California Showdown – Court sides with Schwarzenegger on minimum wage; L.A. council Fires 232 Workers; Illinois Stops Paying Bills Keeps Digging Holes
by ilene - July 3rd, 2010 11:57 pm
California Showdown – Court sides with Schwarzenegger on minimum wage; L.A. council Fires 232 Workers; Illinois Stops Paying Bills Keeps Digging Holes
Courtesy of Mish
Fortunately a California appellate court came down in favor of sanity and sided with the governor when Schwarzenegger Ordered 200,000 State Workers be Paid Minimum Wage until a budget was passed.
Please consider Court sides with Schwarzenegger on minimum wage
A state appellate court on Friday sided with the Schwarzenegger administration in its attempt to temporarily impose the federal minimum wage on tens of thousands of state workers.
It was not immediately clear how the ruling would affect Gov. Arnold Schwarzenegger’s order a day earlier to pay 200,000 state workers the federal minimum of $7.25 an hour as the state wrestles with a budget crisis.
The state controller, who cuts state paychecks, has refused to comply with the order. Friday’s ruling affirms a lower-court decision in favor of the administration in a lawsuit filed two years ago after the governor’s first attempt to impose the minimum wage.
The latest ruling from the California 3rd District Court of Appeal in Sacramento concludes that state Controller John Chiang cannot ignore the minimum wage order from the state Department of Personnel Administration.
But Chiang said in a news release that he interpreted the court ruling to mean that his office would not have to comply with the executive order if it was practically infeasible to do so.
Schwarzenegger’s minimum wage order will not affect all of California’s 250,000 government employees. The 37,000 state workers represented by unions that recently negotiated new contracts with the administration will continue to receive their full pay. The contracts, including one with California Highway Patrol officers, contain pay cuts and pension reforms.
Salaried managers who are not paid on an hourly basis would see their pay cut to $455 a week. Doctors and lawyers who work for the state will not be paid at all until a budget is signed because minimum wage laws do not apply to those professions.
Schwarzenegger is pushing for minimum wage based on a 2003 California Supreme Court ruling. In White vs. Davis, the court held that state employees do not have the right to their full salaries if a state budget has not been enacted. At the same time, the state cannot ignore federal wage laws.
Chiang has maintained that
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DiggCalifornia OKs Taxinator Plan to Pay State Employees Minimum Wage
by ilene - July 2nd, 2010 9:39 pm
California OKs Taxinator Plan to Pay State Employees Minimum Wage
Courtesy of Jr. Deputy Accountant
The state has until the end of the month to come up with a budget plan or will be forced to pay thousands of state employees minimum wage ($7.25) until it does. While some might argue our state employees could have used a pay cut quite some time ago and may be partially to blame for our budget troubles, I’m not sure this is the way to go about fixing our broken budget. If and when Sacramento does figure out a budget, state employees will be due back pay. For now, however, it’s looking like a rough summer for some.
A state appeals court ruled Friday that Gov. Arnold Schwarzenegger can reduce state workers’ pay to the federal minimum wage when the state budget is late.
The ruling comes a day after the governor ordered the pay of nearly 200,000 state employees to be reduced to $7.25 an hour until a budget is passed, but State Controller John Chiang, who issues the paychecks, has said he would not obey the order.
The ruling by the 3rd District Court of Appeals centers on a 2008 case, when during a similar budget impasse Schwarzenegger ordered state workers’ be paid the federal minimum wage.
John Chiang obviously doesn’t want his house burned down but Schwarzenegger could care less, before long he won’t have to worry about any of this crap and will be getting fat on the ranch far far away from Sacramento and all the drama that comes with.
Illinois Leaps Ahead of California in Default Risk, Better than Iraq, Worse than Portugal; Pension Fraud in Milwaukee
by ilene - June 23rd, 2010 3:20 pm
Illinois Leaps Ahead of California in Default Risk, Better than Iraq, Worse than Portugal; Pension Fraud in Milwaukee
Courtesy of Mish
CMA data shows Illinois and California are in the top ten list of sovereign default risks, with Illinois leapfrogging California in terms of increasing risk.
Please consider CMA Market Data as of Wednesday, 23 June 2010.
Sovereign Default Risks
Illinois is ranked a better risk than Iraq, but riskier than Portugal and California.
The countries (or states) are ranked by their cumulative probability of default (CPD), which gives the market’s assessment of an issuer’s likelihood of default over the life of a CDS contract.
9,111 retired California government workers receive pensions in excess of $100,000
Here is the CalPERS Top Ten list
Bruce Malkenhorst is the top recipient making over half-a-million dollars a year in pension benefits. Is that insane or what?
Please click on previous link to search the entire CalPERS list.
3,090 retired California teachers and administrators receive pensions in excess of $100,000
Here is the CalSTRS Top 10 List
Please click on previous link to search the entire CalSTRS list.
Ironman Competitor Deemed "Permanently and Totally Incapacitated" Collects huge pension benefits.
Dave Orlowski, 54 years young, is fit enough for multiple "Ironman Competitions" but amazingly collects $53,063 disability benefits a year plus full health benefits because the Milwaukee police union deems him "permanently and totally incapacitated for duty."
Please consider Fit enough for Ironman but not for the MPD
Dave Orlowski can swim 2.4 miles. He can bike 112 miles. He can run 26.2 miles.
In fact, the 54-year-old athlete can do all of these one right after the other – several times a year. He completed six Ironman triathlons last year, has done three so far this year and hopes to compete in yet another one in Klagenfurt, Austria, on July 4.
Orlowski can also play a round of golf, as he did recently at a fund-raiser for the Make-A-Wish Foundation of Wisconsin.
But this is something the guy won’t do:
He won’t work for the Milwaukee Police Department.
That’s because the former homicide detective has been declared "permanently and totally incapacitated for duty."
As an injured ex-cop, Orlowski has been paid nearly $500,000 in tax-free pension checks by the city since 1999. He is currently receiving $53,063 a year from the city Employees’ Retirement System, plus
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Bankers vs Realtors – Showdown on the West Side
by ilene - June 23rd, 2010 3:13 am
Bankers vs Realtors – Showdown on the West Side
Courtesy of Joshua M Brown, The Reformed Broker
This is a bit like watching rival Mexican drug gangs fight it out for control over a border town – you hope they kill each other and it really doesn’t matter if neither of them "win".
From the New York Times:
On one side are the bankers, who say borrowers should be liable for what they owe. On the other side are real estate agents, who say those who lost their houses should not be so burdened by debt that they cannot move on.
The differences have real financial consequences: bankers want to collect on billions of dollars in outstanding loans; real estate agents want as many people as possible to return to the housing market.
For the first time, the debate is spilling into the realm of law making, with state legislators in California considering a bill that would redefine the obligations of many defaulting homeowners.
Obviously the bankers are "in the right" as far as wanting homeowners to meet their obligations. Strategic default is cute, and in some cases it is economically the smart move, although these are adults that signed their name to a piece of paper so there should be a consequence. That said, in many instances, these loans were grotesque characitures of fair contracts so it’s hard to empathize with the creditors.
The realtors on other hand will make the case that the silver lining of strategic default is that at least it keeps properties turning over and the real estate market moving. They are jackals and a rapid turnover of homes with less consequence to the defaulter leads to buy and sell commissions, which is really all they’re after.
California Bankers versus Realtors to me is like if the Hells Angels and the Mongols fought for territorial control over a gas station bathroom. Whatever.
Have at it, boys.
Source:
Battles in California Over Mortgages (NYT)
CALIFORNIA JOINS THE HIGH RISK DEFAULT LIST
by ilene - June 12th, 2010 6:45 pm
CALIFORNIA JOINS THE HIGH RISK DEFAULT LIST
Courtesy of The Pragmatic Capitalist
California joins the list of countries/states with the highest probability of default:
Source: CMA
Antioch California Considers Bankruptcy; Former LA Mayor Predicts Bankruptcy for LA
by ilene - May 28th, 2010 11:44 am
Antioch California Considers Bankruptcy; Former LA Mayor Predicts Bankruptcy for LA
Courtesy of Mish
Bankruptcy talk is heating up in California with the city of Antioch on the front burner. Please consider Bankruptcy talk spreads among California municipal officials.
Two years after Vallejo, California, filed for bankruptcy protection, officials in nearby Antioch are also tossing around the ‘B’ word.
Antioch’s leaders earlier this month said bankruptcy could be an option for the cash-strapped city of roughly 100,000 on the eastern fringe of the San Francisco Bay area.
"We just want to alert people to the possibility," Antioch Mayor Pro Tem Mary Helen Rocha said.
Orange County Treasurer Chriss Street would not be surprised if more local governments across the Golden State sound a similar alarm.
Street expects more talk of municipal bankruptcy across California because local government finances are in such dire shape — a situation underscored on Wednesday when a top finance officer for Sacramento County projected a worse-than-expected shortfall for the county of $181 million, which could force more than 1,000 layoffs from the county’s payroll.
Marc Levinson, a lawyer with Orrick, Herrington & Sutcliffe LLP who is representing Vallejo in its bankruptcy proceeding, agrees that California’s hard times and lean local budgets are forcing local leaders to weigh bankruptcy.
"It’s a topic on everyone’s lips because cities and counties and local governments are hurting," Levinson said.
Like Vallejo, Los Angeles is suffering from weak revenue at the same time the cost of its pensions and other retirement benefits are rising. Former Mayor Richard Riordan said those factors put the government of the second largest U.S. city on track to declare bankruptcy between now and 2014.
Riordan sees bankruptcy as a necessary tactic for squeezing concessions from the city’s public employee unions. It could also pave the way for 401(k) retirement accounts for new city workers instead of defined pension benefit plans with escalating costs, he said.
"The threat of bankruptcy is really the only way you’re going to get them to make major changes," Riordan recently told Reuters.
Talk of municipal bankruptcy has not escaped California’s politically powerful public employee unions. A number of them are pressing the legislature to pass a bill that would require local governments to get the approval of a state board before filing for bankruptcy. Since the board could be stacked with union-friendly appointees, bankruptcy pleas could be
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Commercial Foreclosures Pick up Speed; Cash-Strapped Landlords let Evictions Lag; Rent Control Idea Straight from the Loony Bin
by ilene - May 24th, 2010 2:59 pm
Commercial Foreclosures Pick up Speed; Cash-Strapped Landlords let Evictions Lag; Rent Control Idea Straight from the Loony Bin
Courtesy of Mish
Here is a pair of interesting articles from the Arizona Republic regarding an increase in commercial foreclosures and a slowing number of evictions in apartment complexes.
Please consider Commercial foreclosures pick up speed
Mesa Financial Plaza, the 17-story office tower that lights up the night sky with a neon-blue silhouette, has been noticed for trustee sale.
The $40.6 million default is just one of many that are starting to drop in the Valley. The number of defaults for loans of more than $20 million is increasing rapidly for all product types, including office, industrial, retail and large apartment complexes.
Chris Toci, executive director of the capital markets group at Cushman & Wakefield of Arizona Inc., said Phoenix is at the front end of a major crash.
Cash-strapped landlords let evictions lag
One might that that evictions would be rising due to lack of payment but that’s not the case in the Phoenix area as Cash-strapped landlords let evictions lag
Fewer tenants are being evicted from apartments across the Valley, but the decline is more about the dismal state of landlord finances than tenants paying their rent on time.
In the latest fallout from the recession and housing crisis, growing numbers of apartment-complex owners are in serious financial trouble or foreclosure.
Lawyers, a tenant advocate and a commercial real-estate broker point to a variety of factors. Overbuilding in recent years saturated the market with apartments just as homebuilders
and investors added hundreds of single-family dwellings to the rental mix.Many owners bought large complexes at the market’s peak and then saw values plummet. Forced to cut rents to keep units occupied, they have been left without enough income to pay debts and keep up maintenance. People leaving the state have only added to high vacancy rates.
And although the recession has left many renters unable to pay each month, apartment owners don’t have the money or inclination to boot them.
Andrew Hull, a Phoenix attorney who represents landlords and property managers, said his eviction caseload has declined about 20 percent this year.
For some of his clients, vacancy rates have skyrocketed, and half of the units in their large complexes are empty. Those in bankruptcy don’t have the money to hire attorneys for evictions, Hull
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What’s Wrong With Expecting a 28,000,000 Dow?
by ilene - May 20th, 2010 6:16 pm
What’s Wrong With Expecting a 28,000,000 Dow?
Courtesy of Jr. Deputy Accountant
Listen, it’s not THAT unrealistic, look at the Dow from March 2009 to now! It’s a miracle!
Schwarzenegger economic adviser David Crane writes about the bizarre situation in WSJ saying in 1999, then governor Gray Davis signed into law a bill that made looting California legal and gave state pensioners quite a boost in income based on completely unrealistic projections of fund performance (you know, the sort of stuff prospectuses warn about).
WC Varones shares a bit of CalPERS math (via WSJ):
What Calpers failed to disclose, however, was that (1) the state budget was on the hook for shortfalls should actual investment returns fall short of assumed investment returns, (2) those assumed investment returns implicitly projected the Dow Jones would reach roughly 25,000 by 2009 and 28,000,000 by 2099, unrealistic to say the least (3) shortfalls could turn out to be hundreds of billions of dollars, (4) Calpers’s own employees would benefit from the pension increases and (5) members of Calpers’s board had received contributions from the public employee unions who would benefit from the legislation. Had such a flagrant case of non-disclosure occurred in the private sector, even a sleepy SEC and US Attorney would have noticed.
Hahahahahahahahaha a 28,000,000 Dow by 2099! Now that’s funny.
F%$k schools, f&*k roads, f*%k social services, as long as our state employees are taken care of, what the hell do we need the rest of that sh*t for?!
See also: Mish’s Social Unrest Spreads to Slovenia and Spain; Images Around the Globe; US Not Immune to Protests
California Students and School Districts Finally Sue the State
by ilene - May 20th, 2010 3:22 pm
California Students and School Districts Finally Sue the State
Courtesy of Jr. Deputy Accountant
About damn time. Now I’m not sure what good this will do but, uh, it’s nice to see California at least attempting to do something about the sad situation in this state.
A coalition of students, school districts and education groups sued the state of California on Thursday, seeking to force the governor and Legislature to develop a new system to fund public schools.
The lawsuit asks the court to declare the current school finance system unconstitutional because the state doesn’t provide enough money to cover its own educational mandates and programs.
The complaint was filed in Alameda County Superior Court by more than 60 students, nine school districts and groups representing school boards, administrators and parent-teacher associations.
"The real problem is the state is not providing the support my school needs to teach me everything I need," said Maya Robles-Wong, an 11th grade student in Alameda who is one of the plaintiffs.
The California attorney general’s office, which represents the state in such lawsuits, did not immediately respond to a request for comment.
Yeah, good luck with that.
The mindset will not change; a depressionary relapse may be coming – European version
by ilene - May 17th, 2010 4:16 pm
The mindset will not change; a depressionary relapse may be coming – European version
Courtesy of Edward Harrison at Credit Writedowns
In March I wrote an American version of this post which pointed to the bailout culture in America as a major reason I fear a depressionary relapse. American policy makers have shifted private losses onto the government’s books while propping up bankrupt companies in the private sector in order to forestall yet greater economic pain.
The mindset is fixed on re-engineering some semblance of past economic growth. The result has been a return in the US to the status quo ante of low savings, excess consumption, indebted households, and leveraged financial institutions, but with policy options significantly diminished and greater levels of government debt to boot. Clearly, when stimulus is withdrawn, policy makers should expect more severe economic bloodletting.
In Europe, the same bailout mentality is at work. However, the results are likely to be even more disastrous because of the fundamental misunderstanding of economics and financial sector balances amongst the policy elite in Euroland. The public and private sector cannot simultaneously net save unless the Europeans engineer a competitive currency devaluation. Therefore, the Europeans’ newfound fiscal austerity is at odds with the need of the private sector to reduce debt and will likely lead to a collapse in consumer demand and depression or a trade war. What Europe needs is to allow over-indebted nations to default, reducing the political and economic pressure of austerity.
Intra-Eurozone Trade wars
Let me review how I come to that conclusion. This is a trade issue, first and foremost. The reason the Eurozone exists from an economic standpoint has to do with European interdependence from business trade. The eurozone functions as an internal market much the way the United States does, with the majority of trade occurring inside the region as opposed to externally with non-Eurozone countries.
When the Euro was formed, exchange rates were fixed and a common monetary policy came into being – much as we see for states in the US or provinces in Canada. Of course, monetary policy is not run for specific regions within the zone, but for the zone overall. And this invariably means that the European Central Bank’s monetary policy is geared more to the slow-growth core of Europe than the periphery.
During any business cycle then, current…
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