the photos show is a lack of desire to demolish abandon buildings.
Most cities would have these torn down.
These buildings have been vacant for a very long time. When the economy was in good shape these structures were still in the same condition.
Because this picture doesn't convey broke like the one of Detroit.
http://upload.wikimedia.org/wikipedia/commons/e/e3/Central_Falls_Street.jpg
If they tore down the abandoned buildings, the homeless wouldn't have anyplace to live.
if they got rid of all the administration figures Mercedes Benz would take huge a hit! oh and we would'nt have a discussion here.
And you want to be my latex salesman!!!!!!!!!!!!
check out this. Why your 401k is choped to crap. This is the B+tch.
http://vodpod.com/watch/5637333-matt-taibbi-why-isnt-wall-street-in-jail-complete-interview
After reading this story I feel alot better this morning. Remind me vinees, this is America right? Sounds more like Guatamala. Without the Kims Cafe, (reference the photo in the article).
I was sure that Harrisburg, Pennsylvania, this most distressed city in the nation, would be on this list.
Great reporting job. Harrisburg, PA is drowning in debt, incompetence and corruption. HOW did the reporter miss this? I suppose the title "GOING broke" covers that. Harrisburg is already bankrupt, but the greedy politicians passed a "law" that disallowed filing for bankruptcy until they loot all the assets to pay off their NY banker buddies.
...and don't forget Reading, PA under the Act 47 Recovery Plan. The City robbed the sewer fund of 11 million $ to meet payroll and now owes 16 million $ due to borrowed interest to repay the sewer fund. Poverty level is at 41%. This city REALLY took a crap in the last 10 years. Was once a pretty cool place to live.
I was thinking the same thing. How the heck did they miss Harrisburg ?
Maybe Harrisburg's credit rating on bonds hasn't hit junk status yet. That was the criteria for the list of nine cities in the article - despite the headline's suggestion that it was about cities going broke.
Anyone notice the trend with all these cities???? Union devastation. See it, understand it, DONT REPEAT IT.
I totally agree with you Steve!!!!
Steve841... so agree... unions are not like they used to be, protecting the hard working Americans for the greedy employers, now the unions have become the greedy employers and are leading their members down the path of poverty with their BS.
Well said!! The unions are not for the little guy now! They are out to get rich and live HIGH on the hog at the members expense!
Steve and others, Do you want to work 80 hours a week for $4 an hour? With no workman's comp if you got hurt? Do you want your 8 year olds to have to work to help support the family? Do you want your wife to have to go back to work the day after giving birth?
Because thats where you would be without Unions.
Look at the City Govenments in these Cities.........I rest my case........
Looks like Gov Chris Christie's got some work to do in his own state before he can become President of the United States
It would appear that Barack Obama's original campaign promise of "I will fix the economy" has turned out to be more like that of fixing a cat.
Don't expect baskets full of healthy kittens.
It took Bush II and the Republicans 8 years to destroy the economy, spend down the surplus, create a phony war for oil and kill over 3,000 Americans and over 100,000 Iraqis invading and conquering a foreign country, borrow billions from China so he could reduce the taxes on the super wealthy. I, like you and all other Republicans, am supprised Obama didn't reverse all of this in two years and get us back to where we were when Bush II took office from Clinton. By the way I don't see any Republican candidate saying they will fix the economy in one or two years and get us back to the Clinton era of a balanced budget and surplus and how. I guess I just missed that speech.
Yeah?? I can still see Dimocrats Dodd and Frank standing in front of the microphones hooting that thanks to them, all Americans could own their own home. They forgot that those who bought with little or no money down, and inflated variable mortgage rates, did not have the income and financial discipline to maintain the property and the mortgage. The result was the implosion of the housing market and the beginning (and continuation) of the current recession. Good job guys! Oh yeah..... it was Bush's fault (????).
hotdog...you're right about the positive condition the country was in before GWB...however, you fail to recognize that it was because both legislative houses were controlled by the Repub. Your argument that its the Repub. fault holds no water.
I just love how the theme has changed. Back in 2008, the promise was that Obama and democrats could fix the economy. It was "hope and change" with MANY promises. Now, 3 years later when we see that it's been a complete failure, the theme has changed to "We can't fix it in 3 years ! It took a long time to get us here and it will take a long time to get us out". And the whole "the GOP blocked everything" argument is complete nonsense. Obama and the Democrats had 2 years with COMPLETE control of Congress and the White House. That was their chance to put some real changes in place because they could basically pass whatever they wanted. They failed, plain and simple.
You know that is BS about it took Bush 8 yrs to destroy the economy. In 2006 when the republicans owned all 3 branches of govt. you were doing well. We all were. I bet you do not even remember how the democrats took control of the house and senate. They could not win on bashing the economy so they used the wars as an excuse to get power, and the people fell for it. Pelosi promised the night she got control of the house that she would make sure the wars ended while she was SOH. Bush became a lame duck, Pelosi and Reid in charge and everything went to hell. And you want to blame Bush but not Obama. Hypocrite.
Speaking of Pelosi, have you read the news about how Obama is giving 787 million to yet another solar company, this one in Nevada. Her brother-in-law owns a large portion. Nothing says hubris and gall better than Obama. He ignores his culpability with Solyndra and turns around and gives almost a billion dollars to another solar company. Guess he had to reward Nancy for all her fine work in his behalf.
I did not even SEE that but the left wing MEDIA does not want stuff like that to get out so they don't print it!
With few exceptions most of these budgetary train wrecks were years in the making. Detroit has been in a slide since the late 60's. Central Falls, Ri underfunded pension plan did not spring up overnight. At somepoint years ago someone had to have seen this disaster coming in these cities. Either through poor planning, business and budgetary, they did little to stem the problems before the problems became overwhelming. Well, it's a little late in the game to finally react.
Seems familiar... Oh yes. The federal government is doing the same thing. And it's also too late to react.
I see most of the cities' failures are because of it's politicians and their decisions.
Politics and government work does not attract the best and brightest.
BUDGET!
Viknat, NJ was RUN into the ground, not ran. Don't call anyone an idiot until you're sure your not self implicating...
Don't you mean "...until you're sure you're not..."?
Let's be careful out there. Regards....
I'm from a city like those(Flint, Mi.) When GM pulled out and went to Mexico, all smaller job shops, suppliers, and local businesses closed up. The city is a huge slum now. Whoever is left there without a job, can thank the UAW
The recent announcement of 2 cars and 1,700 jobs coming to the GM plant in Spring Hill, TN has a large number of people in middle TN applauding. They forgot to read the fine print, those 2 cars and 1,700 jobs were earmarked for GM production in MEXICO!! What's wrong with this picture?? It's Gummint Motors and we own it, why is it going out of the country. The Spring Hill facility was closed and the production of the Traverse was moved to Michigan because the state of TN was not going to give GM any more in lieu of tax breaks, why was the deal with the state of Michigan conducted behind closed doors??
If Ford could cut back, re-organize any put itself in the black without taking federal assistance, why not the same for GM, and why is GM not being held to a higher level of accountability?? The last figure that I recall being tossed out to appease us was $61 Billion still owed by GM to pay back the bailout. They have had no local hires for the Spring Hill facility, does anyone else see a problem here??
Under the new agreement GM can have as many entry level @ $15 per hour as they want, but after 2015 they may constitute no more than 25% of the work force. Unfortunately, there is no indication that there will be any entry level local hires from middle TN, as many of the 1,700 positions will be filled by people who left with the Traverse. The local UAW shows no inclination to give anything back to the community, and can't understand the resentment they experience. Toyota employees in Smyrna, TN refused to affiliate with UAW citing the lack of local hiring at Spring Hill as being a major point. The actual unemployment figure in the Spring Hill and Columbia, TN area is close to 16% and shows no sign of improving at any time soon. As a retired Union Carpenter, I'm disgusted at what the image of union labor has become.
The "Flint" poster is correct. At one time, there were 19 active GM PLants in Flint. Today, there are only 3.
Flint was not that great a place during it's heyday, but is indeed a dump today. FYI, In the 1960's Flint had one of the highest per capita incomes for cites over 300,000. That's because when ma & pa both worked in the 'shop' (GM Factory), they had a combined income of $80,000 (that's 1960's equivalent to $120,000 today.
Like many cities, it has historically be run by Democrats and it has a history o coruption in city govt, excessive union pensions, etc. After all, Flint was the most radical home of the UAW!
Most all of the cities biggest problems are pension plans for city employees though gross mismanagement runs a close second. Even in my own small midwest city employees can retire at 50 after 20 years service. we cannot sustain this with lifespans being what they are today but I don't know when everyone is going to wake up to this fact.
The politicians and union bosses knew this when they created those pension plans. They just wanted to be reelected.
I agree completely. I've watched it happen in Illinois as the problems spread from Chicago to Illinois and now to the White House.
@donteathotdogs.................................and what about all the times the Dems controlled everything? Pelosi and friends are only interested in lining their own pockets. What have they done? or even proposed? or even thought about?
It seems only fair that if your average worker can't expect a pension after working 20, 30, 40 years or more, then our elected representatives - espcially Congress - certainly are NOT entitled to a lifetime of medical care and a pension after serving only one term!!!!
In every instance this is a grand example of the cities living beyond their means. Our federal government is in the same mess. There is polenty of money if they would stick to the basics and stop trying to be all things to all people. Provide for public saftey, fix the roads and bridges and provide a fair enviroment for small business to flourish. Do these things and these cities would be flush.
Sebastian. I totally agree. The cities have lived beyond their means, the Federal government has lived beyond its means and worst of all, a lot of individuals have lived beyond their means. Sooner or later the bill comes due.
When I was a kid in the 60s I got a job commercial fishing for red snapper in the Gulf of Mexico. Fish were everywhere and we loaded the boat very quickly on just about every trip. The feeling was, that the resource was boundless and we kept at it for the next few years into the 70s. Catching the brood stock, juveniles, everything. When the end of the resource came, and the stocks crashed, it was anything but gradual. One trip was fine the next nothing, a few stragglers and that was it. Well the economy is just that way. Our leaders, local, state and fed, treated the economy and its resources (taxes) like they had no finite and definable shape, size or boundaries. Well just like when the snapper stocks crashed, our economy crashed. The thing that amazes me is that these leaders are college (mostly Ivy League) educated and our supposed best and brightest and by the look of things, especially in D.C. HAVEN'T QUITE CAUGHT ON! They still are spending like the resource is limitless when in fact we have found the boundaries of our economy mainly because they crashed into us going lightspeed in the other direction. Now they think more of the same will fix things. There is no way that tax and spend or growing gov at any level will improve the economy. Now, any money in any form, spent by the gov has directly been taken out of the private sector economy, reshuffled and put back into that same finite container in a lesser amount. The laws of nature expressly tell us that this is contraction not expansion. There will be some extra activity from the recipients of the reshuffle but as seen in the ue numbers there will be a decrease in activity elsewhere. Politicians and their flunky advisers have some type of interest at heart. Obviously not being the welfare of the general public. The only other explanation would be that this 8th grade grad is one hell of a lot smarter than any of those eggheads.
IMO the central problem in politics is that the people who want to rule are precisely the ones that we don't want to rule. Random selection of these folks would be far superior to the current system.
I can't belive there's only 9 cities.
That's only 9 cities they chose to talk about. They probably could have talked about hundreds if not thousands.
Maybe it's time to stop running cities like a business.
Stop? They never started.
I thought this article was about CITIES NOT COUNTIES.
can't anyone get their thinking right. Damn INCOMPETANCE
It is Jefferson Texas (city), Not Jefferson county, (county)
I guess the antique business is not good
JMiller. the article is correct, its Jefferson county in Alabama
They had to get red state in there somehow.
The posts here point out the problem. Half the people are illiterate and half the posts are moronic.
Which half does your's fall into? :)
The third half, obviously!
Thanks for the example to my comment.
no stress, I realize we are not worthy of your attention or even your contempt, but I beg of you to please enlighten us with your intellectual brilliance. Show us the light, and all will follow.
Thanks again.
Dick, it will take another internet "bubble" and hundreds of dot.com millionaires along with a republican congress to get us back to a "projected" surplus. Increasing Gov size will not help the economy recover, nor will added EPA regulations, higher public union salaries, increased restrictions, burdensome health care schemes and higher taxes.
bigmountain, no, none of those things can help anyone at all.
"Big Mountain" is right on! Politicians love to hand out the 'candy' that gets them elected, re-elcted. Especially when they won't be around for the 'bellyache' that's sure to follow. Isn't it time for local citizens to vote on employee pay and increases in pay and benefits?
What a concept!
Ok all you brainiacs. If you are so quick to defend Christie for taking over a state that you claim the Democrats put into bankruptcy and you say he isn't to blame...duh...why then are you blaming Obama for trying to save the financial state of the USA that your hero Bush messed up? If Christie isn't to blame for New Jerseys' state of affairs, then Obama isn't to blame for the USA's affairs. Obama took over what was left for him just as Christie supposedly has taken over what was left for him. Stop the stupid blame game. Get a life.
The difference is Christie is getting the state back on track. obama just wants to put the country deeper in debt.
I've watched how Obama's crowd has helped out the city of Chicago and the state of Illinois over the last 20 years. I'm sure they would be on the list in the article if they didn't pay off someone to hide the data.
Illinois (under complete Democratic control for 10 years) increased the state income tax by 50%, more than doubled corporate income taxes, delays payment to vendors by over a year and is still running the state in the red this year.
Now the federal government is on the same track with the same conductor and staff. It will just be a bigger train wreck if it continues.
At least New Jersey is headed in the right direction...
who cares what he 'wants' to do... the fact is, he hasn't accomplished anything in two years!
Jersey's still a hellhole. So it's proof positive that Christie isn't an effective leader.
Nancy, But they are going about in two totaly different ways, Where as Christie has has made huge upswings in the state's economy, Obama still has ours in a stalemate.
Nancy... Bush was a Leader,obama is a blunder ass Idiot.
"Nancy"
Difference is tha tChristie is solving the problems. Obama is throwing gas on the fire!
If he would have 'Focused like a lser' on jobs in his 1st year and not Obama care' we would have avoided anothe trillion dollar debt (Obamacare) and could have spent the money WISELY from the stimulus. The stimulus was a HUGE and INEFFICENT disaster. The few jobs that resulted were for teachers, police and fire personnel but not for. Much as we need these folks, we should have invested in jobs that CREATED WEALTH (manufacturing, etc.)
Nancy, Bush may have started the mess, but it is Obama who has made it far worse and also has prolonged the recession. So yes, we can blame him for what has happened the past two years, when are you people going to stop blaming Bush for incompetence of the current Administration.
Your right EDD, Dubya was the leader that led us into the mess we're in today.
Unions need to evolve not disappear. Without the new Union we will be much worse off then we are now. Evolve is the key.
Nancy Obama took over nearly 3 years ago. His recovery has leveled out with unemployment around 9% for the last year. He spent over $1 trillion dollars trying to keep unemployment below 8%, Obama Stimulus plus the Omnibus bill.
Get it staraight, George Bush and Congress passed TARP, not Obama !!
When President Obama comes to the conclusion that he cannot make a deal with the devil and cleans house, he will have a chance.
What a retard, union devastation?? are all right wingers stupid? Corporate
greed got us into this. The rich in this country did this to the middle class.
OK maybe your not a retard, maybe your rich.
Willie, the rich built this country. Its when people in govt. (both parties) decide to give away the farm because they think things will always be great is when you see this devastion.
OMG if thats not a canned right wing reply I dont know what is. So we should be giving the rich tax breaks isnt that next canned reply??