Washington fears losing Greece to Moscow

©Reuters

Throughout the prolonged showdown between Greece and its creditors, the Obama administration has largely sat on the sidelines, issuing the occasional warning about the potential economic impact of a default.

But with Greece now on the verge of bankruptcy, the US is also beginning to worry about the political fallout from a deeper crisis and the potential for Russia to gain increased influence over a Nato member.

As Washington tries to maintain a united western front in support of sanctions on Russia over Ukraine, a Greek default could provide Moscow an opportunity to sow new divisions among America’s European allies.

“You can easily see how geopolitically this would be a gift to Russia,” says Sebastian Mallaby at the Council on Foreign Relations. “You do not want Europe to have to deal with a Greece that is a member of Nato but which all of a sudden hates the west and is cosying up to Russia.”

Greece was regarded as a frontline state against the advance of Soviet-backed communism during the cold war. Its EU accession in 1981 is one factor that cemented its identity as a western democracy, something that was deepened 20 years later with the adoption of the euro.

For some months, the administration of President Barack Obama has been quietly urging Germany and other EU members to try to find a way to resolve the stand-off with Greece. While economic considerations have been at the forefront, diplomats say the EU’s position on Ukraine has also been part of the conversation.

The visit by Greek prime minister Alexis Tsipras to St Petersburg late last week served as a reminder of the current Greek government’s political ties to President Vladimir Putin’s Russia and showed its willingness to look towards Moscow at moments when the dispute with international creditors is at its most intense.

Via: Financial Times

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Detroit: Riding the Motor City Struggle Bus

DETROIT — I came to Detroit expecting a wasteland. Instead, I met a bunch of nice people and ate hot dogs.

Detroit declared bankruptcy this month, taking the dubious honor of becoming the largest municipal bankruptcy in American history. The city is $18 billion in the hole.

News stories described an empty town, teetering on the edge of anarchy. A place where most of the good things are gone, and what’s left is about to be auctioned off. A place where the last person out won’t have to worry about turning off the lights, because the lights haven’t worked in years.

Yet everywhere I went I encountered people with unflappable civic pride, people starting businesses and saying in the face of everything that Detroit was worth saving and will be saved.

“Detroit’s not dead,” a heavily tattooed 24-year-old woman told me over beers in a downtown bar. “It’s just riding the struggle bus.”

Tuesday

I went out for lunch Tuesday afternoon with a friend in Corktown. One of Detroit’s oldest neighborhoods, Corktown is also one of its recent success stories. The main drag along Michigan Avenue is lined with hip restaurants, bars, and coffee shops painted in bright colors.

The scene would not have looked out of place in Brooklyn. Behind us, though, loomed the abandoned, 18-story-tall hulk of Michigan Central Station. Estimates of the cost to restore the station run as high as $300 million. The Atlantic recently called it “the face of American ruin porn.” Whatever floats your boat.

Via: WFB

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The Pension Issue – Everywhere

Two stories yesterday thrust pension reform in the front of the political news. In Michigan, a judge declared that Detroit could consider bankruptcy to deal with its debt crisis and that public pension obligations can be treated like any other contract under bankruptcy law. In Illinois, the state legislature passed a public pension reform that supporters say will save $160 billion and fund the retirement system over 30 years by reducing benefits for workers and retirees.

Both actions await the inevitable lawsuits promised by the public employee unions that don’t want to see members’ benefits reduced. Both stories have meaning to California cities that are struggling with fiscal problems that are wrapped around pension and health care liabilities.

Let’s state here that no one wants to see pensioners lose income they expected. That goes for public workers as well as citizens on Social Security who could see benefits cut in the not-too-distant future if the current gap between available revenue and payments due is not altered.

Saying that, something has to be done to avert the city bankruptcies and everything is on the table.

The judge making the Detroit bankruptcy decision clearly stated that, “it has long been understood that bankruptcy law entails the impairment of contracts.” That argument is at issue in the San Bernardino bankruptcy debate and could arise again in Stockton. Other California cities facing difficult fiscal conditions due to heavy pension burdens will take note.

The pension decision in Detroit will now become front and center as city officials sit down with union leaders to discuss resolutions to budget problems. The decision also gives a boost to San Jose Mayor Chuck Reed’s effort to find resolution on the pension issues that are threatening the budget in his city and cities across the state.

Reed’s proposed ballot initiative would give local governments more power to negotiate reductions in pension benefits. He has reached out to unions in an effort to find a solution to the pension crisis and avoid a war over the initiative. The unions responded by rebuffing Reed’s overture unless he drops his initiative plan.

In light of the decision coming out of Detroit on bankruptcy and public pensions, perhaps public employee unions should reconsider and accept Reed’s invitation to at least attempt to find common ground.

Via: California Political Review

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Taxpayers lose $139 million on Fisker Automotive loan

Happy Thanksgiving from the Obama administration. The Energy Department has sold off its $192 million loan guarantee to Fisker Automotive to Chinese billionaire Richard Li for $25 million — the biggest taxpayer loss on a green loan since the failure of Solyndra.

The Energy Department will announce the “selling of the promissory note” to Hybrid Tech, which is owned by Chinese billionaire Richard Li, according to sources familiar with the sale. The DOE sold the loan to Li for $25 million after lending the financially troubled green automaker a total of $192 million since 2009.

“Once again, American taxpayers are losing out to foreign investors due to the Obama administration’s failed green energy policies. Time after time this administration has fumbled the ball with their attempts to pick winners and losers when it comes to American energy,” House Energy and Commerce Committee vice chairman Marsha Blackburn, a Tennessee Republican, said in a statement to The Daily Caller News Foundation.

“As a result of President Obama’s misguided policies, the Department of Energy Loan Guarantee program is quickly becoming a highly utilized stimulus program for foreign investors,” she added.

Via: Daily Caller

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Bankrupt solar panel firm took stimulus money, left a toxic mess, says report

A Colorado-based solar company that got hundreds of millions of dollars in federal loan guarantees before going belly-up didn't just empty taxpayers' wallets - it left behind a toxic mess of carcinogens, broken glass and contaminated water, according to a new report. 

The Abound Solar plant, which got $400 million in federal loan guarantees in 2010, when the Obama administration sought to use stimulus funds to promote green energy, filed for bankruptcy two years later. Now its Longmont, Colo., facility sits unoccupied, its 37,000 square feet littered with hazardous waste, broken glass and contaminated water. The Northern Colorado Business Report estimates it will cost up to $3.7 million to clean and repair the building so it can again be leased.

“As lawyers, regulators, bankruptcy officials and the landlord spar over the case, the building lies in disrepair, too contaminated to lease,” the report stated.

"If a coal, oil or gas company pulled something like that the EPA would send out SWAT teams and the U.S. Marshals to track down the offenders, bankrupt or not."

- National Legal and Policy Center, a think tank

The owner of the property tried to force a bankruptcy trustee to clean the facility, but the report said it would "place humans at imminent and significant health risk." One of the hazards is the presence of cadmium, a cancer-causing agent that is used to produce the film on the solar panels, the report said.

While the loan guarantees exposed taxpayers to hundreds of millions of dollars, the federal government lost a total of $70 million backing the failed company. Unsold inventory which should have been used to offset those losses, including 2,000 solar panels, mysteriously disappeared, according to theNational Legal and Policy Center.

Via Fox News

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Digging into Detroit's bankruptcy filing

Detroit has once again been in the headlines as the city and its creditors battle in court over whether the city is eligible to receive bankruptcy protection.

Municipal bankruptcy, like just about everything else that contains the word "municipal" or has anything to do with lawyers, is complicated. We checked in with Detroit lawyer Nathan Resnick, a municipal bankruptcy expert, and with his help we'll try to explain what an ongoing court hearing means, and where Detroit stands in its efforts to turn around its finances.

Didn't Detroit already file for bankruptcy? What's the purpose of the hearing?

Detroit did file for bankruptcy protection on July 18, a process that automatically protects the city against any impending action from creditors. But that doesn't mean it definitely gets to remain in bankruptcy.

Judge Steven Rhodes is hearing arguments about whether the city was, in fact, insolvent when it filed for bankruptcy, and whether it negotiated in good faith with its creditors.

Detroit seems pretty broke — $18 billion in debt. Why would anyone argue it shouldn't be able to file for bankruptcy?

Creditors, which include public employee unions and pension funds, say that the city did not try to negotiate with them before filing for bankruptcy.

They say that Michigan Gov. Rick Snyder appointed an emergency manager, Kevyn Orr, to take over city governance with the idea that Orr would force the city into bankruptcy rather than figure out a way to pay creditors. They've been asking the judge to look into who else [the Republican governor] considered for the emergency manager position before settling on Orr, who represented Chrysler in its 2009 bankruptcy, to prove that Snyder just wanted someone who knew a lot about bankruptcy.

Via: LA Times

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TROUBLED CITIES MUST RECKON WITH STOCKTON’S DEAL

SACRAMENTO — The most optimistic pension reformers had hoped that the decrepit city of Stockton’s 2012 bankruptcy would be a “day of reckoning” — a point where the city’s leaders would pare back overly generous retirement benefits and embark on a road to fiscal responsibility.

They saw hope for hard-pressed cities everywhere, as Bankruptcy Judge Christopher Klein set up a possible showdown over pension payments when he rejected efforts by bond insurers to stop the bankruptcy motion. Klein said he was leaving everything on the table, meaning that city employees might eventually join the bond guys in taking a haircut.

But as often happens with government-reform efforts, the pessimists turned out to be right. Earlier this month, the Stockton City Council approved a plan that restructures debt and fully funds the California Public Employees’ Retirement System, thus leaving pension benefits for city employees unscathed.

If there’s any doubt who won out, one need only read the CalPERS statement: “By continuing to fully fund its pension obligations, Stockton … acknowledged the importance of a secure retirement to its current employees and retirees, and the positive impact that pensions have on recruitment and retention of quality public servants.”

It’s hard to believe that such lush pensions are needed to lure “quality public servants.” But whatever the case, when cities run out of money everyone should share the pain. Instead, the key “stakeholders” — city employees, union leaders, Wall Street creditors — declared a “win-win,” but the deal is not without its losers: taxpayers.

Via: Human Events

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Unions ask Obama for Detroit bailout

Union leaders are calling on Congress and President Obama to provide a federal bailout to the city of Detroit.

The executive council of the AFL-CIO, the nation’s largest labor federation, called for an “immediate infusion of federal assistance for Detroit” to be matched by Michigan, which they say has not done enough to keep the city from going through bankruptcy.

“Bankruptcy must not be used as a tool to impoverish city of Detroit workers or retirees. City workers have already made severe concessions to keep the city afloat,” the executive council said in a statement. “They are not to blame for Detroit’s financial problems, yet they have been making sacrifices all along the way to help the city out.”

The executive council, which consists of more than 50 leaders from various organized labor groups, are angry about pensions for retired workers facing suspension if Detroit goes through Chapter 6 bankruptcy.

“It appears that Governor [Rick] Snyder and [Emergency Financial Manager] Kevyn Orr are pushing Detroit into bankruptcy to gut the modest benefits received by Detroit’s retired public service employees,” the AFL-CIO’s statement reads.

Snyder appointed the emergency financial manager in March to try and help the Motor City sort out its finances. 

Via: The Hill

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BANKRUPT A 123 SYSTEMS WANTS TO PAY BONUSES TO TOP EXECS

Dow Jones Daily Bankruptcy Review reported that A 123 Systems, the bankrupt recipient of Obama’s department of energy loan, now wants to pay top executives more than four million dollars.

This is what Dow Jones reported:

“A123 Systems Inc., the electric car battery maker that filed for Chapter 11 last week after receiving nearly $250 million in government grants, wants to pay more than $4 million in bonuses to a handful of top executives.

The company is asking Judge Kevin Carey of the U.S. Bankruptcy Court in Wilmington, Del., to sign off on incentive bonuses totaling up to $4.1 million for nine key employees, including several company insiders---namely, corporate officers and directors---pending the sale of its assets at a bankruptcy auction.”

Well done, Mr. Obama. We will use some of the $132 million given to A 123 Systems to reward their top executives, who could never deliver an affordable lithium ion battery!  

But hold on. Was it not Mr. Obama who attacked the bonuses for executives at banks that received bailouts in 2008?  Of course Mr. Obama opined on the matter of these executives being given bonuses. The New York Times on January 29, 2009 quoted Obama as saying:

“There will be time for them to make profits, and there will be time for them to get bonuses,” Mr. Obama said during an appearance in the Oval Office with Treasury Secretary Timothy F. Geithner.  Now’s not that time. And that’s a message that I intend to send directly to them, I expect Secretary Geithner to send to them.”

Via: Breitbart

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MOODY'S: MORE CALIF. CITIES AT RISK OF BANKRUPTCY

SACRAMENTO, Calif. (AP) -- One of the nation's top credit rating agencies said Friday that it expects more municipal bankruptcies and defaults in California, the nation's largest issuer of municipal bonds.

Moody's Investors Service said in a report that the growing fiscal distress in many California cities was putting bondholders at risk.

The service announced that it will undertake a wide-ranging review of municipal finances in the nation's most populous state because of what it sees as a growing threat of insolvency.

The report has both investors and government leaders worried.

Three California cities - Stockton, San Bernardino and Mammoth Lakes - have filed for bankruptcy so far this year. They are not likely to be the last, Moody's said.

Moody's reports that some cities are turning bankruptcy as a new strategy to take on budget deficits and avoid obligations to bondholders, an emerging dynamic that could have ripple effects throughout the investment community.

The municipal bond market has long been characterized by low default rates and relatively stable finances, Moody's said, but that outlook is beginning to change as bankruptcy becomes a tool for cash-strapped cities.

As a result, the agency will reassess the financial position of all cities in California, which issues about 20 percent of the municipal bond volume nationwide, "to reflect the new fiscal realities and the governmental practices."

Via: Associated Press

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Obama’s GM ‘Success Story’ Headed for Bankruptcy?

On the campaign trail, Barack Obama’s signature definition of “success” is the government bailout of General Motors. “I said I believe in American workers, I believe in this American industry, and now the American auto industry has come roaring back,” he told an audience in Pueblo, CO last week. “Now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry.” That pronouncement should send a shiver up the spine of every American, due to an inconvenient reality: according to Forbes Magazine, GM is likely headed for bankruptcy all over again.

The numbers are stark. The 500,000 shares of GM stock, comprising 26 percent of the company owned by the government–or more accurately the American taxpayer–sold for $20.21 on Tuesday. This left the government holding $10.1 billion worth of stock representing an unrealized loss of $16.4 billion. Even worse, in order to reach the break-even point, the stock would have to sell for around $53 per share.

The numbers remain in flux. As Investors Business Daily reveals, the Treasury Department continues “to revise upward the staggering losses inflicted on U.S. taxpayers.” They further note that the same day GM announced it was recalling 38,000 Impalas used by police in both America and Canada, due to a possible crash risk, a new Treasury report forecast that losses for GM were expected to reach $25 billion, which is $3.3 billion more than predicted earlier. Furthermore, since that report was based on GM’s stock price at the time of the report–15 percent higher than it is currently–those losses are likely understated.

Via: FrontPageMag.com

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The Childishness of the American Left

The American left is the most self-indulgent, arrogant, and spoiled group of people on the face of the earth.  They live in a nation facing national bankruptcy and societal upheaval -- a country presently subsisting on the residue of past economic achievements.  Yet the only things that matter to them are their lifestyles and imposing their self-determined superiority on rest of the American people.

The true indebtedness of the United States now exceeds $222 trillion.  Appearing on National Public Radio in August of 2011 Professor Laurence J. Kotlikoff of Boston University said:

If you add up all the promises that have been made for spending obligations, and subtract all the taxes we expect to collect, the difference is $211 Trillion.  This is the fiscal gap.  That is our true indebtedness.

Since that interview, the indebtedness has increased by another $11 trillion.  Yet these estimates do not include the full impact of ObamaCare, which could add another $17+ trillion.  On the other side of the ledger: the annual Gross Domestic Product (the value of all economic activity in the U.S.) is $15.6 trillion.  The indebtedness to GDP ratio is a staggering 14.2 to 1 and guaranteed to further accelerate if Barack Obama is re-elected.

The United States is not facing bankruptcy, it is bankrupt.  The primary factor that has kept the nation afloat over the past four years is that the dollar, albeit temporarily, remains the world's reserve currency, thus allowing the Federal Reserve to print enormous sums of money to cover the Obama budget deficits and flood the global market with near worthless cash.  Today itrequires $100.00 to purchase the same goods $10.00 purchased in 1950.

Via: American Thinker

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