Another Day, Another CA City Bankrupt

This is a pretty big one...San Bernardino.

(Reuters) - San Bernardino filed for bankruptcy protection on Wednesday citing more than $1 billion of debts and making it the third California city to seek protection from creditors.

The city of about 210,000 residents 65 miles east of Los Angeles declared a fiscal crisis last month after a report said local government had tapped out its reserves and projected spending would top revenue by $45 million in the fiscal year that began on July 1.

The filing, made in the United States Bankruptcy Court, Central California District, states that the city has "more than $1 billion" in liabilities, and estimated that it has between 10,001 and 25,000 creditors.

Stockton, which like San Bernardino has suffered from the housing crash that was particularly acute in southern California, filed for bankruptcy in June, becoming the largest U.S. city to do so.

Other cities in California are also in deep fiscal trouble and more could file for bankruptcy.

Cities have had the option of filing for bankruptcy since a law was passed during the Great Depression, but it is a relatively rare occurrence. Only about 640 such filings have been made since 1937.

Here;  http://www.reuters.com/article/2012/08/02/us-usa-bankrupty-san-bernardino-idUSBRE87105220120802

Remember Ray-Ban sunglasses in the 1980's?....they started in CA and the rage spread all over the country. 

Remember bell-bottom slacks in the 1970's....that fad started in CA and spread all over the country.

 Remember when spending money you didn't have to buy stuff you didn't need was your ticket to the 'American dream'?...that idea took seed in CA and spread all over the country.

I sure wonder if cities filing for bankruptcy is the next trend that has started in CA and if it will spread all over the country?

As the article says, investors and financial markets are going to closely watch these bankruptcy cases in CA.  If a city is allowed to walk away from its obligations...what does that really mean?  Could the state of CA be the next entity to file?