SGM Metals: Another US City Files for Bankruptcy as US Recovery Gains Steam!

July 18, 2012 - PRLog -- LA Times reports: [ San Bernardino on Tuesday became the third California city in less than a month to seek bankruptcy protection, with officials saying the financial situation had become so dire that it could not cover payroll through the summer. The unexpected vote came at the suggestion of the interim city manager, who said the city faces a $46-million deficit and depleted coffers.

"We have an immediate cash flow issue," Andrea Miller told the mayor and seven-member City Council. Mayor Patrick Morris called the decision, passed on a 4-2 vote, a "stain" on the city. But he said the only other option was "draconian cuts" to all city services, including the police and fire departments. "It means the bills will be paid," said a dejected Morris, who is not a voting member of the council.

The city's fiscal crisis has been years in the making, compounded by the nation's crushing recession and exacerbated by escalating pension costs, lucrative labor agreements, Sacramento's raid on redevelopment funds and a city reserve that is tapped out, officials said.
Miller told the council that the city faced major deficits for the next five years.

The deficits remain even after the city negotiated $10 million in concessions from employees and slashed the workforce 20% over the last four years. The expected bankruptcy for the city of 209,000 residents is certain to heighten concerns about the fiscal forecast for other struggling California cities, which have been slashing jobs and services as tax revenues have declined during the prolonged economic slump.

San Bernardino "is still facing the possibility of insolvency due to a variety of issues including accounting errors, deficit spending, lack of revenue growth and increases in pension and debt costs," according to a budget analysis prepared for the council. "The city has reached a breaking point and faces the reality of deficient cash on hand to meet its contractual and debt obligations," the report said.]

How many US cities have to file for bankruptcy before the nation begins to understand what exactly is going on here? Our nation is not in a recovery, instead we have city after city realizing they have no hope of balancing their budgets and keeping their governments afloat since the economy has been destroyed beyond repair. There was once a day, before the saturation of America by WalMart, when Americans owned small business’s that supplied everything from dry cleaning services to lumber and groceries for their respective communities. These were the upper middle class citizens who paid higher taxes to the local government and supported a majority of the local governments budgets themselves directly as a result of the commerce they conducted in the community.

Remember that the local governments bent over backwards and offered Wally World exceptionally low tax deals in exchange for what the government promoted as a job creation plan for the community itself. Yes they did offer a 1 yr. construction project to build the store as well as lifetime minimum wage opportunities to make the registers beep, but is this really a fair trade for the multi-generation small business’s that were wiped out by the introduction of a global behemoth in to the local ecosystem? Of course it is not, but you have to look even deeper than this to realize why the future is not is not all hopey and changey but instead a period of very painful re-adjustment still to come. The next layer of this transition is one of stark contrast to the past 3 decades of small business growth and employment of your fellow citizens. Remember that it is small business that are responsible for the employment of tax payers not the big multi national conglomerates who are all too willing to outsource their labor requirements in the interest of the all mighty profit. So if small business has been all but wiped out with higher taxes to cover the bailouts and stimulus we were all signed on to and the new Obamacare costs that are ensuring many sleepless nights for business owners, where exactly do you think the hiring of tax payers will come from? Remember that these big behemoths are outsourcing their labor as much as possible, not to mention the federal govt. gives these companies tax breaks as well as actual tax monies to make the move in the first place out of the nation! So it is up to the small business owners to open a new business, or expand their current operations in the face of rising tax obligations by the day and the looming threat of Obamacare crushing their operating budgets? How do small business’s survive if they aren’t able to import their goods from China at the same volumes as a corporate giants like WalMart? And if the small biz could do that hypothetically, who the would employ the unemployed at home? Maybe it’s time to accept that the brilliant ‘service sector economy’ crafted by Greenspan and Bush means NO jobs except govt. employees, waiters, bus boys and WalMart clerks to accept the food stamps and all our goods are produced overseas.

Even more damning in this dilemma is the fact that US consumers have been ruined by the “Low Cost Super Store” offering rock bottom prices for the outsourced goods they offer and this all but guarantees that consumers will be unwilling, or unable, to afford the cost of a locally produced good and the costs that come along with the burdens that have been forced upon those business’s to keep their doors open. As disposable income continues to evaporate consumers will be forced to stretch their pennies even farther than ever before in their lifetimes and this will all but assure WalMart that anyone spending money will be coming their way. Not to mention the fact that WalMart is the “Food Stamp Super Store” and is actually one of the better performing companies in the US Great Recession because of this fact. Imagine that a small business would have to get approved to accept these alternative forms of payment if they were to realistically establish a game plan to retake any market share what so ever from the corporate giant. SO the higher costs of locally produced goods along with the inability to accept food stamps for many goods they would produce and the inescapable dominance of the retail giant all but makes the opportunities for the small business pretty much a joke. So then the question becomes if the small business is no longer there collect the taxes from to support the local governments operating budgets and the corporate giant isn’t responsible to pay hardly any taxes what so ever, how will that local government cover its budgets and avoid bankruptcy? Well they will probably do what every other struggling local govt. has done, cut the police & fire dept. in half and shut down the local libraries and parks to cover the shortfalls, making the communities wildly unsafe as crime levels rise to match the reduction in preventative forces. Who said the American dream was dead?

Enough is enough! Establish your “Plan B” in physical gold & silver bullion now and establish your insurance policy should I be right about this. I can assure you that this is the real story and not what the slick politicians & talking heads are telling you on the TV every night when they say we have been in a recovery since June of 2009 and there are green shoots in the economy. I challenge you to speak to business owners in your area regarding the statements I have made here. I challenge you to disconnect from the group think and begin to think for yourself. It is NOT unpatriotic to question the validity of the recovery and to make arrangements in the best interest of your family by seeking out hard assets that would allow you to remove your families finances from the collateral damage zone should this get any worse. Do what is best for you and not Wall Street and the banks, we tried that 3 years ago and look what it got us! It is far better of a strategy to PREPARE your portfolio than to attempt to REPAIR your portfolio after disasters like what happened in the 4th quarter of 2008.