Friday, October 06, 2017

America's Puerto Rican Municipalities

zerohedge |  We harp on the massive, unsustainable, yet largely unnoticed, debt burdens of American cities, counties and states fairly regularly because, well, it's a frightening issue if you spend just a little time to understand the math and ultimate consequences.  Here is some of our recent posts on the topic:
Luckily, for those looking to escape the trauma of being taxed into oblivion by their failing cities/counties/states, JP Morgan has provided a comprehensive guide on which municipalities haven't the slightest hope of surviving their multi-decade debt binge and lavish public pension awards.  

If you live in any of the 'red' cities above, it just might be time to start looking for another home...

wikipedia |   Chapter 9, Title 11, United States Code is a chapter of the United States Bankruptcy Code, available exclusively to municipalities and assisting them in the restructuring of their debt. On July 18, 2013, Detroit, Michigan became the largest city in the history of the United States to file for Chapter 9 Bankruptcy protection. Jefferson County, Alabama, in 2011 and Orange County, California, in 1994 are also notable examples. "The term 'municipality' denotes a political subdivision or public agency or instrumentality of a State."[1]

From 1937 to 2008 there were fewer than 600 municipal bankruptcies.[2] As of June 2012 the total was around 640.[3] In 2012 there were twelve chapter 9 bankruptcies in the United States, and five petitions have been filed in 2013.[4] Since 2010, 61 petitions have been filed.[5]
Previous to the creation of Chapter 9 bankruptcy, the only remedy when a municipality was unable to pay its creditors was for the creditors to pursue an action of mandamus, and compel the municipality to raise taxes.[6] During the Great Depression, this approach proved impossible, so in 1934, the Bankruptcy Act was amended to extend to municipalities.[7][8] The 1934 Amendment was declared unconstitutional in Ashton v. Cameron County Water District.[9]

wikipedia |  Mandamus ("We command") is a judicial remedy in the form of an order from a superior court,[1] to any government subordinate court, corporation, or public authority, to do (or forbear from doing) some specific act which that body is obliged under law to do (or refrain from doing), and which is in the nature of public duty, and in certain cases one of a statutory duty. It cannot be issued to compel an authority to do something against statutory provision. For example, it cannot be used to force a lower court to reject or authorize applications that have been made, but if the court refuses to rule one way or the other then a mandamus can be used to order the court to rule on the applications.

Mandamus may be a command to do an administrative action or not to take a particular action, and it is supplemented by legal rights. In the American legal system it must be a judicially enforceable and legally protected right before one suffering a grievance can ask for a mandamus. A person can be said to be aggrieved only when he is denied a legal right by someone who has a legal duty to do something and abstains from doing it.