Stockton, California Bankrupt

[errolanderson]

The most populous city in the U.S. to
file bankruptcy next week (according to
Bloomberg)is . . . Stockton, California.
Burdensome employee costs,excessive debt
and so-called bookkeeping errors blamed.

California's debt alone is about eight
(8) times greater than that of Greece.
Not sure how U.S. media continues to
sweep this one under the carpet.

The reason that is brought up is; this
financial implosion in California can
ripple into global commodity markets ie:
agriculture can be affected. Don't let
your marketing guard down in either
grain or livestock.

The U.S. economy has huge structural
problems to address at least the next 3
to 5 years in my opinion.

Errol

[grrrr]

The whole situation reminds me of that scene from "Titanic" where the band keeps playing as if nothing is wrong, but the ship is going down.

[cottonpicken]

I wonder who is holding california state bonds?

I wonder if those people are worried about there cds
insurance hedge with what is playing out in greece.

Its going to be funny when the feds have to start
buying debt at the state and municple levels.

[malta]

Bankruptcy will definitely ripple through the markets. When the US federal government eventually stops borrowing money and balances it's budget that will take $1.4 trillion out of the economy. What will be the impact on agricultural markets when the economy shrinks by $1.4 trillion? Long term good but short term, very very painful.

[parsley]

Is the biggest issue , " When the US will stop
borrowing money?"

Or is it, "When will China stop loaning the US
money?" Pars

[cottonpicken]

Quantitative easing,(when the central banks of the
world buy bonds),will never end.

This is what monetization of debt is and can not be
stopped other wise the system collapses.

We are in a rock and hard spot with no solution to the
problem.

[ajl]

The US and China are joined at the hip.
China needs us to buy their exports so
China has to keep lending. They have
recently tried to diversify their
investments (farmland for one) but they
are very vulnerable to an export slowdown.

[TOM4CWB]

ajl,

Much of the excess currency China now has... is a result of manipulation of US $ vs locked up devalued Chineese currency.

China is to a large extent responisble for the devaluation of the US$... and the more the US$ devalues... the further China cashes in. It would be hard to argue that even the CA$ isn't closely following the US$.

This will end in a revamping of the global currency... not sure how that plays out for debt now held.

Will be VERY interesting to watch what happens... FOR SURE!!!

[cottonpicken]

Gold was the global currency for 5000 years,only the
last 40 it has not been.

The probability of us going back to it are quite high.

[ajl]

Back when they used gold coins people used
to file off some dust off each one and
when they had enough, made a new coin.
This info came from an article sent by e
mail from Black Swan Trading. Currency
debasement is as sure as death and taxes
and not a new phenomena.

[errolanderson]

Apparently, Stockton is broke primarily
due to insane promises to public service
unions. But one by one, a number of U.S.
cities may file for bankruptcy possibly
this year . . .

As for California, the mess has likely
just begun. Oakland & LA may be next on
the road to bankruptcy as well.

This has to be tough news for ETF Muni
bond funds to swallow.

[cottonpicken]

Errol have you ever studied the pension fund
nightmare?

These funds hold tonnes of bonds,if their is a default
or write down they are screwed without a cds being
paid out.

They are screwed anyway with no growth for the past
10 years when they where banking on 6-10%.

[errolanderson]

cottonpicken . . . the U.S. economy is
far from out-of-the-woods despite all
the positive growth data flowing from
their government into markets these
days. This is still the 'calm before the
storm' in my opinion. As Bernie Madoff
stated from his jail cell . . ."The U.S.
government is just a giant ponzi scheme"

I'm am in no way any expert in the bond
market, but from my limited knowledge,
pension funds may be in the crosshairs
of a massive hit with this unfolding
muni fund debacle.

Errol

[Hopperbin]

Stockton only has 291,707 people, hardly one of the most populous cities in the usa so wonder about the rest of the article. Anyways if there is accounting errors should not someone be charged? Could they not raise taxes to pay for their shit? Too many questions here.