Lesson from Detroit: Get ready for more muni
mess - (www.cnbc.com) Fiscally
distressed governments across the country may have gotten a troubling blueprint
this week for getting out of their respective messes. In allowing Detroit to move ahead with its planned bankruptcy
filing, federal Judge Steven Rhodes sent a message to municipal bondholders
that their investments are not risk-free and in fact could suffer dramatic
losses. Bond pros are worried about the implications. "If they allow
Detroit (general obligation) bondholders to be impaired significantly, this
could cause in Michigan and maybe also municipalities across the
country their GO bondholders to have the perception that this could happen
anywhere," said Patrick Stoffel, municipal bond analyst at Wells Fargo. "That
could increase borrowing costs for municipalities and issuers," he added.
"It could cause prices of GO bonds to be affected in the market, and so
there are some possible wide-ranging implications from this Detroit
bankruptcy."
Expiring jobless benefits to lower unemployment
rate - (www.reuters.com) The
unemployment rate could fall substantially early next year as belt-tightening
in Washington throws more than a million long-term unemployed Americans off the
benefit rolls. The loss of benefits could spur former recipients to either drop
out of the labor force or accept jobs they previously would not have
considered. Some economists estimate this could lower the current unemployment
rate of 7.3 percent by as much as half a percentage point. "The lapsing of
the program could lower the unemployment rate by perhaps 0.25-0.50 percentage
point, with much of the effect coming through reduced labor force
participation, rather than increased employment," said Michael Feroli, an
economist at JPMorgan in New York. To receive jobless benefits, Americans are
required to be actively looking for work. That is also a key factor that
defines who is unemployed, as opposed to those who have dropped out of the
labor force.
Bankruptcy
judge gives Detroit a chance to start over — but at what cost? - (www.freep.com) Detroit
officially became the largest municipality in U.S. history to enter Chapter 9
bankruptcy on Tuesday in a ruling that sets the stage for a fierce clash over
how to reduce debt and retiree benefits to return the city to financial
solvency. U.S. Bankruptcy Judge Steven Rhodes said Detroit can legally pursue
pension cuts — a landmark ruling with implications for financially distressed
cities throughout the country. The ruling instantly triggered reaction and
appeals from unions and retirees who fear pension cuts and health care
insurance reductions. The judge also didn’t rule out approving the sale of
assets such as Detroit Institute of Arts property, but he signaled that
one-time fixes to the city’s finances aren’t sufficient to rescue the balance
sheet. Rhodes, who is expected to release a 140-page written order today, said
the sheer weight of Detroit’s financial burden undercuts the city’s ability to
improve vital services and compromises public safety. He said leaders —
including potentially the State of Michigan, which has refused to kick in cash
— must address the “real human needs that will arise because of this
bankruptcy.”
Ukraine
PM warns protesters as delegation seeks financial help in Moscow - (www.reuters.com) Ukraine's
prime minister warned protesters trying to blockade government buildings on
Wednesday they would be punished for any "illegal acts", as officials
went to Moscow seeking aid to avoid a financial meltdown. Meeting the Ukrainian
delegation, Russian Prime Minister Dmitry Medvedev said their country needed
"stability and order", in the two sides' first high-level talks since
Kiev pulled out of a planned trade alliance with the European Union, provoking
mass protests. Prime minister Mykola Azarov also accused the opposition of
trying to provoke violence, and tension remained high in Kiev with protesters
confronting ranks of black-helmeted riot police in front of President Viktor
Yanukovich's main offices after his government's U-turn in trade policy back
towards Russia.
Family
returns home from visiting dying relative to find stranger has moved into their
house, changed all the locks and claimed it as HIS under obscure Ohio law - (www.dailymail.co.uk) A
family in Ohio were in for a nasty surprised after they returned from a visit
out-of-town visit to a dying relative to find someone else had moved into their
house. Their outrage has now turned into a court battle, pitting them against a
man who says he has the court documents to prove the house is now his. Robert
Carr moved into the home that had been occupied for 21 years, changed the locks
and emptied the house. When the family confronted Carr, he showed them a
document he filed with the the County Court. It's called a 'quiet title' and
lays claim to the property because Carr says the family abandoned the house and
gave up all their rights. The family members have said they are too afraid to
be identified. 'What he's looking for is full title and ownership of the home,'
the family's attorney, Alison Warner, said.
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