Anything short of that can be interpreted as a feint to save his own hide and reputation.

Assuming all of this debt is impaired in bankruptcy, which is unlikely, the combined debt at issue here represents just 0.15% of the California market and 0.03% of the total municipal bond market.

According to Bloomberg:
“Since at least 1981, and possibly as far back as the 1930s, no US municipality has used bankruptcy to force bondholders to take less than the full principal due, according to experts and court records …

Of the 43 municipal bankruptcies filed since 1981, 33 were either dismissed by a judge, or failed to win a court ruling discharging their debt. Court records for the remaining 10 did not list the deposition. [James Spiotto of Chapman and Cutler LLP] said none of those cases ended with a cut to the principal owed lenders …”

There are many good reasons why Chapter 9 has remained a last resort for local governments, and why the governments that have filed for Chapter 9 have continued to honor commitments to bondholders, but the central reason is the desire not to be locked out of the municipal bond market for a long period of time. Unlike corporate bankruptcies where there is always the threat of liquidation, municipalities exist in perpetuity and have to be able to provide essential government services to residents. It is very difficult to conceive of a government undertaking, improving, or maintaining large projects and facilities without some measure of access to the capital markets. Vallejo, California is an excellent example. Vallejo filed for bankruptcy in May 2008 and did not emerge until November 2011 (3.5 years later, and only then because of some fortuitous rulings on the city’s behalf). The city racked up $10 million in legal fees (a figure that, according to JP Morgan, escalates to $248 million when ensuing litigation costs are included). Vallejo has not issued bonds since 2004.

The market has actually shown improvement with respect to defaults generally. Per JP Morgan (July 20, 2012 – their discussion of the market has been excellent lately):

“There have been 47 first time payment defaults totaling $889 million YTD. [Stockton is expected to default on $230 million of debt at the beginning of September.] Of this amount, 58% is unrated [translation: sold to sophisticated investors]. This compares positively to a total of approximately $1 billion over the same period last year. If cases where bond insurers had to step in are excluded, the YTD total falls to $725 million across 42 issuers. If the handful of cases where debt service payments were late due to administrative errors / oversights are excluded, the total falls to $549 million across 33 issuers.”

Maybe Chriss Street needs to go easy on the Sterno…

Worst campaign since Simon…..that really was three months of truly bad politics.

For mititia groups, bedroom regulators and fanatical country club groupies.

She makes one a day these days!

Of course…..seriously….not ONE has come true!!!

Flash—- 0 for 9 so far going back to before the oc cops lawsuit case !

Ask me for details!

Ted