This time in Pennsylvania:
The embattled government of Harrisburg, Pennsylvania’s capital, will avoid default on a $3.3 million bond payment this week because of $4.4 million in last-minute state aid.
With Harrisburg’s city council scheduled to meet Tuesday to explore filing for bankruptcy, Gov. Ed Rendell announced Sunday that he was speeding up state funds and grants to the financially-strapped capital…
Harrisburg is bankrupt – it simply cannot pay all of its bills. In fact, it has already not paid some of them. Municipal bankruptcy is really the only way out…but that would harm the city’s bond holders. So, riding to the rescue, Governor Ed Rendell (D-PA). Mish wonder’s how connected the city bondholders are to the Governor – I wonder, too, because this sort of bail out is a monumentally stupid waste of money. It just kicks the can down the road for the city…but it does allow the bondholders some time to try and dump their holdings while the markets are thinking the bail outs will continue indefinitely.
What is really rich is that while a Democrat governor is using taxpayer money to bail out bond holders, one of Harrisburg’s city council members is claiming this is a Wall Street vs Main Street fight…the bond holders are demanding that the burden be put on the taxpayers! For crying out loud, it was the city council who put the burden on the taxpayers – the bondholders are just demanding repayment for money lent. This isn’t a people vs powerful moment but an idiots vs morons scenario. Idiots who bought municipal bonds as if city governments have an endless supply of cash, morons in city government who kept issuing bonds as if ditto.
Go bankrupt. Default on the bonds. Vote Republican in November. That is all Harrisburg can do at this point.
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