This is the future of Americans on Social Security: RI town files for Bankruptcy, $17 million income, $80 million in JUST RETIREMENT LIABILITIES

By overpromising no one gets anything.

The police, the fire, the sanitation, the city workers all of whom paid in for years and DEPEND ON THE PENSION FROM CENTRAL FALLS RI, are now in jeopardy of losing it all.

Central Falls, Rhode Island, one of a handful of U.S. cities and counties facing fiscal collapse in the wake of the economic recession, filed for a rare Chapter 9 bankruptcy on Monday.

The bankruptcy filing, a risky and potentially expensive move that could freeze the city out of the U.S. municipal bond market, marks a symbolic blow as state and local governments struggle to pull themselves out of the recession.

The smallest city in the smallest U.S. state made the filing as it grappled with an $80 million unfunded pension and retiree health benefit liability that is nearly quadruple its annual budget of $17 million.

“This is a wake-up call for other struggling towns,” said Eileen Norcross, a senior research fellow at the Mercatus Center at George Mason University. “States should be looking at Rhode Island and saying, ‘How can we avoid this?”

And then, Reuters hits with the ‘but don’t worry’ line….

Still, dire predictions of mass municipal defaults made late last year by Wall Street analyst Meredith Whitney have not come to pass. A string of failures could rattle the $2.9 trillion U.S. municipal debt market. The Central Falls filing was not the start of a “huge nation-wide trend”, said Adam Stern, a vice president at Boston-based Breckinridge Capital Advisors, a municipal bond investment firm.

Sorry dude, when you overspend and overpromise, THIS IS what happens when a minor decline kills the ponzi game.

Canaries in the coal mine.

Second one in a week.

Related articles

• Central Falls, R.I., files for bankruptcy; layoffs loom (usatoday.com)
• Central Falls Becomes Second Muni Casualty of 2011 (blogs.wsj.com)