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Economics question
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I saw this from Mayor Nagin and immediately wondered if this is true or is he making wild ass statements again. I don't understand economics enough to know how can a city just all of a sudden become bankrupt? Did the hurricane really cause this?

Mayor says New Orleans now bankrupt

Sep. 13, 2005 at 9:02AM

New Orleans Mayor Ray Nagin says the hurricane-devastated city is bankrupt and is scrambling for loans to pay its employees through the end of the year.
"Technically today we're out of cash," Nagin told reporters in Baton Rouge. "The city is bankrupt ... We have no money."
He said the city spent its last available cash last week on city employee payroll and was seeking bank loans, federal assistance and other means of financing to continue paying its bills and staff, the New Orleans Times Picayune reported Tuesday.
However, Nagin was emphatic state and federal officials would not railroad through city reconstruction until it had passed city muster.
"I don't want anybody outside of New Orleans planning nothing as it relates to how we're going to rebuild this city without us signing off on it," Nagin said
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Re: Economics question [armytriguy] [ In reply to ]
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"I don't want anybody outside of New Orleans planning nothing..."

ughh nice use of the English language there.

To the issue at hand it isn't really an economics question, but more of a business one. New Orleans is going to subsist mainly on tax revenues (sales, hotel, etc). Now that all businesses are shut down there aren't really any taxes being collected so the city doesn't have any income, but since they still seem to be keeping their employees they still have to cover those payroll expenses and with no income to cover the expenses it won't take long for any municipality to go bankrupt as they don't typically have cash on hand.
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Re: Economics question [Tyrius] [ In reply to ]
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"I don't want anybody outside of New Orleans planning nothing..."

ughh nice use of the English language there.

To the issue at hand it isn't really an economics question, but more of a business one. New Orleans is going to subsist mainly on tax revenues (sales, hotel, etc). Now that all businesses are shut down there aren't really any taxes being collected so the city doesn't have any income, but since they still seem to be keeping their employees they still have to cover those payroll expenses and with no income to cover the expenses it won't take long for any municipality to go bankrupt as they don't typically have cash on hand.




Isn't this akin to living paycheck to paycheck? Don't city governments try to be fiscally sound and "put something away for a rainy day"? (pun not intended in New Orleans case)
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Re: Economics question [armytriguy] [ In reply to ]
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"Don't city governments try to be fiscally sound"

Sorry, but I laughed pretty hard when I read this. I'd laugh even more if you took the word city out of the sentance.

So, let's take a look at a city gov't's fiscal decision. Good news, we've got 10,000 left over in our budget. What should we spend it on: new computers, new phones, new furniture, go to training, the list is endless but NEVER considers not spending the money. If any department has a budgetary surplus in one year they can expect to have their budgets cut by that amount the next year and no one wants to have their budgets cut, so they find some way to spend the money.
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Re: Economics question [armytriguy] [ In reply to ]
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I know little of economics, but I assumed that the city was bankrupt the minute the levy broke. Government payroll and operational expenses come from its tax base, and the destruction of the real estate and businesses in the city pretty much took care of that.

And I don't think it's asking too much to expect public figures to speak proper English.

The devil made me do it the first time, second time I done it on my own - W
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Re: Economics question [armytriguy] [ In reply to ]
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I've always assumed most cities, counties, etc were nothing more than a tax base that just barely supports as many loans and recurring expenses as possible. Cut off the revenues for as little as a few days, and the tank is empty.

I doubt there are many exceptions to this. Even a slight dip in tax revenue can kill a local government. NO lost nearly 100% of their revenue and won't be getting it back for many months. Even when it does return, it will slowly build from a trickle.
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Re: Economics question [DualFual] [ In reply to ]
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And I don't think it's asking too much to expect public figures to speak proper English.


I think its just the way most people speak in the deep South. I don't have a problem with it. W's English isn't always perfect, either.
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Re: Economics question [TB in MT] [ In reply to ]
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In Reply To:
I think its just the way most people speak in the deep South. I don't have a problem with it. W's English isn't always perfect, either.
Yes, it is exactly the way most poorly educated people here in the South speak, and I do have a problem with it. If you are representing your city (or nation) you should at least make an effort to sound reasonably educated. Regional dialect has nothing to do with laziness and tolerance of improper grammar.

The devil made me do it the first time, second time I done it on my own - W
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Re: Economics question [DualFual] [ In reply to ]
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It's NUCLEAR dammit!
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Re: Economics question [Wolfwood] [ In reply to ]
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Don't get me started.

The devil made me do it the first time, second time I done it on my own - W
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Re: Economics question [DualFual] [ In reply to ]
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Is our children learning?

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"A society is defined not only by what it creates, but by what it refuses to destroy."
John Sawhill
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Re: Economics question [DualFual] [ In reply to ]
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"If you are representing your city (or nation) you should at least make an effort to sound reasonably educated."

I agree but mayor Nagin doesn't sound too uneducated to me ... I have heard a lot worse from politicians. I'll admit he needs to answer some questions and admit some culpability, though, that would help him more than good grammar ... Aren't there entire book dedicated to our president's questionable grammar skills and vocabulary?
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Re: Economics question [TB in MT] [ In reply to ]
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Aren't there entire book dedicated to our president's questionable grammar skills and vocabulary?


I didn't think we were talking about the President, but he no talk so good. Although, that has seemed to work well for him as the people running against think he is stupid and they can roll over him. They are either wrong or Rove is just too good at the political game.
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