The city of Stockton, California declared bankruptcy. What is the cause and how did they get to this point? Rush got to the heart of the matter.

"This is a city in bankruptcy because it cannot pay its promised pensions to union employees," he explained, adding that bondholders put up a fight saying that they were the ones suffering from the bankruptcy.

Rush responded to that argument: "Well, it's real simple, folks. The bondholders don't need the money. They are rich Wall Street maggots. They're investors."

He provided a deeper explanation of this as he brought up how Stockton now has something in common with General Motors. Could this be the start of a trend in California?