In Embattled
Detroit, No Talk of Sharing Pain - (www.nytimes.com) When New
York City threatened to declare bankruptcy in 1975, the idea so terrified
everyone that it forced the city, its workers and its recalcitrant bankers to
sit down and find ways to share the pain. Now another large city, Detroit,
appears to be on the brink of filing for bankruptcy, but there is little talk
of sharing the pain. Instead, the fiscal crisis in Michigan is setting up as a
gigantic clash between bondholders and city retirees. The city’s proposals,
which could give some bondholders as little as 10 cents on the dollar, are
making some creditors think they would be better off in bankruptcy. They see
the specter of a federal judge imposing involuntary losses as less ominous than
it was for New York.
Biggest
protests in 20 years sweep Brazil - (www.reuters.com) As many as 200,000 demonstrators marched
through the streets of Brazil's biggest cities on Monday in a swelling wave of
protest tapping into widespread anger at poor public services, police violence
and government corruption. The marches, organized mostly through snowballing
social media campaigns, blocked streets and halted traffic in more than a
half-dozen cities, including Sao Paulo, Rio de Janeiro, Belo Horizonte and
Brasilia, where demonstrators climbed onto the roof of Brazil's Congress
building and then stormed it. Monday's demonstrations were the latest in a
flurry of protests in the past two weeks that have added to growing unease over
Brazil's sluggish economy, high
inflation and a spurt in violent crime.
Greek
court orders state TV reopened, PM offers compromise - (www.reuters.com) A Greek
court ruled that shuttered state broadcaster ERT must reopen immediately, a
court official said on Monday, offering the squabbling ruling coalition a way
out of a political crisis over the station's abrupt closure. The ruling - which
ordered ERT switched back on until a restructured public broadcaster is
launched - came six day after Prime Minister Antonis Samaras took it off air in
the name of austerity and public sector layoffs to please foreign lenders. The
ruling appeared to vindicate Samaras's stance that a leaner, cheaper public
broadcaster must be set up but also allowed for ERT's immediate reopening as
his coalition partners had demanded, offering all three a way out of an impasse
that had raised the specter of snap polls.
Lenders
ambush newly solvent borrowers seeking old bad debts – (www.ochousingnews.com) For
people who purchased properties in California, a non-recourse state, and never
refinanced, lenders cannot come after them seeking to recoup their losses on a
foreclosure. For those who live in recourse states, or California loanowners
who refinanced, the situation is quite different. Lenders still have the right
to pursue these borrowers for the deficiency, unless they agreed to a short sale in California after July
15, 2011. Most
borrowers walked away thinking the debt was extinguished. While it was detached
from the property, borrowers are still legally liable for any shortfall on the
lender’s books. Lenders haven’t done much to collect on these old debts so far.
Most lenders reason that they couldn’t get blood from a turnip, so they have
been biding their time waiting for debtors to become solvent again and save
some money that they can go after. Lenders seek court actions against homeowners years after
foreclosure: For
Jose Santos Benavides, the ordeal of losing his home was over. The Salvadoran
immigrant had worked for years as a self-employed landscaper to make a $15,000
down payment on a four-bedroom house in Rockville. He had achieved a portion of
the American dream, earning nearly six figures. Then the economy soured, and
lean paychecks turned into late mortgage payments. On Aug. 20, 2008, one year
after he bought his dream home for $469,000, the bank’s threat to take his
house became real via a letter in the mail. Just four days before the bank
seized the property, he moved out, along with his wife and their two young
children. That wasn’t the worst of it. In November, more than three years after
the foreclosure, he was stunned to learn he still owed $115,000 — with the
interest alone growing at a rate high enough to lease a luxury car.
Detroit
Recovery Plan Threatens Muni-Market Underpinnings - (www.bloomberg.com) Emergency
Manager Kevyn Orr’s plan to suspend payments on $2 billion of Detroit’s debt
threatens a basic tenet of the $3.7 trillion municipal market: that states and
cities will raise taxes as high as needed to avoid default. Orr, appointed by
Republican Governor Rick Snyder to oversee Michigan’s largest city, proposed a deal last week that
included skipping a $39.7 million payment on pension-obligation debt. The city
is also set to default on unsecured unlimited-tax and limited-tax
general-obligation bonds as it grapples with $17 billion in liabilities to
avoid a record bankruptcy. By calling into question the safety of any security
backed by a government’s general obligation to pay what it owes, Orr, 55,
imperils similar debt across Michigan, the eighth-most-populous state. As local
governments strive to rebound from the longest recession since the 1930s, they
may confront higher borrowing costs. “It definitely sets a precedent, and
there’s definitely going to be a penalty going forward for the city and the
state,” said Dan Solender, director of munis at Lord Abbett & Co. in Jersey
City, New Jersey. The company oversees $19.5 billion of local debt.
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