5 ms·

Broke Town, U.S.A.

18 points by cwan 16y ago

sudont 16y ago
Be prepared for Roman fire brigades.
- gyardley 16y ago
  Or possibly just an annual fee, paid in advance, to ensure service. Not unknown in rural areas already, where people in unincorporated areas without fire departments can elect to pay out-of-area coverage to nearby municipalities. I remember some sort of controversy about that late last year, when a man who didn't pay the annual fee for firefighting service ended up losing his house.
  - _delirium 16y ago
    Some version of that is occasionally proposed for forest fires in California, but it's never managed to get enacted. Even if we accept that putting out the fire overall is the state's responsibility, a significant portion of the cost of fighting a forest fire is in saving clusters of houses (or occasionally individual houses) that are pretty close to the fire, but seem saveable. In terms of just containing the fire, it's much more efficient to put up a fairly wide perimeter and let everything within it burn, rather than sending in units to spray foam on individual houses. So it's occasionally proposed that that gets reformed somehow: either be less aggressive in trying to save houses overall; or do so but bill the owners; or stop doing it unless owners buy some sort of supplemental insurance in advance; etc. Not a very popular proposal, though. An alternate one is to assess some kind of "you live in a high-risk area" supplemental property tax, which would be more or less like a mandatory version of the insurance option.
fourspace 16y ago
I find it hilarious that the caption under the right side image reads: “You could see 50 to 100 sizable defaults,” Meredith Whitney, a prominent doomsayer, said on “60 Minutes.” How does one rise through the ranks of the doomsaying profession?
- _delirium 16y ago
  Here's an article from '08 investigating that question: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSApdA59SFok&refer=columnist_lewis http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a...
- DanielBMarkham 16y ago
  The doomsaying profession isn't what it used to be. Tragic hard times are coming, and by the end of the decade most doomsayers will be covered in puss begging for pennies down by the local Wal-Mart. If they're lucky. Seriously, though, this article had a lot of random details strewn about, but not enough thread to connect them. Can cites and states declare bankruptcy? Yes. No. Well kinda, but it doesn't help. Are structural issues like union contracts for future payments in terms of benefits a problem? Yes, but not really: the author just makes a passing reference to "political will" as being a problem, whatever that means. All I got from the article was the unsaid conclusion that governments can simply not pay their debts without defaulting. I wonder if this will be a viable strategy?
  - jbooth 16y ago
    At the municipal level, things have been stretched since the boom days in 2004, 2005. Most of them have laws that make it very hard to raise taxes, a pay structure that historically has slanted towards better benefits in exchange for lower pay, and a 10-year run of health insurance cost increases at 10-15% a year. So in many places, they've already cut to the bone, (and did so during the "boom years", to boot). Basically the best thing we can do for municipalities and states is to bend that healthcare cost curve. Unless we do, it's going to be lay people off, raise taxes or both every single year.
JonnieCache 16y ago
Google referer link so you can read the article: http://www.google.com/url?q=http://www.nytimes.com/2011/03/06/magazine/06Muni-t.html?pagewanted=all http://www.google.com/url?q=http://www.nytimes.com/2011/03/0...
- deleted 16y ago
  [deleted]
TomOfTTB 16y ago
This is what makes me think we're only in phase 1 of the financial meltdown. The article tries to paint a rosy picture saying we just need the "political will" to make changes. But we're a nation where the national debt's risen from 8 Trillion in Oct. 2005 to 14 Trillion a mere 5 years later yet we've chosen to run up a projected 1.6 trillion deficit this year. So where's that political will? And if cities and states start declaring bankruptcy it will impact the country in two important ways: 1. All the state workers will see their pensions evaporate to the bare minimum which will cause them to cut their spending to the bare minimum. 2. All the 401(k) plans that are filled with supposedly safe muni bonds are going to see their investments evaporate which will cause the holders of those 401(k) plans to cut their spending to the bare minimum. My argument is the net effect of this is all those people are essentially unemployed as far as the economy's concerned. Because unemployed people are provided the bare minimum by the state so a person who is working but living on a bare minimum budget has the same economic impact. Suddenly you have a society that consists of people who don't have money and people who have money but put it all in savings which does next to nothing to spur the economy. Meaning the nation is going to be faced with a scenario that mimics an unemployment rate of 60% or more and I can't imagine what will happen then.
forgotAgain 16y ago
I thought it was a good article until the last sentence: Until voters can agree on what government services they want and will pay for, it is possible that bondholders will bank the profits while taxpayers, employees and citizens share the losses. I don't understand the need to take a shot at the bondholders here. This isn't a case where investment bankers took advantage of overmatched finance people. The cities and states offered bonds for sale. The bonds were purchased by average people in return for an agreed to interest payment.
- TomOfTTB 16y ago
  Let me say up front that I agree with you on demonizing people who purchased these bonds. But let me play devil's advocate. For years politicians have been talking about "Predatory Home Loans" where banks supposedly took advantage of people by selling them on loans they could never afford. By law the terms of these loans were spelled out to these buyers. These buyers were told what their payments would be and how much interest they'd pay. Yet the lending practices are still considered predatory because the lender should have known the borrower didn't have the ability to pay the loan. Now, for example, look at the State of California. California's GDP to Debt ratio is nearly 20% and their monthly bills total to more than their monthly income. If the state were an individual it would easily have poor credit. Yet when a bond measure is passed no one spells out the terms. No one makes sure they know how much they'll pay in taxes each month after that to pay off the bond or how much total interest will be paid. So while I agree with you I can see how someone could reasonably direct the rage they had at predatory banks towards bond holders
  - protomyth 16y ago
    Some of the (smaller) banks actually didn't want to lend. They were sued by some organization for being too strict in their lending requirements.
  - anigbrowl 16y ago
    Yet when a bond measure is passed no one spells out the terms. No one makes sure they know how much they'll pay in taxes each month after that to pay off the bond or how much total interest will be paid. Why do you say that? Every time I see a bond measure on the ballot, there's an estimate of the fiscal impact from the Legislative Analyst's Office in the voter information pamphlet, showing the relative costs of principal and interest payments, and the annual cost of paying off the bond. I suppose a lot of people don't bother to read that and just vote based on TV ads or signs instead, but it's not as if the information is hidden from them. For that matter, private interests can and do put bond measures onto the ballot as well. In 2008 there was one proposing the state issue about $2 billion in bonds to build children's hospital facilities, which passed. All the major campaign donors were hospitals, but I'm sure that's just a coincidence.
enjo 16y ago
Calls for any but the most serious crimes go unanswered. Residents who complain about prostitutes or vandals are told to fill out a form. My god that needs a citation.

Broke Town, U.S.A.

18 points by cwan 16y ago

sudont 16y ago

Be prepared for Roman fire brigades.

gyardley 16y ago
Or possibly just an annual fee, paid in advance, to ensure service. Not unknown in rural areas already, where people in unincorporated areas without fire departments can elect to pay out-of-area coverage to nearby municipalities. I remember some sort of controversy about that late last year, when a man who didn't pay the annual fee for firefighting service ended up losing his house.
- _delirium 16y ago
  Some version of that is occasionally proposed for forest fires in California, but it's never managed to get enacted. Even if we accept that putting out the fire overall is the state's responsibility, a significant portion of the cost of fighting a forest fire is in saving clusters of houses (or occasionally individual houses) that are pretty close to the fire, but seem saveable. In terms of just containing the fire, it's much more efficient to put up a fairly wide perimeter and let everything within it burn, rather than sending in units to spray foam on individual houses. So it's occasionally proposed that that gets reformed somehow: either be less aggressive in trying to save houses overall; or do so but bill the owners; or stop doing it unless owners buy some sort of supplemental insurance in advance; etc. Not a very popular proposal, though. An alternate one is to assess some kind of "you live in a high-risk area" supplemental property tax, which would be more or less like a mandatory version of the insurance option.

fourspace 16y ago

I find it hilarious that the caption under the right side image reads: “You could see 50 to 100 sizable defaults,” Meredith Whitney, a prominent doomsayer, said on “60 Minutes.” How does one rise through the ranks of the doomsaying profession?

_delirium 16y ago
Here's an article from '08 investigating that question: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSApdA59SFok&refer=columnist_lewis http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a...
DanielBMarkham 16y ago
The doomsaying profession isn't what it used to be. Tragic hard times are coming, and by the end of the decade most doomsayers will be covered in puss begging for pennies down by the local Wal-Mart. If they're lucky. Seriously, though, this article had a lot of random details strewn about, but not enough thread to connect them. Can cites and states declare bankruptcy? Yes. No. Well kinda, but it doesn't help. Are structural issues like union contracts for future payments in terms of benefits a problem? Yes, but not really: the author just makes a passing reference to "political will" as being a problem, whatever that means. All I got from the article was the unsaid conclusion that governments can simply not pay their debts without defaulting. I wonder if this will be a viable strategy?
- jbooth 16y ago
  At the municipal level, things have been stretched since the boom days in 2004, 2005. Most of them have laws that make it very hard to raise taxes, a pay structure that historically has slanted towards better benefits in exchange for lower pay, and a 10-year run of health insurance cost increases at 10-15% a year. So in many places, they've already cut to the bone, (and did so during the "boom years", to boot). Basically the best thing we can do for municipalities and states is to bend that healthcare cost curve. Unless we do, it's going to be lay people off, raise taxes or both every single year.

JonnieCache 16y ago

Google referer link so you can read the article: http://www.google.com/url?q=http://www.nytimes.com/2011/03/06/magazine/06Muni-t.html?pagewanted=all http://www.google.com/url?q=http://www.nytimes.com/2011/03/0...

deleted 16y ago
[deleted]

TomOfTTB 16y ago

This is what makes me think we're only in phase 1 of the financial meltdown. The article tries to paint a rosy picture saying we just need the "political will" to make changes. But we're a nation where the national debt's risen from 8 Trillion in Oct. 2005 to 14 Trillion a mere 5 years later yet we've chosen to run up a projected 1.6 trillion deficit this year. So where's that political will? And if cities and states start declaring bankruptcy it will impact the country in two important ways: 1. All the state workers will see their pensions evaporate to the bare minimum which will cause them to cut their spending to the bare minimum. 2. All the 401(k) plans that are filled with supposedly safe muni bonds are going to see their investments evaporate which will cause the holders of those 401(k) plans to cut their spending to the bare minimum. My argument is the net effect of this is all those people are essentially unemployed as far as the economy's concerned. Because unemployed people are provided the bare minimum by the state so a person who is working but living on a bare minimum budget has the same economic impact. Suddenly you have a society that consists of people who don't have money and people who have money but put it all in savings which does next to nothing to spur the economy. Meaning the nation is going to be faced with a scenario that mimics an unemployment rate of 60% or more and I can't imagine what will happen then.

forgotAgain 16y ago

I thought it was a good article until the last sentence: Until voters can agree on what government services they want and will pay for, it is possible that bondholders will bank the profits while taxpayers, employees and citizens share the losses. I don't understand the need to take a shot at the bondholders here. This isn't a case where investment bankers took advantage of overmatched finance people. The cities and states offered bonds for sale. The bonds were purchased by average people in return for an agreed to interest payment.

TomOfTTB 16y ago
Let me say up front that I agree with you on demonizing people who purchased these bonds. But let me play devil's advocate. For years politicians have been talking about "Predatory Home Loans" where banks supposedly took advantage of people by selling them on loans they could never afford. By law the terms of these loans were spelled out to these buyers. These buyers were told what their payments would be and how much interest they'd pay. Yet the lending practices are still considered predatory because the lender should have known the borrower didn't have the ability to pay the loan. Now, for example, look at the State of California. California's GDP to Debt ratio is nearly 20% and their monthly bills total to more than their monthly income. If the state were an individual it would easily have poor credit. Yet when a bond measure is passed no one spells out the terms. No one makes sure they know how much they'll pay in taxes each month after that to pay off the bond or how much total interest will be paid. So while I agree with you I can see how someone could reasonably direct the rage they had at predatory banks towards bond holders
- protomyth 16y ago
  Some of the (smaller) banks actually didn't want to lend. They were sued by some organization for being too strict in their lending requirements.
- anigbrowl 16y ago
  Yet when a bond measure is passed no one spells out the terms. No one makes sure they know how much they'll pay in taxes each month after that to pay off the bond or how much total interest will be paid. Why do you say that? Every time I see a bond measure on the ballot, there's an estimate of the fiscal impact from the Legislative Analyst's Office in the voter information pamphlet, showing the relative costs of principal and interest payments, and the annual cost of paying off the bond. I suppose a lot of people don't bother to read that and just vote based on TV ads or signs instead, but it's not as if the information is hidden from them. For that matter, private interests can and do put bond measures onto the ballot as well. In 2008 there was one proposing the state issue about $2 billion in bonds to build children's hospital facilities, which passed. All the major campaign donors were hospitals, but I'm sure that's just a coincidence.

enjo 16y ago

Calls for any but the most serious crimes go unanswered. Residents who complain about prostitutes or vandals are told to fill out a form. My god that needs a citation.