Chicago is now the city of big debt, where each of its 2.7 million residents -- from infants in diapers to senior citizens on fixed incomes -- is on the hook for about $20,000 in long-term pension promises and bond obligations. Like the relentless snow clogging the city’s streets, it just keeps piling up.
When Vallejo , California, filed for bankruptcy in 2008 after failing to win union pay cuts, Councilwoman Stephanie Gomes said officials around the U.S. would have their eyes trained on the city of 120,000.
State and local governments are likely to avoid bankruptcy through spending cuts, even as their financial stress mounts, according to panelists at a Securities Industry and Financial Markets Association seminar.
Michigan Governor Rick Snyder told a federal judge that he considers Detroit’s bankruptcy the “largest issue” facing the U.S., while declining to answer some questions about how the case may affect retired workers.
Jefferson County, Alabama, can’t fully repay $205 million in general-obligation bonds without raising taxes, the county’s bankruptcy lawyer said, threatening investors with losses not seen in the U.S. since the Great Depression.