The capital of Pennsylvania has filed for bankruptcy protection. They simply couldn't meet their bond payments anymore so the city controller told us, "it's irresponsible not to file for bankruptcy."
Pennsylvania's capital has authorized a bankruptcy filing, making the city the nation's highest-profile municipality to acknowledge that it can no longer handle its burdensome debt.
Harrisburg's city council authorized the measure Tuesday after the government spent the past year and a half trying to find a solution to its $300 million debt crisis.
In the face of a continuing political battle over whether the city should restructure its debts, Harrisburg's leaders finally capitulated and said the Chapter 9 filing is the only way out of the situation.
"Actually it's irresponsible not to file for bankruptcy," city Controller Dan Miller told CNBC. "It's the only plausible option we have for a long-term recovery in our city."
The city's troubles began in early 2010 when it could no longer meet debt service payments on an incinerator project gone awry. Harrisburg missed a debt payment before ultimately turning its finances over to the state government in hopes of a long-term solution.
Bond holders now will face the prospect of taking what likely are substantial haircuts on the principal they are owed for the incinerator project.
As reader Mike pointed out....it's funny how filing for bankruptcy used to be a sign of financial and even moral failure...but now we are told it's irresponsible NOT to file for bankruptcy.
The right will be wrong and the wrong will be right. Evil will be called good and good will be called evil.
Also interesting is that this announcement is PRETTY BIG NEWS....but the municipal bond market has just yawned and shrugged it off. It makes one wonder if we are just getting so used to shocking headlines that we simply aren't shocked anymore??
Hat tip to Mike S.
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home