Hurricane Irene-sparked Municipal Bankruptcies on the Rise?


The buzzword on everyone’s lips is Hurricane Irene, especially if you live on the East Coast of the United States. Lots of news, alerts and warnings are being issued on the hurricane and its movements across the eastern seaboard. As individuals and families we have to brace ourselves and take whatever precautions practically possible to face the onslaught of Hurricane Irene. But for counties and municipalities, the total cost in wreckage could pose insurmountable financial problems.

Many counties and municipalities across the US are heading towards bankruptcy because of the prolonged economic crisis. First there was the subprime mortgage crisis and now there’s the trillion-dollar budget deficit crisis, not to mention the economic woes of our European trading partners. All these spell potential financial ruin for many countries, let alone smaller regions like counties or municipalities. Despite market predictions and bond-selling strategies to raise funds, many counties and municipalities are not adequately prepared for large-scale natural disasters like Hurricane Irene.

At best, the municipalities are able to deal with the minor meteorological blips like the occasional heavy snow storm or forest fire, but generally, America’s municipalities are currently living on razor thin surpluses, if any. All it takes is one strike from a very capricious and hardly predictable mother nature to tilt the balance between financial status quo and financial bankruptcy.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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