"Somebody has to suffer and in this case the city manager has decided it should be the bondholders..."
As we go forward, more than ever before, it is all about managing counterparty risk, including 'accounting errors' and outright fraud.
Sometimes you may be able to adequately prepare and allow for risk of loss.
But at other times it can come suddenly and unexpectedly, as it did to the customers of MF Global, and only insiders will be able to take measures to protect themselves, and leave the unsuspecting to take the greatest share of loss.
Don't wait to fill your lamps with oil until after the darkness falls, for then the price may be very dear, if there is any to be had at all.
The philosophical niceties and theories of the pied pipers of paper money, presented every time they reappear throughout history as something 'new' and 'modern,' and 'innovative,' will provide little comfort for the victims of the hard realities of default, whether it comes from non-payment or inflation.
“The wise do at the beginning what the fool does at the last.”When you consider what is 'safe,' keep in mind the customers of MF Global and the injustice done to them by a system tainted with fraud and corruption. And then make your plans accordingly.
Baltasar Gracian
Stockton to Take Steps Toward Bankruptcy, City Manager Says
By Alison Vekshin and Michael B. Marois
February 24, 2012, 5:22 PM EST
Feb. 24 (Bloomberg) -- Stockton, California, may take the first steps toward becoming the most populous U.S. city to file for bankruptcy next week because of burdensome employee costs, excessive debt and bookkeeping errors that misrepresented accounts, city officials said today.
The Stockton City Council will meet Feb. 28 to consider a type of mediation that allows creditors to participate, the first move toward a Chapter 9 bankruptcy filing under a new state law. The council will also weigh suspending some payments on long-term debt of about $702 million, according to a 2010 financial statement.
"Somebody has to suffer and in this case the city manager has decided it should be the bondholders who suffer,” Marc Levinson of the Sacramento-based law firm Orrick, Herrington & Sutcliffe LLP, which represents the city, said at a news briefing at Stockton’s City Hall today...
Read the rest here.
