San Bernardino City is being sued by CalPERS (California Public Employee Retirement System) for failing to make a required payment.
The problem, of course, is that the city is bankrupt. (As is Stockton, Vallejo, Mammoth Lakes, and more in the wings…)
This is all going off to court, who will likely decide the City must pay, at which time the city ceases to provide current services and folks pack up and leave…
Mellisa Francis on Fox Business had the story on her show “Money”. Video here:
Further on in the show she referenced an article, that she said was in Forbes, about the 11 States that are now in a “Death Spiral”. I think it’s this one:
One was California. They also had New Mexico, New York, Ohio, Illinois, and a few others. One on the list is Hawaii, you know, the State with the model “cover everyone” health plan? The basic metric was a composite of the “Makers vs Takers” ratio (if more Takers than Makers) and the debt rating (too much debt to service drives the rating down).
A small snippet from the article:
It’s easy to see how California got on our list. It has pampered a large army of civil servants while using every imaginable trick to chase private-sector jobs away, the latest being a quixotic scheme to reduce the globe’s atmospheric carbon. A City Journal essay by Victor Davis Hanson notes that the state spends $10 billion a year on entitlements for illegal aliens.
Yes, that’s right. $10 Billion, with a “B”… for folks who are not even citizens nor legal to be here…
The metaphor used that was most of a ‘touchstone’ for me, was just that of “more people in the cart riding than outside pulling it”.
I did find a very good write up of just WHY such ‘death spirals’ are happening, and will continue to happen. I’m going to quote some of it, but please do hit the link… even if for no other reason than the cool bat and moon graphics that I’m not reproducing here ;-)
Democrat Death Spiral
The objective of liberal politics is to induce the Democrat Death Spiral, a vicious cycle by which miserable economic conditions lead to government dependency and class envy, leading to Democrat electoral victories, leading to higher taxes and crippling regulations, leading to still more miserable economic conditions. Once the Democrat Death Spiral has been initiated, the more damage left-wing bureaucrats inflict on the economy, the more certain they are of reelection.
Detroit entered the Democrat Death Spiral decades ago. As a result of the city’s utter wretchedness, the Democrats who inflicted it receive upwards of 90% of the vote. There is no possibility of Democrats losing control, or of the city ever regaining its lost greatness.
California officially entered the Democrat Death Spiral when it brought back Jerry Brown despite a desperate economic situation that urgently required the state to turn away from Governor Moonbeam’s brand of profligate liberalism. In effect, the state committed suicide out of sheer moonbattery. Its prospects are no better than Detroit’s.
It is no coincidence that Obama received 98% of the vote in Detroit, America’s worst and most liberal city, the model for our future.
So looks like I’m in The Land Of Death Spirals… Oh Joy…
Also of interest, this article on what happened in Washington State when they tried an “Obamacare Lite” insurance mandate:
Avik Roy, Contributor
Want to See a Health Insurance Death Spiral? Visit Washington State
As Peter Suderman described in a 2009 op-ed, the impact of these changes on the insurance market was swift. Some premiums increased by as much as 78 percent in the first three years after the law was enacted. Enrollment in the individual health-insurance market dropped by 25 percent. Within four years, no major insurer in the state was offering maternity coverage. More than 30 insurers left the state altogether.
The Democrats did learn something from that. They have now made it mandatory for you
to pay to have a tax extracted from you to pay for it.
Wonder if San Bernardino will be subject to such an extraction?
Will the last one in the State with money please hand it over?
FWIW, putting “death spiral” in with various government names gives interesting results. Including the EU… looks like they have way more obligations than can ever be paid too, and not just in the PIIGS…
It would be VERY interesting to make a list of who is owed all those promises and who is expected to pay them. Near as I can tell, it’s “old folks” vs “young folks”. Which will work fine just up until they decide to stop paying and working for nothing. NINI Anyone? (Neither in Employment nor Education. The term of art in Spain.) With youth unemployment at about 50% in most such Workers Paradise places, it looks to me like they are already ‘checking out’…