Another one bites the dust.

Not long after the City of Harrisbury’s bankruptcy in Pennsylvania, now there is another local government in America seeking protection from its creditors.

Finally, after many years of wrangling, Jefferson County of the State of Alabama is now officially bankrupted. Last week, the County filed the largest bankruptcy ever in America by a municipal government. This filing involved a bond issue of $3.1 billion that is more than twice the amount of which Orange Country of California had filed in the 90's.

The proceeds from the bond sale were spent on a new sewerage system. But borrowed money to finance expensive drain pipes were not the only liabilities that came with a variable rate bond issue. The County also got itself into the muddy water by entering an interest rate swap deal. The intention to protect itself from the fluctuation of borrowing costs on a large bond issue was a prudent one. But the outcome of the bet on interest rates had not been favorable to the County. In addition, there were many hikes on the County's sewerage rate in the past. Apparently, the extra revenue from the higher charges could not help the County's finances either.

Now while the courts in Alabama mete out measures to put the Jefferson County’s treasury in order, 750,000 County residents will be on the hook of paying more and more their good money to flush their toilets in the future.

With the way the economy is now in America, I do wonder which government or local district will be the next one in such an unenvious position. - Ayee