Central Falls bankruptcy: the canary in the coalmine?

[marmar]

Central Falls bankruptcy means a grim present for the 'city with a bright future'
Tiny city is first in Rhode Island to go bankrupt as debt-ridden municipalities face higher interest rates

Dominic Rushe in Providence
guardian.co.uk, Sunday 7 August 2011


Central Falls in Rhode Island bills itself as "a city with a bright future". Its present looks grim. The tiny city of 18,000 people claims to be the smallest, most densely populated in the US. Now it has another claim to fame: Central Falls is the first city in the state to go bankrupt. It is unlikely to be the last.

Cities across the US are facing bankruptcy as the economy threatens a double-dip recession. Debt-ridden municipalities face higher interest rates after the decision by ratings agency Standard & Poor's to cut the US's credit rating. There are a dozen other cities at risk in Rhode Island alone.

Alabama's Jefferson county looks set to become the largest municipal bankruptcy in US history, saddled with $3.2bn (£2bn) in debt it ran up on a new sewage system. The Pennsylvania state capital, Harrisburg, is considering bankruptcy, burdened with $300m in debt it ran up on a new incinerator.

What makes Central Falls particularly worrying is that the financial crisis is only a secondary factor in its collapse. This city's problems have been decades in the making and stem from a pension burden created for baby boomers who were promised far more than Central Falls – and many other US cities – can now afford. ..............(more)

The complete piece is at: http://www.guardian.co.uk/business/2011/aug/07/central-falls-bankruptcy-city

[shanti]

1. what is the end result of

a city going bankrupt? is it just unincorporated and absorbed into the county?

[PoliticAverse]

2. Another underfunded pension liability fiasco. n/t