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Northern California City Declares Bankruptcy

 It is a very harsh sign of the times, when a whole city in Northern California can’t meet their bills and declares bankruptcy. It isn’t just the little guy being hit by this non-declared recession and hard times. It seems the reverse trickle down has trickled up instead, in the city of Vallejo. Bankruptcy is an extreme measure, but apparently this Northern California city felt it had no other option.

The Northern California city of Vallejo has over 100,000 residents. This is no little ghost town in the middle of a disappearing area. Vallejo is a city sitting in the seemingly prosperous San Francisco bay area. It seems few places are immune to the slump in the economy. Suburbs in the bay area touch borders with each other. What strikes one, can very definitely spread to another, given the right conditions. Hopefully this bankruptcy Vallejo is filing for, isn’t the beginning of a domino game.

The effect of declining house sales and building doesn’t just hit the housing business. Local retailers are feeling the pinch. Follow that disturbing trend back up the chain, and you realize, distributors, manufacturers and workers get hit too. It is a vicious cycle.

The San Francisco bay area suburb city, is just another victim of the recession we are supposedly not in. The city of Vallejo has lost a lot a revenue from declining retail sales and the bust in the housing industry. It isn’t just individual families being hit by the huge slump in house sales. It seems it has spread like a bad virus, right up into the functioning abilities of a city. Are other cities going to be forced to follow suit soon? Let’s hope they are not a trendsetter in this slumping economy.

The drawback to filing to bankruptcy are many. If they don’t succeed in their quest with the legal system to get bankruptcy status, they could end throwing more good money after bad, then be in more of a hole than they already are. Besides that, the people not getting paid, because the city or anyone else claims bankruptcy, get hit too. Bankruptcy is definitely a black eye, no matter what spin you give it. Sometimes though, you have no choices left but to file bankruptcy. Other cities have filed bankruptcy in the past, and eventually came back stronger.

The San Francisco Bay Area is getting a heavy dose of foreclosure blues. The Northern California city of Vallejo isn’t the only one being struck by foreclosures and lost revenues. Cities count on housing industry sales, and a thriving consumer industry to fund much of their budgets. If the increasing foreclosure ads and signs are any indicator, there are a lot of people in trouble in the bay area.

Local real estate businesses are now not only selling houses in normal sales, they are doing a business in foreclosures. They have to survive in tough times too, and those houses have to get sold somehow. The banks don’t want all that dead weight hanging on them. The advertisements can even be seen on local billboards. It is a sad shift in how they are forced to find business.

Some local mortgage companies have shut their doors or downsized, laying off long time employees. It makes one wonder how many of those workers may end up in the same boat, filing for bankruptcy or losing their homes. Consumers all over are having to do some downsizing and major cutbacks in their spending, to be able to hold on to what they already have.

The Northern California city of Vallejo is trying to survive in increasingly hard economic times. Filing for bankruptcy seems to be their method to get through this non-recession, recession. Let’s hope this desperate step isn’t going to be repeated throughout the country. Someone has to pay the debt.
By: Dreamweaverr
Published: 05/17/08


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    8 Posted Comments:

    @ 1:26 pm 05/17/08 by Cindy
    OMG!
    Laurie this is a great article! It's so hard to see what is going on around the country and not be more than bit worried. nice reporting!
    Reply to this Comment

    more than a little frightening

    @ 2:03 pm 05/17/08 by Laurie
    It is more than a little frightening. I keep hearing more and more storiesabout cutbacks, lost jobs, lost homes, you name it, from people across the country, from all walks of life, and all industries. It is not just limited to a few.

    Here is a commentary on it:

    http://www.associatedcontent.com/article/628887/no_mr_bush_i_agree_we_arent_in_a_recession.html
    Reply to this Comment

    bankruptcy

    @ 7:44 pm 05/17/08 by Sally
    Great Article. I hope it doesn't happen to my city.
    Reply to this Comment

    what next

    @ 3:24 pm 05/18/08 by Angela Blak
    i wonder how many people have to fall before they do some thing about it
    Reply to this Comment

    vallejo bankruptcy

    @ 1:00 pm 05/19/08 by reality bites
    Wow. This article completely misses the reason for Vallejo's bankruptcy. It is the giant raises and incredible benefits that the city has been lavishing on public employees. The housing problems merely made it happen sooner. Vallejo would have been bankrupt a couple of years down the road even if the economy was roaring along because the city council has been in the pocket of the unions.
    Reply to this Comment

    actually

    @ 4:17 pm 05/19/08 by Lynn
    Getting decent benefits and raises, is hardly "lavishing" something on public employees. They earn what they get. Yes that is one aspect of their problems,the battles with the unions, but without the income to pay their bills and employees, which does in part come from housing and local businesses, they can't pay bills. Income for the city of Vallejo, and for a lot of cities has dropped dramatically. Many places are putting needed projects on hold for the time being.
    Reply to this Comment

    Vallejo Bank Rupt

    @ 8:57 pm 05/21/08 by CC
    Too bad, the city has so much going for it yet the people who live here must pay for it. The very people who contributed to this are the only ones who will profit, shame on them for leaving the rest of us to clean up the red. Sorry, I cannot wait 5 plus more years until it rides the storm out...must leave soon.
    Reply to this Comment

    @ 10:11 pm 05/21/08 by Lynn
    sadly the storm seems to be spreading.
    Reply to this Comment

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