WITH a friend I visited an old industrial city in upstate New York. He wanted me to see the massive high school - a block square, three stories high - where he spent his youth. As we approached, we could see a sign. I thought it was an announcement, maybe "Congratulations Senior Class!" I was wrong. The sign read: "For Sale: For information on purchasing this building and site, contact the Board of Education." The school was boarded up.Smart money, at least cautious money, abandoned junk bonds some time ago. But what about cities? Are they junk? Bridgeport, Conn., is $12 million in the hole. It scotched street cleaning, closed parks, completely eliminated recreation programs and lifeguards, and halved its budget for libraries and the elderly. Yet it cannot find another dollar and must declare bankruptcy. The news caused barely a stir at America's financial market. Why? Because Bridgeport's credit rating was already just a shade above junk bonds - unlike Philadelphia with a solid junk bond rating. "We told people to sell Philadelphia three years ago," stated one market analyst. To buy Bridgeport or Detroit or St. Louis bonds is like buying - well - junk bonds. Adventurous lenders make a return, but everyone else loses. Philadelphia pays a usurious 25 percent to borrow funds. Scarce urban dollars go to len ders. Few get excited when a company goes belly up. "Going Out of Business" signs are common. New stores move into old quarters. Bankrupt corporations disappear. Bloomingdale's went bankrupt, yet customers still throng its counters. But bankrupt cities? They drop losing divisions like parks and schools. "Drop" spells close or sell-off. If there is money in them, why not cash in? The oldest laugh in the book is about the guy who purchases the Brooklyn Bridge. But the joke may be obsolete. East St. Louis recently sold its city hall. The opportunities are endless. Citizens will be able to purchase a park or school or library that a municipality is unloading. Imagine the proud investor reporting to a spouse that he (she?) picked up a nice little park with an adjoining high school with all the extras: gym, library, auditorium. The shrewdest financier, however, might be puzzled by what to bid. Is it a "fixer-upper"? Can it be put on a cash basis by charging admission? Should it be subdivided? Optimists must be disheartened by American cities. Urban America seems a series of decaying recreation centers, overcrowded or closed schools, libraries rarely open, cratered roads. New York City just locked Thompson Square Park. Why? Too much filth. Too many homeless. Too many problems. Need it be said? The story is not identical everywhere. Some cities, or rather some urban sections, prosper. Yet barriers protect islands of wealth from seas of want. Conservatives don't like to hear the answer is money. They are right - to a point. Yet the problem is not increasing, but decreasing funds. Federal monies to local and state governments have dropped by half over the last decade. Washington dispenses billions for space stations, wars, and bank bailouts - but nickles and dimes education and parks. What is even more bizarre, this strange behavior seems popular. A recent war - I'll leave it unnamed - in defense of a small illiberal monarchy caused more than 100,000 deaths. It yielded colonies of refugees and serious industrial and environmental damage. It produced a political situation hardly better than before it began. The war cost billions. One might think the massive sums expended and the resulting violence and suffering would anger citizens. Yet Americans seem delighted. A parade to celebrate this dubious war cost $12 million - the sum driving Bridgeport bankrupt. People are funny; money is funny. But where is the joke if America handsomely funds wars but allows its cities to slide into bankruptcy, collapse, and violence? We protect Kurdish refugees, but innocent children are gunned down in American cities. The day before July 4th, a Los Angeles family buried their son, an army private. He survived the Persian Gulf war, but not city streets, where he was killed in a "drive-by shooting." In these weird times, perhaps we should reverse our budgetary system. I propose to "federalize" municipal budgets and "municipalize" the federal budget. Have Washington totally fund - not control - city governments, services, education. In return, have local populations vote up or down the billions (and taxes) for space stations, Stealth bombers, and bank bailouts. You might see some funny results.