Wednesday, July 31, 2013

Bankruptcy in Detroit: What’s Next? (video)

Bankruptcy in Detroit: What’s Next?: "Clips from a news conference, where Gov. Rick Snyder of Michigan and Kevyn D. Orr, the Detroit emergency manager, discussed how the city will move forward after filing for bankruptcy."


Monday, July 29, 2013

Detroit largest US city to file for bankruptcy, but for how long?

Detroit becomes largest US city to file for bankruptcy in historic 'low point' | World news | " . . . . The governor painted a picture of a city in collapse. Citizens wait 58 minutes for the police to respond to calls, compared to a national average of 11 minutes. Only a third of ambulances were in service in the first quarter of 2013. There are approximately 78,000 abandoned buildings in the city. The unemployment rate had nearly tripled since 2000 and the homicide rate was at its highest level in 40 years, he said. Detroit is unable to meet its most basic obligations to its residents, let alone its creditors. "The citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services," Snyder wrote. . . ." (read more at link above)

Who's next? LA, Oakland, or ???

Mish's Global Economic Trend Analysis: Detroit Files Chapter 9 Bankruptcy; Oakland, LA, Others on Deck; Pension Promises vs. Bondholders in Spotlight; The Bright Side: "Clearly this is not a surprise. Nor did the stock market treat it like a surprise. What's going to be a surprise . . . is when Oakland, LA, Houston, Baltimore, and numerous other cities declare bankruptcy to escape untenable pension and health-care promises." (read more at link above)


Friday, July 26, 2013

Chicago bond ratings slashed

Chicago bond ratings slashed - ""The current administration has made efforts to reduce costs and achieve operational efficiencies, but the magnitude of the city's pension obligations has precluded any meaningful financial improvements," Moody's said. The credit rating agency added that its negative outlook is based on the "dramatic spike in annual pension payments scheduled to take effect in the 2015 budget year." Moody's said it expects the payments "will place material strain on the city's operating budget." "The outlook incorporates the likelihood of continued growth in unfunded liabilities in the city's four pension plans given currently suppressed contributions from the city," Moody's added, noting its outlook also takes into account Illinois' constitutional protection of pension benefits."


Wednesday, July 24, 2013

Detroit bankruptcy, public trough empty

Monday, July 22, 2013

Police kill 7 year old girl in military assault on private dwelling

Whatever happened to the U.S. Constitution? Does anyone even care anymore in America?--

Detroit police officer on trial in death of girl, 7, during raid; reality TV crew was at scene - The Washington Post: "But some critics of the police department’s tactics believe it was used in the fatal raid simply to satisfy a crew from “The First 48,” a show that focuses on the crucial early stages of homicide investigations. Weekley’s trial could reveal how the TV crew’s presence influenced decisions that May 2010 night. “This was essentially a military assault on a private dwelling,” said Ron Scott, spokesman for a watchdog group, Detroit Coalition Against Police Brutality. “I think the administration of the police department wanted to show Detroit was tough on crime and show something exciting for television. “Police work is not television, and television work is not police work,” he said. “The two combined to make it a horrific night.”" 

Friday, July 19, 2013

Can the Government Actually Play Moneyball?

Probably not--the politicians, the lobbyists, the public unions--too many toes to step on--too many hogs at the trough:

How Government Can Actually Play Moneyball | New Republic: "Bridgeland and Orszag’s question is worth considering. Can the government play moneyball? They argue that the federal government, operating in a climate of austerity not experienced for decades, should invest in empirical studies to determine the most efficient ways to spend the government’s money, thereby saving taxpayers over the long run. This is similar, they contend, to when the cash-strapped Athletics turned to the data-driven empiricism of sabermetrics, “replacing scouts’ traditional beliefs and biases about players with data-intensive studies of what skills actually contribute most to winning.” In other words: Find out what the best practices are, and adopt them."

Good idea though.


Wednesday, July 17, 2013

Citi To Pay Almost $1B In Fannie Mae Mortgage Settlement

Citi To Pay Almost $1B In Fannie Mae Mortgage Settlement - Forbes: "Fannie Mae and Freddie Mac have spent the years since the financial crisis trying to force Wall Street to repurchase billions in shoddy loans sold during the boom years of the housing bubble. Monday brought another settlement from one of the country’s biggest banks." (read more at link above)


Friday, July 12, 2013

US Public Pensions: Another Reality Distortion Field

The increased cost of providing pensions shows up everywhere but in the US public pension market. And that is just wrong--

Pensions: Another discount rate illusion | The Economist: " . . . Some states have laws - even constitutional amendments - designed to protect public pensions. Now that may change in future, but until it does, these are pretty watertight commitments. (For those interested, the AEI has a detailed paper on the legal status of pension promises. as well.) As Messrs Biggs and Smetters write
the discount rate used to value future pension liabilities should reflect the fact that pension funds are guaranteed, even if the return on a pension's investments are not. More formally, the discount rate applied to the liability should be based on the risk of the liability, not the risk of any assets used to fund any liability.
. . . anyone in a DC or 401(k) plan who seeks to guarantee their pension via buying an annuity will find that the cost of buying a given income has risen; put another way, the same pension pot buys a smaller income. In short, the increased cost of providing pensions shows up everywhere but in the US public pension market. And that is just wrong."


Wednesday, July 10, 2013

Public Pension Problem Swamps Illinois

In Illinois (which has the largest net pension liability in the US), "denial" is apparently the "plan" to deal with the unfunded public pension liabilities--

Public pension costs swamp revenues of 10 U.S. states -Moody's | Reuters: "Ten U.S. states have public pension liabilities that are at least as big as their annual revenues, according to a Moody's Investors Service report released on Thursday that found the Illinois pension bill was equal to 241 percent of its revenues. . . . . Illinois is notorious for both its underfunded retirement system and the political battles over how to fix it. In March, the state settled Securities and Exchange Commission fraud charges for allegedly misrepresenting the depth of its pension problems. According to Moody's, Illinois has the largest net pension liability in the country, $133 billion, equal to $10,340 per person in the state . . . California had the second highest pension liability, $120 billion, but that is only $3,206 per capita in the state, which ranks as the country's most populous." (Read more at link above)

Monday, July 8, 2013

NSA Contractor Became Wealthy off US Government

Here's a story you never hear reported by "mainstream media"--nor the amount of political contributions paid by government contractors to political parties and politicians--

Leaker’s Employer Became Wealthy by Maintaining Government Secrets: "Edward J. Snowden’s employer, Booz Allen Hamilton, has become one of the largest and most profitable corporations in the United States almost exclusively by serving a single client: the government of the United States. Over the last decade, much of the company’s growth has come from selling expertise, technology and manpower to the National Security Agency and other federal intelligence agencies. Booz Allen earned $1.3 billion, 23 percent of the company’s total revenue, from intelligence work during its most recent fiscal year. The government has sharply increased spending on high-tech intelligence gathering since 2001, and both the Bush and Obama administrations have chosen to rely on private contractors like Booz Allen for much of the resulting work. Thousands of people formerly employed by the government, and still approved to deal with classified information, now do essentially the same work for private companies. . . ." (read more at link above)

This is why there will NEVER be any cutbacks or reform of the NSA et al. Follow the $$$$.

Friday, July 5, 2013

Government Workers Get Paid Working for Unions, Not Us

Ever hear of featherbedding? This is worse--

"With a backlog of almost 1 million unprocessed benefit claims at the Department of Veterans Affairs, it is shocking that over 250 of the Department's employees are on "official time," doing no work for veterans. It sounds unbelievable to most of us who have to show up at work to do a job, but "official time" is time that federal workers spend working for their unions, and not working for taxpayers." (source infra)

RealClearMarkets - While the Rest of Us Toil, Government Workers Get 'Official Time": ". . . VA employees on "official time" represent unions such as the American Federation of Government Employees, the National Federation of Federal Employees, the National Association of Government Employees, National Nurses United, and the Service Employees International Union. . . . a nurse in San Francisco, made $131,849 representing the NFFE. . . . (a government worker) representing the SEIU, was paid $120,544 not to work as a pharmacist at the VA hospital in Jackson, Mississippi. Contributions from these unions flow back into politics, the vast majority to Democratic causes. . . ." (read more at link above)

Wednesday, July 3, 2013

California, Illinois Pension Crisis -- more bad news is coming

  • Moody’s new credit standards for public pensions would nearly double the unfunded liabilities for state and local pension plans in California to $328.6 billion from $128.3 billion.
  • California has the second lowest credit rating at Standard & Poor’s of all 50 states; Illinois now has the worst. Moody's new standards would drop the funded status of these plans to 64%, versus a previous estimate of 82%, the Center said.
  • “By standard accounting methods, some state pension funds will run out of assets within as little as five years”
  • New rules will lower expected rates of returns on their pension assets, instead of the often overstated returns they now use to paper over holes in their plans blown out by bad investments.
  • Meredith Whitney says California is papering over budget holes with gimmicks, like raising taxes retroactively, pushing state expenses onto local towns and cities that can’t afford them, and underfunding their pension funds. "It’s so much worse than the rosy picture that the headlines suggest,” the CEO of Meredith Whitney Advisory group says . . .

Monday, July 1, 2013

Higher Education Hogs at the Trough

Glenn Harlan Reynolds: What's Really 'Immoral' About Student Loans - "If we want to solve the very real problem of excessive student-loan debt, college costs need to be brought under control. A 2010 study by the Goldwater Institute identified "administrative bloat" as a leading reason for higher costs. The study found that many American universities now have more salaried administrators than teaching faculty."