Unfortunately, we have found other information that indicates that Detroit and those nine cities we discussed yesterday are not the end of government bankruptcy problems and challenges. Today, using an analysis completed by the Business Insider website, we will look at some more cities and other government entities that are likely to go belly up in the next few years, given the financial mismanagement of those government entities’ financial affairs by short sighted and inept politicians.
Keep these examples in mind when you hear people saying it would be a good thing to bailout Detroit. Because if you think bailing out Detroit is a good thing, what do you tell the people of Chicago, New York City, Baltimore, Richmond, Fort Worth, Cincinnati, Charleston (W.V.), Stockton (California), and the dozens of other government entities and pension funds which also had their financial holes dug deeply for them by bygone political clowns.
The Business Insider article broke their analysis of pending government bankruptcies into two parts. The first part looked at the top ten cities it felt would experience bankruptcy first. The second part looked at other government entities that were likely facing bankruptcy in the relative near future as a result of large and unfunded pension obligations.
Cities In Financial Crisis Mode
The Business Insider analysis is based on the work of two people cited in the article, Robert Novy-Marx and Joshua Rauh. Their analysis found the following disturbing financial trends:
The analysis was done in 2010 and already one of their predictions at that time, the bankruptcy of Detroit, has already happened. While it happened much sooner than they predicted, they thought insolvency would happen by 2023, that is probably due to the ineptness of Detroit politicians and not their prediction methodology.
The average American city they examined has unfunded pension liabilities of about $15,000 for each city resident, I.e. every person living in that average city would have to write a check for $15,000 to cover the pension promises that past politicians have made to retired and current city workers. This debt load does not include any other city debt load for schools, general city debt, etc.
Of the 77 cities that they analyzed, many of them are facing financial insolvency and ruin within the next ten years. One of the problems they found is with the accounting methods used by city governments to calculate their future debt and pensions obligations.
Their analysis found that the method used by government entities grossly underestimates the true financial cost in the future, with just these 77 cities they analyzed underestimating these obligations by billions and billions of dollars in the coming years.
They also remind us that not just the big cities they analyzed are going down the financial drain, noting that The first total municipal pension default happened recently when Prichard, Alabama ran out of money and had to stop mailing pension checks to retired city employees.
Pitiful, shameful financial management by past politicians. As you review the top ten worst financial situations in American cities below, keep in mind that you had to be a complete math moron as a politician not to know what was happening over the years or you did not care what were doing to future city residents as long as you continually got yourself reelected today and damn the future consequences.
#10 Fort Worth
Unfunded liability: $2 billion
Unfunded liability per household: $7,212
Solvency horizon: 2023
#9 Detroit
Unfunded liability: $6.4 billion
Unfunded liability per household: $18,643
Solvency horizon: 2023
#8 Baltimore
Unfunded liability: $3.7 billion
Unfunded liability per household: $15,420
Solvency horizon: 2022
#7 New York City
Unfunded liability: $122.2 billion
Unfunded liability per household: $38,886
Solvency horizon: 2021
#6 Jacksonville
Unfunded liability: $4 billion
Unfunded liability per household: $12,994
Solvency horizon: 2020
#5 St. Paul
Unfunded liability: $1.4 billion
Unfunded liability per household: $13,686
Solvency horizon: 2020
Note: These numbers refer to St. Paul's largest pension, a teachers fund.
#4 Cincinnati
Unfunded liability: $2 billion
Unfunded liability per household: $15,681
Solvency horizon: 2020
#3 Boston
Unfunded liability: $7.5 billion
Unfunded liability per household: $30,901
Solvency horizon: 2019
#2 Chicago
Unfunded liability: $44.8 billion
Unfunded liability per household: $41,966
Solvency horizon: 2019
#1 Philadelphia
Unfunded liability: $9 billion
Unfunded liability per household: $16,690
Solvency horizon: 2015
Bad News Bonus Information, Part 1: The Business Insider analysis and article also predicted the following cities, while not quite as close to bankruptcy as the top ten listed above, will face financial ruin/pension apocalypse within the next twenty years or so:
2024: Seattle
2026: Dallas
2027: Houston, Los Angeles, Miami, San Jose
2028: Memphis, Milwaukee
2031: Tacoma
2032: San Francisco
Beyond City Bankruptcies
Bad News Bonus Information, Part 2: Again, a sad, sad situation across the country. But, there’s bad news beyond the city level of government. It is not only these city governments that are heading towards bankruptcy because of greedy or short sighted politicians, the following state government pension funds are also underfunded and are also circling the financial drain:
#11 New Hampshire
Year pension fund runs out: 2022
Bill in the following year: $1.0 billion
Share of state revenue: 30%
#10 Kentucky
Year pension fund runs out: 2022
Bill in the following year: $5.3 billion
Share of state revenue: 35%
#9 Kansas
Year pension fund runs out: 2022
Bill in the following year: $2.5 billion
Share of state revenue: 23%
#8 Colorado
Year pension fund runs out: 2022
Bill in the following year: $7.8 billion
Share of state revenue: 54%
#7 Oklahoma
Year pension fund runs out: 2020
Bill in the following year: $3.7 billion
Share of state revenue: 30%
#6 Louisiana
Year pension fund runs out: 2020
Bill in the following year: $4.3 billion
Share of state revenue: 27%
#5 Hawaii
Year pension fund runs out: 2020
Bill in the following year: $1.7 billion
Share of state revenue: 24%
#4 New Jersey
Year pension fund runs out: 2019
Bill in the following year: $14.4 billion
Share of state revenue: 34%
#3 Indiana
Year pension fund runs out: 2019
Bill in the following year: $3.6 billion
Share of state revenue: 17%
#2 Connecticut
Year pension fund runs out: 2019
Bill in the following year: $4.9 billion
Share of state revenue: 27%
#1 Illinois
Year pension fund runs out: 2018
Bill in the following year: $13.6 billion
Share of state revenue: 32%
As a native of New Jersey, let’s do some simple math to show how dire the situation will be in the next few years in New Jersey. There are currently about 8.8 million people living in New Jersey. If this analysis is correct, in 2019, the state government pension fund will run dry and will need $14.4 billion a year going forward to pay the promises past New Jersey politicians have made relative to state pensions.
If we divide the $14.4 billion shortfall by the number of residents, adults and children, we see that the annual obligation under current parameters in that state will be just over $1,600 a year, every year forward. Thus, hypothetically, a New Jersey family of four would have to pay about $6,500 a year to the state government just to fund its pension obligations. This shows you how pathetic the state government financials in New Jersey and many other towns and states were managed by the politicians throughout the decades.
That pathetic management has now come home to roost in the form of state and municipal bankruptcies. And as always, that insanity, idiocy and incompetence on the part of the American political class is going to financially strain and pummel taxpayers going forward.
More insanity tomorrow, it never seems to stop.
Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:
www.loathemygovernment.com
It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.
Please visit the following sites for freedom:
Term Limits Now: http://www.howmuchworsecoulditget.com
http://www.reason.com
http://www.cato.org
http://www.robertringer.com/
http://www.youtube.com/watch?v=08j0sYUOb5w
No comments:
Post a Comment