More Misery for America's Most Miserable City

More Misery for America's Most Miserable City


By Al Lewis
Published March 02, 2012
FOXBusiness


Stockton, Calif., has ranked among the U.S.'s least literate cities, most obese cities, most crime-ridden and dangerous cities, and now it ranks among the nation's most insolvent cities.

The Los Angeles Times called this town of 290,000 in California's Central Valley "Foreclosureville USA." Last year, Forbes magazine said Stockton had been "ravaged by the housing bust" and placed it No. 1 on its list of "America's Most Miserable Cities."

"An article like this is the equivalent of bayoneting the wounded," Stockton City Manager Bob Deis told Forbes at the time. "I find it unfair. .. The people of Stockton are warm. The sense of community is fantastic."

The wounded, with their fantastic sense of community, turned out in droves Tuesday night for Stockton's city council meeting. There, Stockton's leaders decided to default on bond payments and start a newfangled mediation process with creditors, unions and debt holders in the unlikely hope of avoiding a Chapter 9 bankruptcy filing.

If you want to read about the U.S.'s economic recovery, pick up almost any newspaper. But if you want to see a truly bewildered people, a community that is still reeling from what the economy and their government has done to them, there's a six-hour video of Stockton's city hall proceedings on the city's website. (Here's a link to the video: http://tinyurl.com/6tkhwz8.)

"We definitely need the help of the Lord," Mayor Ann Johnston declared in calling for the opening prayer.

From there, the microphone went to a diverse cast of characters, few of whom had any clue as to how the city got into its devastating financial predicament, or how it could ever get out of it.

One woman used the opportunity to denounce police corruption, and demanded the city investigate a car accident she said involved a police officer under the influence of alcohol. One man complained that little kids are racing around his neighborhood in go-karts because there are no police to stop them. And another woman blissfully declared: "Poetry is rampant in Stockton."

Among those who stayed on topic, one woman made her second demand for the mayor's resignation. A man suggested city leaders try living on the streets like he and his cancer-stricken wife before making its decision. And another woman noted the city has not yet provided citizens with accurate financial data. "Unless we know what happened to the money," she said, "I don't know how we're supposed to trust you to fix it."

The warm Stocktonians did not speak in favor of the city filing bankruptcy. Instead, they spoke of saving the city's arts commission. Supporting its small businesses. Shopping with local merchants instead of the city's Wal-Mart stores. And keeping faith with the city's unionized workers, especially the police, because, as one young man explained, his brother has been robbed and assaulted twice.

"Everybody should think positive instead of thinking negative," an elderly gentleman declared. "The city's not going bankrupt. Think positive."

Another warned against hiring consultants: "Instead of people with degrees, we need people with degrees in common sense to solve our problems."

Common sense would dictate filing bankruptcy immediately. This is what U.S. companies do before getting in over their heads. This is what wealthier Orange County, Calif., did in 1994 after investing in derivatives. What makes Stockton any different--other than it doesn't seem to have a clue?

"One of the things I've been asked, at least 100 times: How did we get here?" Deis, the city manager, said. "It's an accumulation of decisions and mistakes over 20 years."

Among the key mistakes, Deis blamed the city's decision in the 1990s to offer generous health benefits to its retirees, a dearth of independent audits, astonishingly sloppy bookkeeping, and decisions to borrow hundreds of millions of dollars for civic projects, and then back the debt with the city's general fund.

Along the way, members of city council stopped Deis to ask questions like, What is the general fund? What is it used for? And, Where do the city's revenue come from?

Now, I am not regurgitating all this just to say that Stockton has become a laughing Stockton.

I take a broader, more generous view. I wonder if Stockton's sufferings and shortcomings are different only by degree: An overly optimistic and undereducated people, electing ignorant and misinformed leaders, piling up debt, until the one day when they can't.

It's a lot like so many other places I know.

(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at al.lewis@dowjones.com or tellittoal.com)

Please read complete article at link below:

http://www.foxbusiness.com/economy/2012/03/02/more-misery-for-americas-most-miserable-city/

http://www.youtube.com/watch?v=_Kk7O0h--rg&feature=related