Have a gander at America’s 17 most-bankrupt cities, and consider the party variable: Two Republican mayors, two independents, one city so bankrupt that it is in state receivership — and twelve Democratic mayors, meaning the Democrats lead 70.5 percent of the most-bankrupt cities, by my always-suspect English-major math.
And you thought their record was bad in Congress.
And get a load of the size of these budget shortfalls: Camden, N.J., at 15 percent, Hamtramck, Mich., at 17 percent, Paterson, N.J., at 24 percent, Central Falls, R.I., at 22 percent.
The state of California cannot afford to bail out San Francisco, Los Angeles, San Diego, and San Jose; the state of Illinois cannot afford to bail out Chicago and Joliet; New Jersey cannot afford to bail out Camden, Patterson, and Newark. The outstanding municipal-bond obligations are huge. Vero has some thoughts here, and here’s one sleep-disturbing fact:
But municipal bonds have not yet lost their low–risk reputation. According to the Investment Company Institute, $84 billion went into long-term municipal bond mutual funds in 2010, up from $69 billion in 2009. And the 2009 level represents a 785 percent increase from the 2008 level of $7.8 billion. Artificial incentives have lured investors into thinking that lending cash to bankrupted cities will be profitable.
New Jersey already has been accused of fraud for running what amounts to a muni-bond Ponzi scheme.
Questions: Why do city voters continue to elect these mayoral specimens? And why do the markets continue to lend city councils vast amounts of money? And which one of those trends comes to an end first?