Economic Reality: Californian city of Vallejo declared bankrupt

The fate of Vallejo - official motto: “City of Opportunity” - has sent shock waves across the country as scores of other local authorities also struggle to balance the books in the face of slumping incomes.

Councillors took the drastic step because falling property tax revenues mean they can no longer pay the generous salaries negotiated for firefighters and police officers during the flush years.

Read full article in Telegraph.co.uk