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10 Signs That America Is On The Verge Of A Horrible Municipal Debt CrisisMarch 22, 2012 Is America on the verge of a horrible municipal debt crisis? Unfortunately, the answer is yes. From coast to coast there are an increasing number of cities, towns and counties that are rapidly going broke. Financial analyst Meredith Whitney took a lot of heat when her prediction of a municipal bond crash in 2011 did not happen, but she was not fundamentally wrong in her analysis. A horrifying municipal debt crisis is starting to unfold right in front of our eyes. It just did...

If Economy Is Recovering, Why Are U.S. Cities Going Bankrupt? Interest-Rates / US Debt Mar 09, 2012 - 01:16 PM By: EWI As pundits chatter about an economic recovery, 80 miles east of San Francisco you'll find a city (pop. 292,000) facing bankruptcy: Stockton is on the verge of becoming the largest city in the United States to declare bankruptcy... San Francisco Chronicle (3/4) Bloomberg reports (2/25) that it costs the city $175,000 just to get a consulting firm's fiscal evaluation. Management Partners issued a report which said: ...the city took on a large amount of debt in anticipation of...

Of all Super Bowl commercials, Chrysler's latest pro-America, Imported-from-Detroit pep talk may be getting the most attention. As you've no doubt seen by now, Clint Eastwood's steely gaze and growling baritone speak of a county knocked down but not out. A country that's hurting, scared and angry. A country that's lost its AAA credit rating. A country that needs to pull together to pick itself up. The advertisers are trying to tap into the sense that all's not right in the economy. Something is fundamentally broken, and, until it's fixed, problems like chronic joblessness, bombed-out home prices and stagnant wages...

It's good news in the sense that a state going broke is one way to stop the spending. A better way, of course, is to cut the budget.Alas, Governor Moonbeam doesn't appear to have it in him: California will run out of cash by early March if the state does not take swift action to find $3.3 billion through payment delays and borrowing, according to a letter state Controller John Chiang sent to state lawmakers today.The announcement is surprising since lawmakers previously believed the state had enough cash to last through the fiscal year that ends in June.But Chiang...

All hail the wondrous Arab Spring! It is one year ago today that the protests in Cairo's Tahrir Square began, ending in the fall of the Mubarak regime. It was fitting that President Obama mentioned it at the State of the Union, since he had a major role in that "wave of change," calling for Mubarak's ouster and signaling to the Egyptian military who now control the country which way to turn. It's well worth examining how things are going. The parliamentary elections have been held, and the Islamist Muslim Brotherhood and the hardcore Salafist al-Nour Party won -- surprise!...

The Collapse Of MF Global Basically Started On Corzine's Day 1 Ben Walsh Dec. 12, 2011, 8:36 AM Image: AP MF Global Client's Counsel Blasts Jon Corzine Calling His Prepared Testimony 'Cowardly' And A 'Cop-Out' Five Reasons Why Wall Street Enjoyed Today's Corzine HearingMF Global's Bankruptcy Trustee Finally Pinpointed The Shady Trades In Customer Accounts When Jon Corzine, on a visit to MF Global's Chicago office shortly after becoming CEO in 2010, Dealbook reported that he discovered that a young trader was successfully using a small account to trade the firm's capital, he was enthralled. With widening eyes, Corzine suspended...

Crystal Cathedral Ministries has chosen Chapman University to purchase its 40-acre Garden Grove, Calif., property as the megachurch tries to pull out of an estimated $50 million debt. Chapman was among several interested buyers, which included Hobby Lobby and the Roman Catholic Diocese of Orange. The university, which offered $50 million for the campus, will reportedly allow Crystal Cathedral to "continue serving its mission," by letting it lease, and eventually buy back its core buildings, The Los Angeles Times reported. “Chapman University is pleased and honored by the Crystal Cathedral Ministry Board’s decision to select the University as the buyer...

Bankruptcy: From Greece To Rhode Island By Frederick SheehanJuly 25, 2011 07/25/11 Central Falls, Rhode Island faces a plight that should be studied for its application elsewhere. It is nearly out of money. This is common news today, whether in Greece or California. The various parties are assumed to possess a means to carry on. This is assumed because it is generally so. The banks had the Fed; General Electric had the Fed and the FDIC; Greece has the ECB; California is prepared to launch a bridge loan. Despite the band-aids, the trend towards insolvency continues. Central Falls has reached...

Jefferson County To Lay Off One-Third Of It's Workforce To Avoid Largest-Ever Municipal Bankruptcy Grace Wyler Jun. 7, 2011, 10:36 AM Alabama's troubled Jefferson County may be forced to lay off nearly 700 employees - one-third of its workforce - as it struggles to avoid what would be the largest municipal bankruptcy in U.S. history. County officials will meet today to discuss the layoffs, which are part of a plan to reduce the county budget by $12.3 million, The Birmingham News reports. The cuts are needed to make up for a $70 million loss in occupational tax revenue this year....

Just as Vallejo, Calif., starts to pull itself out of municipal bankruptcy, Stockton, its Central Valley neighbor, hurtles towards financial collapse. Calling Stockton's fiscal problems "chronic and severe," city officials have declared a state of fiscal emergency for the second time in two years, The city is facing a $37 million budget gap this year, a 60% increase from last year's $23 million shortfall, according to Bond Buyer. City officials project the budget deficit will grow to $48 million by 2014 if nothing is done to reign in ballooning employee costs. Public safety personnel costs alone eat up 80% of...

‘The Hospital Insurance Trust Fund is projected to become exhausted in 2020.” As plain as the sun, that sentence appears on page 4 of the Congressional Budget Office’s “March 2011 Medicare Baseline,” released on March 18. Those twelve words encapsulate the gargantuan problem that undergirds today’s national yelling match over Medicare. It hardly matters whether one loves or hates Rep. Paul Ryan (R., Wis.) and his Path to Prosperity, or whether one believes Pres. Barack Obama is the reincarnation of George Washington or Karl Marx. Regardless, if America does nothing, the CBO calculates, Medicare will run dry on Sept. 30,...

The Crystal Cathedral, seeking a way to resolve its debt woes, will sell its church and 40-acre campus for $46 million to an Orange County developer, according to the federal bankruptcy plan filed Friday. Greenlaw Partners of Newport Beach will buy the property in Garden Grove, Calif., and plans to build apartments on the land, the Chapter 11 exit plan filed at the federal courthouse in Santa Ana disclosed. The real estate developer will lease the property back to Crystal Cathedral for $212,000 a month and guarantee exclusive lease rights for 15 years, according to the reorganization plan. The church...

It’s nice to see some mainstream economists making logical arguments with regards to America’s financial position. In a recent research piece Credit Suisse shows that America is far from being broke. Of course, anyone who understands MMT and the actual workings of a modern fiat monetary system knows this is a preposterous notion to begin with, but CS is using a traditional framework and their evidence counters much of what we so often hear from fear mongerers and politicians: “Some of our senior politicians and market pundits say it every day: “America is broke.”We wonder if this is meant...

Detroit Pension Funds Sue To Block State Emergency Managers Grace Wyler Apr. 19, 2011, 12:05 PM Detroit's two pension systems have sued Michigan Gov. Rick Snyder and Treasurer Andy Dillon over the state's controversial emergency manager law that aims to save Michigan's distressed local governments and schools from financial collapse. The suit, filed in federal court Monday, claims that the new law - which expands the authority of state-appointed financial managers to restructure public finances - is unconstitutional and would modify Detroit's City Charter and collective bargaining agreements, the Detroit News reports. The law gives the emergency managers power to...

Approximately one in eight Republicans currently think making Donald Trump the party's nominee is a good idea.  I'm not going to venture an opinion on whether he'd make a good president (though he'd certainly be a great improvement over the incumbent). Or even whether Mr. Trump would make a good campaigner (although he'd certainly be an improvement over the last nominee). What Donald Trump would be is an absolutely catastrophic nominee and a guarantee of four more years of Obama as president. Obama Commercial One: Show video of slot machine wheels spinning as announcer says: "Donald Trump made a fortune...

Several states in the Union are discussing bankruptcy, despite opposition in Washington. How bad is it? The Daily Beast crunches the numbers of all 50 states to find who's in the deepest debt—and it isn't who you think. On Friday, The New York Times reported that policymakers, cognizant that 44 states project budget shortfalls in 2012, were exploring ways to let these states declare bankruptcy. That possibility—forbidden under current law—has been debated all week. So which states are the most vulnerable—in terms of indebtedness and unfunded liabilities—and thus more likely to consider this drastic option, should it be made available?...

During the 2008 financial crisis, the federal government reacted in a frantic, ad hoc fashion, tapping taxpayers for bailouts galore, running roughshod over the rights of bondholders and catching the American people unaware and unprepared. In contrast, we still have time to prepare for the looming crisis threatening to engulf California, Illinois, New York and other state governments. The new Congress has the opportunity to prepare a fair, orderly, predictable and lawful approach to help struggling state governments address their financial challenges without resorting to wasteful bailouts. This approach begins with a new chapter in the federal Bankruptcy Code that...

As states struggle with enormous deficits and exploding pension costs, some analysts are urging Congress to enact a law enabling states to declare bankruptcy the way municipalities can under Chapter 9 of the federal bankruptcy code. This is a bad idea. A state bankruptcy provision could create more problems than it solves. Bankruptcy proponents understandably worry that states such as California and Illinois are so deep in the hole they may end up petitioning Congress for federal relief. To forestall this possibility, the argument goes, even the threat of bankruptcy would give governors and legislators a powerful new weapon for...

This is going to become quite common over the next few years; municipalities large and small backed up against the wall and finding the only out to be bankruptcy. The problem is that if states begin to allow these smaller governments to go under, it will depress the muny markets which could kill the big cities with increased borrowing costs. It's going to be a question of pick your poison: "We can make it until March 1 - maybe," Mr. Cooper said of Hamtramck's ability to pay its bills. Beyond that? The political leaders of this old working-class city...

We won’t be able to say we weren’t warned. Continued huge federal budget deficits will eventually mean huge increases in government-borrowing costs, Erskine Bowles, co-chairman of Barack Obama’s deficit-reduction commission, predicted this month. “The markets will come. They will be swift, and they will be severe, and this country will never be the same.” Bowles is talking about what the business press calls bond-market vigilantes. People with capital are currently willing to loan money to the federal government, by buying U.S. bonds at low interest rates. That’s because interest rates are generally low and because Treasury bonds are regarded as...

Can everyone please stop talking total nonsense about the California budget? I know that facts and truth seem to be optional these days. I know that in the exciting new world of infinite media everyone can choose to believe whatever fantasies they want. But in the case of California, it’s getting on my nerves. Last week Chris Whalen, the high-profile analyst at Institutional Risk Analytics, caused a stir by arguing California was going to default on its debts. “I think they’re going to default… I think eventually the debt will have to be haircut,” he told Henry Blodget, the former...

Currently, states are not allowed by federal law to go bankrupt, a situation David Skeel seeks to change, in an important article in the Weekly Standard. He argues that this is far preferable to the inevitable federal bailouts for spendthrift states like California, New York, and Illinois, which have been so generous to their employees in pay, benefits, and pensions that they are unable to raise enough revenue to meet their obligations. The idea that taxpayers in more sensible states like Indiana and Texas should have to bail out wealthy Democratic strongholds unable to operate responsibly is explosive. Mark...

American Media, which also publishes Men's Fitness and Star, seeks Chapter 11 agreement as it negotiates with bondholders. The owner of supermarket tabloid the National Enquirer is to file for bankruptcy protection in the US. American Media, the country's biggest owner of celebrity magazines, publishes more than a dozen titles with a combined circulation of 6.8m as well as the National Enquirer. The privately owned company has been trying to refinance its debt and said today that it will enter into a Chapter 11 agreement to negotiate a debt-for-equity swap with bondholders. David Pecker, American Media's president, insisted in a...

The news that the Crystal Cathedral had filed for bankruptcy protection made for an instant sensation. The church established by Robert Schuller, the very prophet of “Possibility Thinking,” was now forced to seek protection from its creditors, listing $55 million in debt, including a $36 million mortgage. The Los Angeles Times ran “Cracked Crystal” as a headline. The New York Times reported that the “landmark megachurch” would continue, even as it sought protection from its impatient creditors. From coast to coast, the news traveled fast. A statement posted on the church’s website dated October 18 was titled, “A New Chapter...

Senate Shockingly Passes Bill That Could Bail The Banks Out Of Foreclosure-Gate Joe Weisenthal Oct. 7, 2010, 7:37 AM The hottest story right now in the banking industry is foreclosure-gate, as various firms like Bank of America, JPMorgan, and GMAC have halted foreclosures upon realizing that the paperwork behind them has been shoddy at best. The fallout -- which has already invited investigations from state AGs -- could throw a major wrench into what's already been a costly, tedious, and economically damaging process. Seemingly out of nowhere, the Senate passed a bill that could get the banks out of this...

Strategic Defaults Threaten All Major U.S. Housing Markets Keith Jurow 09/30/10 8:00 AM EST In my last article, we examined the shadow inventory to determine how many distressed properties (not on MLS) were almost certain to be forced onto the market in the not-to-distant future. For a sensible follow up, let's take an in-depth look at so-called "strategic defaults" to see how many homeowners are likely to "walk away" from their mortgage debt although they might be financially able to continue paying it. Strategic Default Defined According to Wikipedia, a strategic default is "the decision by a borrower to stop...

The Reason Why Americans' Debt Is Falling Is That People Are Defaulting Like Crazy Vincent Fernando, CFA Sep. 29, 2010, 7:16 AM American households are cutting back their debt so rapidly that debt payments as a percentage of disposable income has hit about a nine-year low. Yet there's more to this national deleveraging than belt-tightening. Americans are cutting their debt levels due to mass defaults:Fortune: Total household debt fell by $77 billion during the three months ending in June, but nearly half of that decline stemmed from bank charge-offs of residential mortgages, credit cards and other consumer loans, according to...

15 States Where Foreclosures Are Still Surging Gus Lubin Jun. 5, 2010, 8:27 AM Realtytrac's monthly report has an bittersweet outlook for real estate. Total foreclosures are down 9%, thanks to improvement in disaster areas like California and Florida. But 27 states reported rising foreclosures, with major increases in some areas. Meanwhile, bank repossessions -- the most miserable stage of the foreclosure process -- set a new monthly high in April. The housing virus is mutating. It's hard to say if we're getting better. See Where Foreclosures Are Surging >[snip]

Yesterday was my 58th birthday. If I were a Greek worker I could retire. Although pension payments in Greece normally start around 61, special provisions allow anyone to retire at 58 if they have been in employment for 35 years. That, as it happens, is how long I have been at work. My index-linked pensions from the Greek Government would be worth 75 to 90 per cent of the average salary in the country, guaranteed for the rest of my life by the State. If you want to know why Greece is going bankrupt and why the euro seems to...

Last week, the Senate Banking Committee approved Sen. Christopher J. Dodd's financial reform bill on a party-line vote, moving the bill to the full Senate. Without a doubt, the most important question about the bill is whether it will end massive Wall Street bailouts. Republicans such as Sen. Richard C. Shelby of Alabama want to change the bill to guarantee that it really does end "too big to fail." That's just what he and his colleagues should be doing:Bank of America, Chase, Citigroup and Wells Fargo - the four largest bank holding companies in America - required massive government aid...

LONDON — As interest rates on Greek debt spiraled upward again Thursday, the question facing Europe was no longer whether Athens has the political will to cut spending and raise taxes to curb its gaping budget deficit, but whether Greece will run out of money before it gets the chance to do so. With the rate on 10-year Greek bonds reaching as high as 7.5 percent, up from 6.5 just three days ago, and the cost of insuring against a Greek default hitting a record high, the message from the market could not be clearer: Artfully worded communiqués from Brussels...

U.S. Housing Underwater, Securitized, And Screwed by The "Pass The Trash" Strategy Housing-Market / US Housing Dec 15, 2009 - 04:48 AM By: Mike Shedlock Calculated Risk had an interesting post last Saturday about Refinancing with Negative Equity. His post refers to an article written by David Streitfeld from the NY Times Interest Rates Are Low, but Banks Balk at Refinancing citing among other things the plights of Mark Belvedere who owes $235,000 on a condo that would sell for barely half that today, and Andrew Knapp who has tried twice to refinance and failed. From the Times... Mr. Belvedere...

Let it shut down. The state of New York. Let it run out of money, let the lights go out, let the IOUs roll. Sometimes to fix it, you’ve got to break it. And this is one of those times. New York needs tough love. In these waters, the best thing is to put the ship on the rocks and wade to shore. With a budget gap of $3.2 billion, an incompetent for a governor and a gaggle of moral crooks in the legislature, it’s time to take Grama off life support. Just let it shut down. Gov. David Paterson...

Don't Do It! (Cashing Out 401ks)Monday, November 9. 2009 Posted by Karl Denninger in Consumer at 08:44 Grrrrr.... As the last of his severance pay dwindled away in March, Brad Cleghorn of northwest suburban Marengo cashed out his 401(k) plan in order to pay his mortgage and feed his family. Cleghorn is not alone. A Hewitt Associates study shows that 46 percent of workers with 401(k) plans who lost or switched jobs cashed the plans in, a trend that could lead to serious problems when younger generations of people working today reach retirement. That's not the real problem folks. Let...

The graphic story of the finacial bailout of the last 8 months. Financial Meltdown Bailout

Entrepreneurship and new small businesses are supposed to lead us out of the recession, just as they have in prior downturns, right? Sure. Your neighbor's grand idea will persuade a bank to lend her start-up money; she'll open for business in six weeks; and money will immediately flow from customers to her to her employees. Taxes will be paid, and the national economic engine will hum effortlessly in no time. If only. Today shows a different reality: Commercial bankruptcies are surging. Fewer people are starting small businesses, and firms already open are struggling under changing consumer habits, a lack of...

Extended Stay Hotels has filed for Chapter 11 bankruptcy protection, buckling under debt as its revenue dries up in the recession. The Spartanburg, S.C.-based company filed its Chapter 11 petition Monday in the Southern District of New York. Extended Stay - which operates under the brands of Extended Stay America, Crossland Economy Studios, Extended Stay Deluxe and Homestead Studio Suites — operates 15 hotels in the Orlando area. According to the filing, Extended Stay had about $7.1 billion in assets and $7.6 billion in liabilities at the end of 2008. Lakewood, N.J.-based Lightstone Group bought Extended Stay from Blackstone Group...

The buzz this week has been that Eddie Bauer Holdings is close to filing for bankruptcy if it can’t sell itself or restructure. Liquidation firms have reportedly been sizing up the apparel cataloger/retailer for weeks, including Hilco Consumer Capital and Gordon Brothers—the firms that bought Sharper Image out of bankruptcy in May 2008. Eddie Bauer, which recorded a net loss of $165.5 million for fiscal year 2008, said in March it has $193 million in outstanding debt, and that it was trying to amend the loan terms. The Bellevue, WA-based company generated $971.3 million in sales for fiscal 2008, down...

Debt-ridden amusement park operator Six Flags, controlled by Washington Redskins owner Dan Snyder, has filed for Chapter 11 bankruptcy reorganization. The New York-based chain of parks has been trying unsuccessfully this year to renegotiate terms with lenders on hundreds of millions of dollars in debt. Six Flags parks, including its Six Flags Great Escape and Indoor Water Park in Queensbury, will continue to operate as usual under reorganization. “The current management team inherited a $2.4 billion debt load that cannot be sustained, particularly in these challenging financial markets,” said Six Flags chief executive Mark Shapiro in a statement. “As a...

Government Motors? The name has the proper initials, but the connotation is imprecise. Yes, the federal government now owns a majority stake in General Motors, but the senior administration officials who explained the deal to reporters sounded almost desperate to be rid of the responsibility. (“The government really has no desire to own equity stakes in companies any longer than is absolutely necessary and will actively seek to dispose its ownership interest as soon as it is practical to do that.”) We cannot blame them. GM is a financial basketcase, saddled with uncompetitive labor costs and a mandate to make...

<p>Economy: With General Motors' long-awaited "pre-packaged bankruptcy" finally here, America is on the verge of a new era — one where government, not investors and consumers, is the final arbiter of success.</p> <p>GM's bankruptcy pushes bondholders aside in favor of the U.S. government and the UAW. Though bondholders hold $27 billion in debt, they'll get just 10% of stock.</p>

President Obama is recommending that Americans "buy American cars," but he will certainly have a hard time convincing union school teachers to buy U.S. brand cars. Teachers have been avoiding American cars like the proverbial swine flu in lieu of purchasing Japanese cars made in Marysville,East Liberty and other Ohio locations which are among the few Ohio companies that are above water. Now, if these Ohio Honda, Volvo, and other car plants are overly dissed by Obama as he strengthens tariffs in order to make "our" GM/Chrysler cars more profitable, Ohio and the rest of the U.S. could lose tens...

Go to the link to read this interesting article. Here is something not being reported in the MSM: In a statement published on The Wall Street Journal Web site, the recalcitrant bondholders said they sought an accommodation with the government. "Under long recognized legal and business principles, junior creditors are ordinarily not entitled to anything until senior secured creditors like our investors are repaid in full. Nevertheless, to facilitate Chrysler's rehabilitation, we offered to take a 40 percent haircut even though some groups lower down in the legal priority chain in Chrysler debt were being given recoveries of up to...

General Growth Properties Inc. has filed for Chapter 11 federal bankruptcy protection to reorganize. General Growth listed $29.5 billion in total assets and about $27.3 billion of debts in its bankruptcy petition, making it the largest real estate bankruptcy in U.S. history. Chicago-based General Growth (NYSE: GGP), whose shopping mall holdings include Coronado Center, New Mexico's largest enclosed mall, said in an announcement Thursday that it had sought bankruptcy protection only after being unable to refinance or extend maturing debt. The company said all day-to-day operations and business of its shopping malls would continue as usual while it reorganizes. General...

Local Massachusetts pols literally feeling the heat. When revenues won't cover spending ...

Retailing Chains Caught in a Wave of Bankruptcies By MICHAEL BARBARO The consumer spending slump and tightening credit markets are unleashing a widening wave of bankruptcies in American retailing, prompting thousands of store closings that are expected to remake suburban malls and downtown shopping districts across the country. Since last fall, eight mostly midsize chains — as diverse as the furniture store Levitz and the electronics seller Sharper Image — have filed for bankruptcy protection as they staggered under mounting debt and declining sales. But the troubles are quickly spreading to bigger national companies, like Linens ‘n Things, the bedding...

February 16, 2008 More volunteer for bankruptcy as going bust loses its stigma Grainne Gilmore, Economics Correspondent There is increasing evidence that going bankrupt is losing its stigma as consumers struggle with mounting debts. Three quarters of all people who petitioned for bankruptcy last year did so voluntarily, new figures show. While overall bankruptcy petitions fell slightly last year, figures from the Ministry of Justice released yesterday showed more people initiating proceedings. Some 53,114 people petitioned in court to become bankrupt in 2007, up from 52,717 in 2006. Vince Cable, Liberal Democrat Treasury spokesman, said: “These figures are clear evidence...

(AP) Delta and Northwest have hired law firms to lead their bankruptcy cases. They've tapped legal consultants to handle corporate tax and immigration issues. And they've put on the payroll financial and aviation experts to advise them on government procurement matters. It's the business of bankruptcy, and these days, with four major airlines in Chapter 11, it's big business. (snip) Just how much the process will cost Atlanta-based Delta Air Lines Inc. and Eagan, Minn.-based Northwest Airlines Corp. is an open question. The bankruptcy case of UAL Corp.'s United Airlines has cost more than $250 million in the nearly three...

But grocery chain says stores will remain open, financing is lined up and employees will get paid. NEW YORK (Reuters) - Winn-Dixie Stores Inc. has filed for bankruptcy protection, due to stiff competition and the need to restructure to stem widening losses.

Vast majority is unaware of the record county bankruptcy in 1994, a survey shows. Ten years after Orange County's bankruptcy led to painful cuts in government spending and a billion-dollar debt that won't be repaid for decades, the vast majority of county residents are virtually unaware of the largest municipal default in U.S. history.