She also mentioned state flight risk (state arbitrage), where companies or people leave for more favorable business conditions. Imagine if people left a city in mass exodus. What would happen to the tax base? Would defectors be treated like short sellers? Detroit is going through a similar event, but it was years in the making. They are shrinking the city, shutting down services and offering incentives for people to move. FYI: Illinois increased business taxes by 46 percent and the individual income tax by 66% (Fox Video). Watch the CNBC interview after the jump.
1. Bloomberg: "JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said he expects more U.S. municipalities to declare bankruptcy and urged caution when investing in the $2.9 trillion public-debt market." (see his interview on CNBC)
2. Bloomberg: "About 20 minutes after Christie, 48, told a town-hall meeting in Paramus today that health-care costs “will bankrupt” the state, the New Jersey Economic Development Authority cut its tax-exempt school-related bond offering by more than half to $712.3 million."
3. WestLaw News and Insight: "CHICAGO, Dec 29 (Reuters) - Indiana lawmakers next year will take up a bill that would establish a process to aid financially struggling local governments, ultimately allowing them to file for municipal bankruptcy (Chapter 9).
4. Bond Buyer: "Daniels this week called the measure — Senate Bill 105 — a "useful mechanism" for helping fiscally stressed cities that would help provide clarity on the topic of municipal bankruptcy."
5. Bloomberg.com: “Hundreds of jurisdictions” in the state may face financial collapse in the next three to five years, Rick Snyder, Michigan’s newly elected Republican governor, said Nov. 19.
