On March 22nd, the End of the American Dream blog came out with 10 indicators that cities around the country could begin defaulting in greater numbers as both the pension funds and municipal bonds outstanding could be on the verge of a collapse.
Chart courtesy of the Wall Street Journal
#3 Suffolk County in New York has declared a "fiscal emergency" after discovering that it is projected to take on a total of more than 500 million dollars of additional debt by the end of 2013.
#4 The city of Trenton, New Jersey is so broke that it has put off buying more toilet paper for city buildings. At last report, there were a total of 15 rolls remaining and after that those that use city restrooms will be on their own.
#5 Some cities are slashing expenses dramatically in an attempt to stay afloat.
#7 Pension problems are catching up with a lot of cities all over the nation. For example, CBS News reported recently that the city of Central Falls, Rh0de Island has been forced to declare bankruptcy because of pension woes....
#8 Last November, Jefferson County, Alabama filed for the largest municipal bankruptcy in U.S. history. At the time, they had accumulated a total of approximately 4.2 billion dollars of debt.
#9 Several other U.S. large cities have defaulted on their debts in early 2012
#10 In all, there have been 21 municipal defaults so far in 2012. The grand total of those defaults comes to 978 million dollars.
On top this these indicators listed, interest rates appear ready to move up outside the Fed's influence to control the lending rates. Rates crossed 4% for the first time in several months in March, and the rate of foreclosures is now increasing after legal and legislative changes were made to the contract ownership barriers between banks and homeowners.
Lower tax receipts, coupled with rising inflation and the inability of cities to borrow money through bond auctions will accelaerate the collapse of many municipalities, and lead to greater unrest as city pension funds continue to shrink for retirees.