In what will likely be the first major municipal bankruptcy of the New Normal, Harrisburg is likely about to shut the gates. In an interview conducted with restructuring site Debtwire, the City's controller Dan Miller said Harrisburg would be better off filing for Chapter 9 than trying to restructuring finances under Act 47, the Financially Distressed Municipalities Act. He added that the latter has never solver the problems of any municipality that entered the program and the institution of a commuter tax in Harrisburg to avoid a Chapter 9 would be unworkable. On the other hands, "when reached for comment, long-time opponent of a Chapter 9 filing for the city, PA governor Ed Rendell said Harrisburg officials have not given him any indication that they will seek Chapter 9 protection. Rendell said he hopes that the city "will either sell assets or seek Act 47" before making a Chapter 9 filing." Alas, it appears the nearly bankrupt city has run out of options.

Selling assets such as parking garages, the City Island amusement center and even the Harrisburg incinerator would leave the city in a worse financial situation than simply filing for Chapter 9, Miller countered. The city has not even received any interest from potential acquirers about the incinerator, according to Bill Cluk, a former Harrisburg Authority board member.

Harrisburg has long been entangled in a bitter sale attempt to dispose of its incinerator, which many have seen as a Panacea for the city's financial problems. Alas, as Debtwire notes, a sale of the incinerator would net enough cash to only cover a third of the $280 million in debt held by the Harrisburg Authority.

The actual date of the filing would likely be in under 2 months: "Miller said that Harrisburg's decision on whether to file Chapter 9 protection could arise as early as mid-September when the city has to make a $3.7 million bond payments."

Yes, you read that right: in some universe parallel to that of the Fed, $3.7 million is still a large number. Considering that total US debt issuance each week is about $100 billion, it is very likely that the Treasury will likely step in on this "one isolated case", followed by another, and another, until the several hundred billion in state and local government underfunding is completely transferred to the Federal balance sheet as well. And why not - it is not like anyone has any illusions that the US can avoid defaulting at this point.