Whereas, the NY Times revealed State and municipal bonds positions needed to be reduced or liquidated, this was reported earlier here on this blog multiple times.
1. November 29, 2010, Andrew Cuomo; A Drag Queen; And Dragging New York State Bankruptcy And NY Bond Devaluation Out Of The Closet
The words, Mene, Mene, Tekel, u-Pharsin, written by a God of Justice Disrupt the Albany Victory Celebration. CuomoTARP has obtained two translations for the handwriting "Mene, Mene, Tekel, u-Pharsin" on the walls of the NY Capital Buildings. It was the same Aramaic words the Babylonian King Belshazzar saw on the wall in Babylon around 539 B.C.,
Now, the translation #2 for NY Bond Holders:
Mene: Count your bond values now
Mene: Count your bond values after the credit rate rises, inflation increases and bond desirability decreases *See notes 3 and 4 below
Tekel: Same as shekel or watch your money
U-Pharsin; Your bond values will be cut in half
The Words of the Prophet to bondholders: Sell now and not cry later
3. Dec. 14, 2010 . NY Bankruptcy, NY Bonds, NY Constitution, NY Pensions; The Resolution
Simple question: Will Congress bailout States or create a new Bankruptcy Chapter?
When New York State runs out of money, (technically bankrupt or bankrupt if the new Chapter 10 is adopted), the NY Constitution requires the Comptroller "shall set apart from the first revenues thereafter received ...a sum sufficient to pay such interest, installments of principal. ... at the suit of any holder of such bonds." so apply the moneys thus set apart. The comptroller may be required to set aside and apply such revenues as aforesaid, at the suit of any holder of such bonds.
Supposedly NY Pension Benefits are protected in this article of NY Constitution § 7. ...membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired.
No way out except for New York to limit its payments to NY bondholders in federal bankruptcy action.
4. The text of a new Chapter 10 Bankruptcy for States in, A Moody's Downgrade Means Inevitable State Bankruptcies Need A New Bankruptcy Chapter 10 For States
Federal debt for States' bailout will dry up after, "Moody's warned Monday that it could move a step closer to cutting the U.S. Aaa rating if President Obama's tax and unemployment benefit package becomes law." There is no hope for NY or California or Illinois or Michigan except for a Federal Bailout or bankruptcy. But there's no Federal bankruptcy law applicable to the States. (See this link for more details)
Since Congress will be reluctant to bailout States (where would it end?), we need a new Bankruptcy Chapter for State Bankruptcy to be called Chapter 10. Since States are sovereign entities and as such retain sovereign powers, Congress can simply make modifications to the present Chapter 9 for municipalities to create a United States Code Title 11 Bankruptcy Chapter 10 for States.
I've copied sections of the Federal Bankruptcy law for Chapter 9 and would remove text in blue and insert the red text. Other parts of this Chapter 9 would remain unchanged and be renumbered from §§
TITLE 11 CHAPTER
SUBCHAPTER I—GENERAL PROVISIONS (§§
SUBCHAPTER II—ADMINISTRATION (§§
SUBCHAPTER III—THE PLAN (§§
This chapter does not limit or impair the power of a State to control, by legislation or otherwise,
Notwithstanding any power of the court, unless the debtor consents or the plan so provides, the court may not, by any stay, order, or decree, in the case or otherwise, interfere with—any of the political or governmental powers of the debtor State; the debtor’s use or enjoyment of any income-producing property; the sovereign immunity of such debtor State.
(b)The chief judge of the court of appeals for the circuit embracing the
If the petition is not dismissed under subsection (c) of this section, the court shall order relief under this chapter notwithstanding section (b)The court may not, on account of an appeal from an order for relief, delay any proceeding under this chapter in the case in which the appeal is being taken; nor shall any court order a stay of such proceeding pending such appeal. The reversal on appeal of a finding of jurisdiction does not affect the validity of any debt incurred that is authorized by the court under section (c)or (d)
The holder of a claim payable solely from special revenues of the