Stockton, California, the city with the nation's second-highest home foreclosure rate and an official 18.6% unemployment rate, may declare bankruptcy by Wednesday June 27, which would be the largest official city bankruptcy in American history. Stockton's bankruptcy, the parallel breakdown of several other cities, and the huge budget gaps of many of the nation's states, represent Nerobama's destruction of America's physical- economic system, and the accompanying financial system.
A river port city in California's Central Valley, populated by 290,000 people, Stockton had been historically involved in agriculture, but it 'diversified' in the 1980-2005 period, and developed a 'red-hot' real estate market. With the bursting of the real estate bubble, home prices fell more than 40%; Stockton has an official home foreclosure rate of 7.1%, which means that 1 in every 140 homes is in foreclosure, second highest in the nation. As part of the nationwide depression, city revenues shrank. During the past few years, Stockton has slashed employment in its police force by 25%, its fire deparment by 30%, and all other services by more than 40%.
Yet, this has not succeeded, not surprisingly. Stockton has a $26 million budget deficit to close within a week. City and state governments are required by law to have balanced budgets by July 1. Stockton is also defaulting on its debt, and in March, Wells Fargo Bank filed a suit against the city for missing a nearly $800,000 payment the month before on $32.8 million in bonds. Under a new California state law, Stockton has been holding negotiations with its creditors and labor unions in an attempt to work out a solution prior to declaring bankruptcy; however, City Manager Bob Deis asserted that Stockton could file for Chapter 9 bankruptcy as early as June 27. As a result, not only would Stockton default on some of its bonds, but ominously, some in the city government are pushing for it to end, after a one year 'grace' period, its health benefits for city employees.
Meanwhile, Obama's economic policies have destroyed the city of North Las Vegas, Nevada, the state's fourth largest city, with a population of 230,000. Since 2007, the city's revenues have plunged by 63% to $298 million this year. During that time, 3,000 businesses have left the city. Recently, the city government declared a state of disaster for North Las Vegas, in the misguided attempt to make the city workers pay by ripping up their union contracts.
Simultaneously, in 2011, the City of Harrisburg, Pennsylvania, attempted to file a Chapter 9 bankruptcy, but was blocked by a bankrutpcy court judge, and instead was put under Pennsylvania state receivership. The one year moratorium on Harrisburg's filing for bankruptcy expires on July 1, and that crisis could heat up again.
It were impossible to think one could solve these crises within the bounds of state or local governments. Only the adoption of LaRouche's three-pronged fight—reestablishment of the original Glass-Steagall law, NAWAPA XXI, and the creation of a national credit system—gives our nation the weapons to address reality.