The world is paying attention to California's cities as they start to topple like dominoes into bankruptcy. Many of them are reeling from a deflation in real estate values which saw their sources of revenue shrink. But due to long term deals they made while they were flush, they have not been able to reel back on spending outlays in order to adjust to the new economic realities.
Sports stadiums, boat harbors, new municipal buildings, fleets of brand new vehicles and generous labor contracts with their unionized municipal employees have brought them to their knees economically. Many others are on one knee, begging the state or the federal government to step in and help. But of course this is akin to asking the economically blind to lead the economically blind. The cities are a microcosm of spending by the state and federal government. But they can't, like the federal government, print more money, or in the case of the state, issue as many debt obligation bonds or push off debt into the future.
Stockton, San Bernadino, Mammoth Lakes and Compton California, all have recently filed for bankruptcy protection. But experts believe they are just the tip of the iceberg as the recession still has a grip on the golden state. Other cities have been proactive in dealing with their back breaking unionized public workers wages and benefits as their citizens voted to rein in the unions power.
What will these cities look like after they emerge from bankruptcy? The City of Vallejo was the 1st major California city to file bankruptcy in 2008 and just recently emerged. ... continues at Irish Central here.