November 10, 2011
By: Brenna Lemieux
When Harrisburg, Pennsylvania’s capital city, filed for Chapter 9 bankruptcy protection last month, some people were less than thrilled. Notably, Harrisburg’s mayor, Linda Thompson, and the state government in Pennsylvania reportedly think that the bankruptcy filing was illegal under state law.
The city council members who filed the petition, though, insist that their attempt to seek bankruptcy is completely valid. Now, the Washington Examiner reports, a federal judge will hear arguments from both sides on November 23.
The hearings will determine whether or not the city can go ahead with its bankruptcy filing; if the judge rules to permit the bankruptcy, the city will then have to go through the entire bankruptcy process.
But if Pennsylvania’s legislature has its way, no bankruptcy will be necessary: the State Senate is apparently moving forward legislation that would allow the governor to declare a state of fiscal emergency for Harrisburg and send an appointee to the capital to handle financial matters.
Pennsylvania’s bankruptcy woes by no means have the monopoly on dreary financial news right now. The Bureau of Labor Statistics announced last week that the nation’s Misery Index (a measurement of the unemployment rate plus the inflation rate) has reached 13.0, a 28-year high.
While the Misery Index is widely acknowledged as being an unscientific measurement of current economic conditions, it can nevertheless communicate important information about the current state of the economy.
The index jumped after September’s unemployment numbers remained stuck at 9.1 percent and the BLS announced that consumer prices rose by 3.9 percent in the last year.
High unemployment plus significant inflation could mean serious financial hardship for millions of Americans – and may even point toward a slip back into recession. Other signposts (including increasing numbers of business bankruptcy filings and more stirrings among municipalities seeking or considering bankruptcy protection) also seem to point to a double-dip recession – but as of now, nothing is official.
The good news (if it can be considered that) is that the White House’s 2012 Budget Analysis reportedly forecasts economic growth, along with a decrease in unemployment, between now and 2014. The bad news, though, is that most experts predict that unemployment will not drop below six percent until at least 2015.
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