The Stockton CA and North Korean Bankruptcies

Well, there’s a lot of bankruptcy in the twin sagas of Stockton California and North Korea. Oh sure, two different places, but yet, well, not all that dissimilar in the results of their operations. North Korea might be a fourth world dictatorship building nuclear weapons, and Stockton a regular California, USA city with extraordinary high crime, foreclosure and unemployment rates – but still, they are the same in this: they spent themselves into bankruptcy. It’s easy to do, and it doesn’t make a difference whether you spend it on nuclear weapons or on pension plans and benefit packages for union employees, or even if you are a person who likes tomorrow’s gadgets but you make yesterday’s salary. Just like Greece spent itself into bankruptcy with the public employee sector consuming the national wealth, and the USA is spending itself into bankruptcy with $1.5 trillion dollar annual deficits.

For bankruptcy is simply owing more money than one earns, has saved, or can borrow on top of the distended credit one already has. It makes no difference on what the money is spent, or whether for good or bad things. And it makes no difference the size of the entity which bankrupts itself. One person earning $15,000 a year can bankrupt himself as well as one country earning $15,000,000,000,000 a year. For bankruptcy is one of those things that is exceedingly clear in definition and observance: if you earn 15 whatevers, but spend 30, year in and year out, you will go bankrupt. That’s rather simple, no?

Ah, apparently one can fool many people with the “full faith and credit” of the borrower to make believe it can’t happen. “Oh, don’t worry, he’ll earn the money next year, when things get good.” Yah, sure, right, ask Greece, and the Germans who are bailing them out before we must bailout the Germans. I have to love this bizarre notion of stupidity and uneconomic thought from our own government. For contrary to the assertion of one Valerie Jarred (or Jarret? Oh, who cares, the idiot,) adviser to the president, unemployment does not help the economy. For one person winds up supporting two: himself and the unemployed guy next door. And that’s just going to bankrupt the one earning the money. Well, it’s the same for nations. Even good guys like Greece, or pariahs like North Korea. And certainly for cities like Stockton which can’t print their own money or counterfeit another country’s, like Greece and North Korea love to do, respectively.

Here are the stories.

And I read this drivel:

However, thanks to a new California law, the City Council’s move also could be the first step toward avoiding such a dramatic move. Under the state law, municipalities considering bankruptcy must first seek mediation with creditors, with the goal of settling debts without filing for Chapter 9 protection.”

Yes, well, one does not need a new law to do that. That should go without saying. What, you’d declare bankruptcy before begging and pleading for a little debt settling? Hell, I thought everyone would plead to reschedule, reduce, waive, cancel, extend, hold off, renegotiate, etc etc, a debt before just walking away from it and going to a bankruptcy court. What cities in California could not do a little, um “Debt Counseling” as it’s called? Indeed, it’s probably a service provided or paid for by the debt inducing policies and programs of the good government of Stockton which seeks to help its people, no doubt, deal with their foreclosures and their unemployment.

But suppose the banks and bond holders agree to “settle the debt”? – that means, somehow, they are either going to be giving up repayment, thus earning a loss, thus cutting their income, thus making paying their own debts a bit rougher, or they are going to lower the interest rates or extend the payments, perhaps even wait a year to get the paying back up again. Well, it makes no difference. The outcome is that the debt holder is out some money now, and possibly forever, which negatively impacts on their own debt situation.

And this mush: “Dozens of residents attended Tuesday’s six-hour council meeting to oppose the vote to enter mediation, saying they feared it would push Stockton further into trouble. The river port city of 290,000 already has the second-highest foreclosure rate in the nation and one of the highest crime and unemployment rates.”

The problems of the city are not from home foreclosures, those are individual people problems. Indeed, the city even still gets the taxes on the houses, for the banks which foreclose must still keep paying those.

Instead, the reporter breathlessly goes on with still more mush:

In recent years, thousands of new homes mushroomed in Stockton, part of a housing boom in suburban development that attracted buyers from the San Francisco Bay area and beyond. But when the economy crashed and the construction bubble burst, Stockton was battered by foreclosures and lost income from property taxes and other fees. Multi-year labor contracts with escalating costs added to the burden, forcing officials to make deep emergency cuts to the city payroll, including its police department.”

So, in recent years, the city took in much more money from ample fees and taxes no doubt, for new construction, but either neglected to charge enough for the services rendered in return (doubtful,) or they gave “Multi-year labor contracts with escalating costs.” Yes, that’s it. For again, whomever foreclosed is still paying the taxes. Or the city itself will seize the property, which is doubtful, for they’d rather the tax money on empty houses with no kids in the public school system to pay for. Still, the fees from the construction was collected up front, and the fees for garbage not picked up anymore from the lack of people, well, of what use are those fees, except to pay for the bloated labor budgets of non-working garbage men on the public payroll?

Then mush from the politician, at direct contradiction to the reporter’s claim that the magical new law for mediation will prevent the bankruptcy by passing along the loss to other people outside of the city who may then face their own financial troubles and even bankruptcy. Imagine the poor schnook who has his life savings in City of Stockton bonds? Well, go greet at Walmart till he’s 75, oh well, while city employees earn some big bucks for doing less since there’s less people. More than a few are quoted in the article “I’m outta’ here.”

“If they vote for mediation, it is the first step towards bankruptcy,” former City Manager Dwane Milnes told KCRA-TV. “That means 1,000 people could lose retirement benefits.”

Aw, a 1,000 people could lose their retirement benefits. Well, someone will lose them. Either the schnooks who bought city bonds, the businessman owed money by the city, the banks kissing off a loan. The money isn’t there. So who along the famous multiplier chain of dollars will be out the dollars? If the city retirees keep their benefits, someone else will lose a like amount of cash to cover the new found resources to keep the retirement benefits. Which is why cities shouldn’t be in the retirement business. In fact, if city employees were given their money to put into their own accounts, they’d have the money, and more importantly, the city wouldn’t have had that cash pile to borrow from and replace with good faith and credit bonds of the city. Egad, what a mush pit, eh?

Stockton will be the first city to test the state law, Assembly Bill 506, which is less than two months old. It requires local government agencies to undergo mediation or hold a public hearing and declare a fiscal emergency before filing for bankruptcy”

Well, yes, nice of the new law to require the city to tell the people, “We screwed up, you lose.” And formally with an “emergency”! Wonderful! The people are duly informed. And the former city manager (which is a pretty powerful position for California cities; you know, the person who actually runs the place while the mayor is out cutting ribbons and kissing babies,) is so sure that the mediation will push the city into bankruptcy. Well, sure, it must, for the city is, um, bankrupt. Perhaps the debt holders won’t agree to any terms and demand their money. Hell, perhaps they’ll go seize and claim some of the assets of the city so they can sell them for real cash to the highest bidder. Hell, put the city employment office building on the auction block and sell it. There’s just too many high paid employees anyway, ones the city clearly can’t afford. Or they’ll just kiss off the debt, and add it to their loss column. Shuffling debts, what a concept, eh?

And then there’s the international bankruptcy mush: North Korea is so broke that they must trade some lying about their nuclear ambitions for hundreds of thousands of tons of food. It’s not their first time, no. Oh, going back to Clinton, hell, maybe Reagan, maybe Eisenhower for all I know. But it seems every few years for “astounding breakthroughs” of “agreements” with North Korea’s despotic lunatic leaders the USA gives them food in return for “ending” their current programs for nuclear weapons. Yes, well, at least the ones we know about which are included in the agreements.

Oh, this is no new story; this is but the latest charade given by the clever Kim family, kings of North Korea, (and when you hand power from father to son to son’s son, well, very Louis-lou-ah, if you ask me, and with three Kims in a row, just put Roman numerals already, and spare us the confusion; current man at bat? Kim III.) Now let’s watch the muttering mushrooms pop up at the State Department with a piece of paper in their hands for “peace in our times.” And then the next president is faced with the same dilemma. Oh, there’s a “humanitarian” crisis – whimper! North Korean’s starving, let’s help those who create the starvation, for sovereignty’s sake, I’m sure. So, let’s feed the bankrupt nation’s people in return for the King Kim III’s promises, not a one of which has ever been kept. Here, the story:

Under an agreement reached in direct talks in Beijing last week, North Korea has agreed to allow the return of nuclear inspectors from the International Atomic Energy Agency, and has agreed to implement a moratorium on long-range missile tests, nuclear tests, and nuclear activities at Yongbyon, including uranium enrichment activities, the State Department said. In return, the United States will provide North Korea with a large food aid package.

Yes, well, now that the North Koreans know the price of a “large food aid package” is some lies and fake moratoriums, why, there’s no incentive to tell the truth or make a real end to the nuclear ambitions. Why use up the currency you pay for your food with? After all, if they were truly to end their nuclear programs, why, they’d have nothing to buy food with when this food runs out. We wouldn’t take the Won or whatever it is, for it’s worth less than the packaging on the food stuffs. And we surely can’t take their dollars, for they print them up, counterfeiting with wild and public abandon, and quite good, if truth be told.

“To improve the atmosphere for dialogue and demonstrate its commitment to de-nuclearization, the DPRK has agreed to implement a moratorium on long-range missile launches, nuclear tests and nuclear activities at Yongbyon, including uranium enrichment activities,” State Department spokeswoman Victoria Nuland said in a press statement Wednesday. “The DPRK has also agreed to the return of IAEA inspectors to verify and monitor the moratorium on uranium enrichment activities at Yongbyon and confirm the disablement of the 5-MW reactor and associated facilities.”

Yes, well, I’m sure when the DPRK (oh, please, must we really go by the fictitious “democratic people’s republic of Korea”? Just call it the Kingdom of Kim and be done with it,) are done doing all they wish at Yongbyon they’ll move to more charming place. But I bet we shall soon discover at oh, “Dum Nuts” or perhaps “Screw you” some other nuclear efforts running apace. And then, oh the horrors, we shall have to have a new round of negotiations. Perhaps the current King Kim can say that the previous two King Kims had not told him of Dum Nuts or Screw You, and thus, well, for a few hundred thousand tons of food he’d be glad to forgo the efforts there too. Why, since the need for food is never ending for the 17 million in the world’s biggest prison camp, I’m sure the Kim family has facilities and moratoriums and fancy hotel rooms for international inspectors galore to pay for the food.

Then the self-delusional, let’s help Obama and the Nobel Prize committee, doggerel mush:

Despite the stunning breakthrough, “the United States still has profound concerns regarding North Korean behavior across a wide range of areas,” Nuland’s statement cautioned, but added that “today’s announcement reflects important, if limited, progress in addressing some of these.” In return, the United States will “move forward with our proposed package of 240,000 metric tons of nutritional assistance along with the intensive monitoring required for the delivery of such assistance,” she said.

Ah, yes, “important, but limited” – yes, well, so does an alcohol make important, but limited progress by buying two fifths instead of a half gallon. Surely it’s a stunning breakthrough in blind stupidity on the part of our erstwhile Foggy Bottom representatives for peace in our times. Sure. And just how many times does it take for the North Koreans to fool us into a few hundred thousand pounds of food stuffs, to be diligently monitored in being given out to the prison population, before we recognize it all for what it is?: Mush and Lies. Egad, and this umpteenth time of being paid for food with empty promises and lie is “stunning” alright, in a most depressing way. Ah, but I suppose we can claim jobs here in America! Why, it’s helps the immigrant farm laborers here in the US get paid by growing free food for the North Koreans, while the citizen taxpayer is taxed to pay for the military stationed ever on alert just across the border in Non-Kim Korea. Egad, what a tangled web, no?

It’s stunning alright, right up there with the new California law which will prevent civic bankruptcy by calling it mediation. Let’s just define things out of existence, that’s the bankrupt model.


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