April 1, 2013

Stockton Bankrupt. Big Whoop.

The City of Stockton California has become the largest city in the United States to go bankrupt.  It'd be a big story except for two factors: liberals don't want you to know about it, and conservatives saw it coming (at least a year ago).  Stockton, by the way is the canary in the coal mine for California, and perhaps the United States federal government.  So actually, it is a big whoop.
SACRAMENTO, Calif. (AP) — The people of Stockton will feel financial fallout for years after a federal judge ruled Monday to let the city become the most populous in the nation to enter bankruptcy.

But the case is also being watched closely because it could answer the significant question of who gets paid first by financially strapped cities — retirement funds or creditors.

"I don't know whether spiked pensions can be reeled back in," U.S. Bankruptcy Judge Christopher Klein said while making the ruling. "There are very complex and difficult questions of law that I can see out there on the horizon."

The potential constitutional question in the Stockton case is whether federal bankruptcy law trumps a California law that says money owed to the state pension fund must be paid.

In making his ruling, Klein disagreed with creditors who argued that Stockton failed to pursue all avenues for straightening out its financial affairs.

"It's apparent to me the city would not be able to perform its obligations to its citizens on fundamental public safety as well as other basic government services without the ability to have the muscle of the contract-impairing power of federal bankruptcy law," Klein said.
Here's an afterthought (for liberals) - maybe they were overextended on the pension funds,

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