I'm afraid I'm far too ignorant about city financing, defaulting and debt. So I ran Vicky's post by my council person, Barret Lane and this is what he e-mailed me:
"No. Intentional default is absolutely not an option. The credit rating is not the only factor in play. At a minimum, we'd get sued (for breach of contract on the bonds) and lose. Then, we'd have to raise taxes to pay the judgment. In the meantime our bond rating will be reduced to junk status or something close to it."
Thought I'd pass this on to the List. I am especially persuaded by Barret's argument that the city would get sued if we pulled an intentional default and we'd have to raise taxes just to pay the judgement.
But I do understand why Third World countries think about defaulting all the time.
Lynnell Mickelsen
Linden Hills, Ward 13
Not living in the Third World yet---but who knows? If Tim Pawlenty and Patty Awada have their way, our city could be like the Third World sooner than we'd think. I understand their agenda. I get their hostility. But it all seems so destructive and pointless. It takes only a few years to tear our city down........and years and years to build it back up. And by then Tim and Patty will be long gone from the scene.
From: Vicky Heller's original post:
It's time to face facts guys, and the music. NO ONE IS GOING TO BAIL US OUT!And why should they? Minneapolis spent a billion dollars of money we didn't have on stuff we didn't need. It's that simple. Here are our choices at this point: 1. Raise taxes until everyone moves out of town. 2. Reduce services until everyone moves out of town. 3. Stop paying some of the municipal bondholders (who don't pay taxes anyway.) Stockholders have lost over $7 trillion. Now it's the bondholders turn to lose. Our debts are up to $2.2 billion including interest according to the City's 12/31/2001 financial reports. How do I spell relief? D-E-F-A-U-L-T SO WHAT if we get a black eye from the credit rating agencies. They are going to downgrade us anyway. And, if they had done their job - we wouldn't be in this pickle (I think we should sue them for breach of fiduciary duty.) Besides, it's going to take us several years to pay off our LEGITIMATE debts - so we won't need to borrow in the near term anyway. Think about it. Vicky Heller Cedar-Riverside and North Oaks
Lynnell Mickelsen 4233 Linden Hills Blvd Minneapolis, MN 55410-1607 612-920-2076 [EMAIL PROTECTED] TEMPORARY REMINDER: 1. Send all posts in plain-text format. 2. Cut as much of the post you're responding to as possible. ________________________________ Minneapolis Issues Forum - A City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:[EMAIL PROTECTED] Subscribe, Unsubscribe, Digest, and more: http://e-democracy.org/mpls
