Stockton, a local newspaper published in the headlines the upcoming bankruptcy news
Network television news: the Government has filed for bankruptcy in the United States is not new, but history has repeatedly been a latecomer innovation. Stockton, California, United States, after a number of mediation and negotiation, not yet 90 days within the prescribed period to reach an agreement with creditors, filed for bankruptcy protection so far, the largest U.S. cities. But also become the first American cities have to seek bankruptcy protection due to their inability to repay the government employees pension and medical insurance.
Senior fellow at the Milken Institute of Huang Guangdong, the city government since 1931 has been declared bankrupt no fewer than 600, but Stockton is very different from the past.
Huang Guangdong:
Milken Institute Senior Fellow of its debt a large part of city employees or retired employees of pensions and medical insurance, accounting for 60% of the debt and the figure is still very likely to upward growth.
Figures show that the Stockton City medical insurance to pay for government employees is over 400 million U.S. dollars, pension insurance of about 100 million to $ 40 million.
Under California law, medical insurance and pensions of government employees from the special fund to manage. The municipalities where workers each to the fund to pay a certain amount of insurance money. Manage the Fund according to the actual costs, the costs of health care and pension.
Recently, the Stockton City deteriorating economic situation, tax revenues by decreasing. Under financial pressure, Stockton began to default on every money paid regularly to the health and retirement insurance fund. By accumulated arrears, Stockton on the management fund account to leave a huge financial black hole.
To fill the financial black hole, Stockton city government hopes to issue bond financing to weather the storm. However, compared with revenue of over one hundred million U.S. dollars, $ 700,000,000 of bonds Stockton unbearable.
Actual income is much lower than expected, and no hope of a substantial increase in the foreseeable future tax Stockton municipal government issued bonds in the bond market has shrunk for two, which means that the creditor not only not interest, it even the principal must be a loss of 20%. Desperation, Stockton had filed for bankruptcy protection.
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Source: http://www.finance-ol.com/2012/07/stockton-united-states-filed-for-bankruptcy/
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