CA bankruptcy; effect on r.e.

[bsrsharma]

One other effect may be to encourage out migration of better off Californians to escape the dysfunction. That will hurt the buy up r.e. It may eventually lead to CA becoming a two tier society like Brazil: the gated communities with self contained municipal services and the left behind who have to some how survive without a functioning state.

[CA renter]

[quote=Arraya]Of course it would have an affect. Everything is connected.

The state lays of 30,000 people that is 30,000 w/o jobs defaulting on their loans, losing their home to foreclosure, clogging up banks balance sheets, perpetuating the credit contraction, sucking money out of consumption based economy, leading to more job losses, leading to a larger tax shortfall, etc..

It’s a vicious cycle…[/quote]

Spot on, Arraya.

Regarding Prop 13…I don’t see how it can remain in its current form. They will have to tax rentals and second homes at market rate, at the very least. The protection for primary residences will probably stay in effect, as it should, IMHO.

I’d also bet big money that the pension plans get re-worked. There’s no way around that one, either.

[CA renter]

[quote=Arraya]Of course it would have an affect. Everything is connected.

The state lays of 30,000 people that is 30,000 w/o jobs defaulting on their loans, losing their home to foreclosure, clogging up banks balance sheets, perpetuating the credit contraction, sucking money out of consumption based economy, leading to more job losses, leading to a larger tax shortfall, etc..

It’s a vicious cycle…[/quote]

Spot on, Arraya.

Regarding Prop 13…I don’t see how it can remain in its current form. They will have to tax rentals and second homes at market rate, at the very least. The protection for primary residences will probably stay in effect, as it should, IMHO.

I’d also bet big money that the pension plans get re-worked. There’s no way around that one, either.

[CA renter]

[quote=Arraya]Of course it would have an affect. Everything is connected.

The state lays of 30,000 people that is 30,000 w/o jobs defaulting on their loans, losing their home to foreclosure, clogging up banks balance sheets, perpetuating the credit contraction, sucking money out of consumption based economy, leading to more job losses, leading to a larger tax shortfall, etc..

It’s a vicious cycle…[/quote]

Spot on, Arraya.

Regarding Prop 13…I don’t see how it can remain in its current form. They will have to tax rentals and second homes at market rate, at the very least. The protection for primary residences will probably stay in effect, as it should, IMHO.

I’d also bet big money that the pension plans get re-worked. There’s no way around that one, either.

[CA renter]

[quote=Arraya]Of course it would have an affect. Everything is connected.

The state lays of 30,000 people that is 30,000 w/o jobs defaulting on their loans, losing their home to foreclosure, clogging up banks balance sheets, perpetuating the credit contraction, sucking money out of consumption based economy, leading to more job losses, leading to a larger tax shortfall, etc..

It’s a vicious cycle…[/quote]

Spot on, Arraya.

Regarding Prop 13…I don’t see how it can remain in its current form. They will have to tax rentals and second homes at market rate, at the very least. The protection for primary residences will probably stay in effect, as it should, IMHO.

I’d also bet big money that the pension plans get re-worked. There’s no way around that one, either.

[CA renter]

[quote=Arraya]Of course it would have an affect. Everything is connected.

The state lays of 30,000 people that is 30,000 w/o jobs defaulting on their loans, losing their home to foreclosure, clogging up banks balance sheets, perpetuating the credit contraction, sucking money out of consumption based economy, leading to more job losses, leading to a larger tax shortfall, etc..

It’s a vicious cycle…[/quote]

Spot on, Arraya.

Regarding Prop 13…I don’t see how it can remain in its current form. They will have to tax rentals and second homes at market rate, at the very least. The protection for primary residences will probably stay in effect, as it should, IMHO.

I’d also bet big money that the pension plans get re-worked. There’s no way around that one, either.

[patb]

I’ve seen cities and counties file Chapter 9,
but despite sovereignty, does that not still
prohibit a chapter 9 filing?

I could see that debtors may not be able to
force Chapter 7, but what prevents a state
from petitioning a court and asking for a Chapter 9
hearing?

of course, even if the state can’t enter CH 9
it can be forced into Functional bankruptcy.
The Rating agencies can writ ethe risk up to C grade
risk, the banks could stop all lending, leaving
only the federal reserve or treasury as a lender.

Of course at that point if the state is sovereign
it can waive Prop 13, to rewrite taxes,
and it can also go to the IMF or World bank….

That would be interesting. California as an IMF client.

[patb]

I’ve seen cities and counties file Chapter 9,
but despite sovereignty, does that not still
prohibit a chapter 9 filing?

I could see that debtors may not be able to
force Chapter 7, but what prevents a state
from petitioning a court and asking for a Chapter 9
hearing?

of course, even if the state can’t enter CH 9
it can be forced into Functional bankruptcy.
The Rating agencies can writ ethe risk up to C grade
risk, the banks could stop all lending, leaving
only the federal reserve or treasury as a lender.

Of course at that point if the state is sovereign
it can waive Prop 13, to rewrite taxes,
and it can also go to the IMF or World bank….

That would be interesting. California as an IMF client.

[patb]

I’ve seen cities and counties file Chapter 9,
but despite sovereignty, does that not still
prohibit a chapter 9 filing?

I could see that debtors may not be able to
force Chapter 7, but what prevents a state
from petitioning a court and asking for a Chapter 9
hearing?

of course, even if the state can’t enter CH 9
it can be forced into Functional bankruptcy.
The Rating agencies can writ ethe risk up to C grade
risk, the banks could stop all lending, leaving
only the federal reserve or treasury as a lender.

Of course at that point if the state is sovereign
it can waive Prop 13, to rewrite taxes,
and it can also go to the IMF or World bank….

That would be interesting. California as an IMF client.

[patb]

I’ve seen cities and counties file Chapter 9,
but despite sovereignty, does that not still
prohibit a chapter 9 filing?

I could see that debtors may not be able to
force Chapter 7, but what prevents a state
from petitioning a court and asking for a Chapter 9
hearing?

of course, even if the state can’t enter CH 9
it can be forced into Functional bankruptcy.
The Rating agencies can writ ethe risk up to C grade
risk, the banks could stop all lending, leaving
only the federal reserve or treasury as a lender.

Of course at that point if the state is sovereign
it can waive Prop 13, to rewrite taxes,
and it can also go to the IMF or World bank….

That would be interesting. California as an IMF client.

[patb]

I’ve seen cities and counties file Chapter 9,
but despite sovereignty, does that not still
prohibit a chapter 9 filing?

I could see that debtors may not be able to
force Chapter 7, but what prevents a state
from petitioning a court and asking for a Chapter 9
hearing?

of course, even if the state can’t enter CH 9
it can be forced into Functional bankruptcy.
The Rating agencies can writ ethe risk up to C grade
risk, the banks could stop all lending, leaving
only the federal reserve or treasury as a lender.

Of course at that point if the state is sovereign
it can waive Prop 13, to rewrite taxes,
and it can also go to the IMF or World bank….

That would be interesting. California as an IMF client.

[jonnycsd]

bsrsharma wrote:

. . . may eventually lead to CA becoming a two tier society like Brazil: the gated communities with self contained municipal services and the left behind who have to some how survive without a functioning state

IMHO the entire USA is quietly but steadily moving towards a Brazilian socio-economic model. Like frogs in a pot of water on the stove top, by the time people realize what is happening it will be too late. The middle class will be gone, corruption rampant and clientelismo politics will be the accepted order. And yes, there will be gated communities and a massive underclass.

[jonnycsd]

bsrsharma wrote:

. . . may eventually lead to CA becoming a two tier society like Brazil: the gated communities with self contained municipal services and the left behind who have to some how survive without a functioning state

IMHO the entire USA is quietly but steadily moving towards a Brazilian socio-economic model. Like frogs in a pot of water on the stove top, by the time people realize what is happening it will be too late. The middle class will be gone, corruption rampant and clientelismo politics will be the accepted order. And yes, there will be gated communities and a massive underclass.

[jonnycsd]

bsrsharma wrote:

. . . may eventually lead to CA becoming a two tier society like Brazil: the gated communities with self contained municipal services and the left behind who have to some how survive without a functioning state

IMHO the entire USA is quietly but steadily moving towards a Brazilian socio-economic model. Like frogs in a pot of water on the stove top, by the time people realize what is happening it will be too late. The middle class will be gone, corruption rampant and clientelismo politics will be the accepted order. And yes, there will be gated communities and a massive underclass.

[jonnycsd]

bsrsharma wrote:

. . . may eventually lead to CA becoming a two tier society like Brazil: the gated communities with self contained municipal services and the left behind who have to some how survive without a functioning state

IMHO the entire USA is quietly but steadily moving towards a Brazilian socio-economic model. Like frogs in a pot of water on the stove top, by the time people realize what is happening it will be too late. The middle class will be gone, corruption rampant and clientelismo politics will be the accepted order. And yes, there will be gated communities and a massive underclass.

[Author]

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