Wednesday July 11, 2012
Meredith Whitney took a lot of flack for her prediciton of massive defaults at the municipal level. I suggested that if Mert had broadened her definition of default, she would be right on the money, so to speak.
By that I mean the municipality will have to default on a promise to either or
employees
bond holders
stakeholders, citizens
The default may take the form of reduced services such as closing libraries or lower wages, Scranton, PA is now paying $7.50 an hour and is out of cash, or it might be a post poned payment to bond holders or some or all of the above.
Three cities in CA have gone Chapter 9 in the last two weeks. That legitimizes the process for others to follow. The rush to BK Court won't wait until the November election. It will be interesting to see if the Romney campaign chosses to make this an example of Political Promising Gone Wild. CA is after all a Democrat controlled state.
Professor Elam 
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