Posts Tagged ‘Illinois’

California Showdown – Court sides with Schwarzenegger on minimum wage; L.A. council Fires 232 Workers; Illinois Stops Paying Bills Keeps Digging Holes

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

Arnold Schwarzenegger as an unstoppable killing machine in the science fiction thriller Terminator 1984.

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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Illinois Leaps Ahead of California in Default Risk, Better than Iraq, Worse than Portugal; Pension Fraud in Milwaukee

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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Cost of Insuring Illinois Debt from Default Hits All-Time High; Illinois Pension Fund Loses $Billions in OTC Derivatives Positions

Cost of Insuring Illinois Debt from Default Hits All-Time High; Illinois Pension Fund Loses $Billions in OTC Derivatives Positions

Courtesy of Mish

USA, Illinois, Chicago, Millennium Park, Cloud gate sculpture, dusk

Congratulations of sorts go to the State of Illinois for having the most hopelessly underfunded pension plans in the US and also one of the biggest per capita budget deficits.

Topping off the misery, the Illinois Teachers Retirement System is losing money in risky derivatives bets in what one analyst says amounts to “collecting nickels ahead of the bulldozer.”

Given that sorry state of affairs it should be no surprise to discover Illinois Debt Default Insurance Climbs to Record.

The cost of insuring Illinois bonds against default rose to a record as lawmakers sought to close a $13 billion deficit in the state’s proposed budget for the year starting July 1.

The cost of a five-year credit-default swap for the state rose 2 basis points today to 304.64 basis points, or $304,640 per $10 million of debt according to CMA DataVision.

Illinois Loses $Billions on OTC Derivatives

Inquiring minds are reading Illinois pension fund uses OTC derivatives to recoup returns, jeopardizes pensions

Dale Rosenthal, a former strategist for Long Term Capital Management, the hedge fund known for its epic collapse in 1998, and a proprietary trader for Morgan Stanley, has seen his share of financial complexities.

But when shown a seven-page list of derivatives positions held by the Illinois Teachers Retirement System as of March 31, obtained by Medill News Service through a Freedom of Information Act request, the University of Illinois-Chicago assistant professor of finance expressed disbelief.

“If you were to have faxed me this balance sheet and asked me to guess who it belonged to, I would have guessed, Citadel, Magnetar or even a proprietary trading desk at a bank,” Rosenthal said.

How bad is it? After losing $4.4 billion on investments in fiscal year 2009, and 5 percent on investments in fiscal 2008, the teachers’ pension is now underfunded by $44.5 billion, or 60.9 percent, according to the Commission on Government Forecasting and Accountability’s March 2010 report. By comparison, only 20.3 percent of the Chicago Teachers’ Pension Fund is unfunded.

For the quarter ended March 31, according to derivatives experts who studied TRS’ financial documents, the fund lost some $515 million on its derivatives portfolio. Since then, the fund’s derivatives positions have likely soured further, the experts


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Social Unrest Spreads to Slovenia and Spain; Images Around the Globe; US Not Immune to Protests

Social Unrest Spreads to Slovenia and Spain; Images Around the Globe; US Not Immune to Protests

Courtesy of Mish 

The wave of social unrest is spreading. A new round of protests has hit Spain with a public sector strike set for June 8. In Slovenia, students are protesting new rules that limit their work hours and pay.

"Luka Gubo" an economist from Slovenia writes:

Hi Mish!

First I must say that I love your blog. Great job!

I just wanted you to know that Slovenian students are protesting too.

The main reason for organizing protests is changes in law regarding student jobs. Current tax law makes average workers uncompetitive because businesses pay about 15% income tax for students and more then 35% income tax for average worker (average net income is 930€).

Bear in mind that the average time for a student to complete his higher education here is 6 years and that more then 20% of "students" do not to school at all. Instead, they just enjoy student benefits like lower income taxes, food stamps, etc.

I think that everyone would agree a new law is needed in Slovenia. However, the new will limit the maximum hours worked by students to one third of full work time, and put a limit on maximum hourly wage at 8€ per hour.

That one *ing great free-market solution, wouldn’t you agree?

Here is the Slovenian parliament building after 2 hours:

The protests went smooth for a while, but it did not last long. You can find a series of 39 images at http://www.finance.si/galerije/2139/3/

Luka Gubo

More Images

Greece, Spain hit by strikes over cuts

CNN Reports Greece, Spain hit by strikes over cuts

Public sector union ADEDY and private sector union GSEE called the strikes against the government’s austerity measures, in particular the pension reforms announced last week. The reforms include raising the retirement age, which varies in different professions.

It is the first major strike since May 5, when violent protests against the austerity measures resulted in the deaths of three people in the capital, Athens.

Spanish government workers were set to protest at 6 p.m. (noon ET) outside the Ministry of the Treasury in Madrid and outside the central government offices in their respective towns. Spanish government workers were set to protest at 6


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Fitch Downgrades Illinois and Warns of Further Actions as Budget Gap Widens

Fitch Downgrades Illinois and Warns of Further Actions as Budget Gap Widens

Courtesy of JESSE’S CAFÉ AMÉRICAIN

Illinois is financially the fifth largest US state with a 2008 GDP of approximately $633 Billion.

To put this in perspective, the 2008 GDP for the nation of Greece was approximately $357 Billion.

The largest state is California with $1.8 Trillion in 2008 GDP, roughly on a par with Russia, Spain, or Brazil,

The US is also considering accounting rule changes that will require the states to more accurately reflect and more fully fund their pension obligations for government employees.

The problem of States’ debt is made more problematic by decreasing state tax revenues and the enormous demands of the US Federal government for more tax revenues on their citizens’ incomes, and the crowding effect in markets by the record amounts of sovereign debt issuance which is largely short term and must be rolled over regularly.

The Bond Buyer
Fitch Downgrades Illinois to A-minus
By Yvette Shields
March 29, 2010

CHICAGO — Fitch Ratings late Monday downgraded Illinois’ general obligation rating one notch to A-minus and warned of possible further action by leaving the state’s credit on negative watch ahead of $1.3 billion of short- and long-term GO issuance in three deals over the coming weeks.

Gov. Pat Quinn had hoped that the General Assembly’s passage last week of pension reforms would stave off any negative rating actions and buy the state some additional time to address a nearly $13 billion budget deficit and liquidity crisis in the current legislative session.

But Fitch analysts said the state’s challenges are too severe and persistent. They believe it is unlikely the fiscal 2011 budget will “sufficiently address either the annual operating deficit or accumulated liabilities.”

The results of the current session will drive analysts’ decision as to whether Illinois holds on to its current rating level. Fitch dropped the state’s $23.4 billion of GO debt two notches down to its current level last July.

Fitch’s action follows Standard & Poor’s decision on Friday to place the state’s A-plus rating on negative CreditWatch. Moody’s Investors Service on Monday affirmed its A2 rating and negative outlook.


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Bankruptcy Court Gives Prichard Alabama 2 More Months To Figure Out How To Pay Pensioners

Bankruptcy Court Gives Prichard Alabama 2 More Months To Figure Out How To Pay Pensioners

Courtesy of Mish 

Prichard Alabama declared bankruptcy on October 28, 2009 over pension obligations. Since then pensioners have not been paid. Now a bankruptcy court has given the city two more months to figure out how to do so.

Let’s backtrack to the beginning. Please consider Prichard files for bankruptcy protection again.

Wednesday, October 28, 2009

The city of Prichard filed for bankruptcy Tuesday in an attempt to cope with the debt created by fighting lawsuits and addressing the demands of unpaid and agitated retired city employees.

The Chapter 9 filing marks the second time in a decade that the city declared it was out of money. Mayor Ron Davis, who just two years ago helped the city pay off its creditors from the 1999 bankruptcy, blamed the latest financial crisis in part on a flawed municipal pension plan. The filing came a day before Davis and the city Finance Director Rex Williams were slated to be deposed by attorneys representing the pensioners in a lawsuit filed in August.

With the filing, that testimony will be put on hold, along with any other litigation pending against the city.

"After careful review of all of our options, bankruptcy protection seems to be the only solution left at this time," Davis said in a statement released Tuesday afternoon. "Over the past 50 years, the pension plan was amended by the Legislature more than fifteen times, and always the economic burden on the City was increased. This has been a long-term problem that was unfortunately inherited by this administration.

"After several lawsuits filed by pensioners, it has forced us to come to this decision, one that will protect the city and its residents," Davis’ statement added.

Pensioners Have Received No Checks For Six Months

Please consider Still no money for Prichard pensioners

A bankruptcy court judge has given the City of Prichard two more months to figure out how they will pay retired city workers. Prichard pensioners have gone six months without a pension check.

Prichard is operating under the protection of Title IX Bankruptcy, and for many people, that means no promised pension payments.

After six months with no pay, Prichard pensioners put their faith into the courts. They hoped a judge would force the city to pay some, if not all, of


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Rep. Suzie Bassi: “Illinois in Utter Crisis, Next to Bankruptcy, $13bn Hole in a $28bn Budget”; Ambrose Evans Pritchard Inflicted with FIV

Rep. Suzie Bassi: "Illinois in Utter Crisis, Next to Bankruptcy, $13bn Hole in a $28bn Budget"; Ambrose Evans Pritchard Inflicted with FIV

Courtesy of Mish 

French mime artist Marcel Marceau's items auctioned at Drouot in Paris

Ambrose Evans-Pritchard has the right facts but the wrong cure in Don’t go wobbly on us now, Ben Bernanke, an article detailing the problems in many US states, notably Illinois.

Barack Obama’s home state of Illinois is near the point of fiscal disintegration. "The state is in utter crisis," said Representative Suzie Bassi. "We are next to bankruptcy. We have a $13bn hole in a $28bn budget."

The state has been paying bills with unfunded vouchers since October. A fifth of buses have stopped. Libraries, owed $400m (£263m), are closing one day a week. Schools are owed $725m. Unable to pay teachers, they are preparing mass lay-offs. "It’s a catastrophe", said the Schools Superintedent.

In Alexander County, the sheriff’s patrol cars have been repossessed; three-quarters of his officers are laid off; the local prison has refused to take county inmates until debts are paid.

Florida, Arizona, Michigan, New Jersey, Pennsylvania and New York are all facing crises. California has cut teachers salaries by 5pc, and imposed a 5pc levy on pension fees.

This is not to pick on America. Belt-tightening is the oppressive fact of 2010-2012 for half the world. Hungary, Ukraine, the Baltics and the Balkans are already under the knife. Latvia’s economy may contract by 30pc from peak to trough as it carries out an "internal devaluation", ie wage cuts, to hold its euro peg.

The eurozone’s fiscal squeeze is well advanced in Ireland. Brussels has told Greece to cut by 10pc of GDP in three years, Spain by 8pc, Portugal by 6pc. Britain must slash soon, or face a gilts strike.

The Bank for International Settlements says Britain needs a primary surplus of 5.8pc of GDP for a decade to stabilise debt at pre-crisis levels, given the ageing crunch as well. The figure is 6.4pc for Japan, 4.3pc for the US and France. It warns of "unstable dynamics", posh talk for a debt spiral. "Action is needed now."

The West risks a slow grind into debt-deflation unless central banks offset fiscal tightening with monetary stimulus – QE, of course – to keep demand alive. Yet the Fed and the European Central Bank are letting credit contract.

So why has Bernanke broken ranks with King and…
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School Bills Due But State Can’t Pay: “There is No Money”; Let the War on Public Unions Begin

School Bills Due But State Can’t Pay: "There is No Money"; Let the War on Public Unions Begin

Courtesy of Mish

Two schoolgirls and boy (4-6) standing at table making paper chain

While the stock market marches on oblivious to the real world, things are rapidly approaching crisis mode in Illinois, and for that matter nearly everywhere you look. Please consider School bills are due, but state won’t pay.

Say the words out loud to get a feel for the size of it: Forty-five million, two hundred and six thousand, six hundred and fifty-four dollars, and sixty-one cents. That’s how much the state is behind in payments to your local schools.

When the quarterly payments came due at the end of the year, the state again missed its categorical and grant payments to all 871 Illinois school districts.

This money is supposed to fund projects like school buses, special education, reading programs and early childhood development. But the money’s not coming, instead getting added bill by bill to an already $4.5 billion IOU the state has for services from schools to homeless shelters.

But the same state that’s no longer paying for these programs legally requires them.

Unlike the usual budget bellyaching when political pressure can make money appear, this time is different, said state Rep. Linda Chapa LaVia, D-Aurora. There is no money. "This is not a false alarm. This is not someone pulling a fire drill. This is a fire," Chapa LaVia said.

The West Aurora School District plans to lay off teachers for the second year running. Last year, the district planned to lay off 120 teachers, but ended up only giving 55 the ax. The district didn’t have a change of heart — laying off all 120 would have pushed class sizes past the maximum in the teachers union contract.

There’s a fee the district can pay if they want to go past that limit by laying off more teachers. They’re considering it. "It’s cheaper to pay a premium than to pay a teacher," West Aurora Chief Financial Officer Christi Tyler said.

It’s not that the state is denying it owes this money. The Illinois State Board of Education, like many state agencies, is dutifully sending its vouchers to the comptroller’s office, where … nothing happens.

What usually is a bureaucratic delay where the comptroller gets the voucher and then cuts the check within


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ValueWalk

Bishop urges Congress to consider immigrants, refugees for coronavirus stimulus checks

By Aman Jain. Originally published at ValueWalk.

The first round of stimulus checks helped millions of people meet their financial needs. Although the CARES Act offered stimulus checks to most Americans, it missed a few groups as well. Two such groups are immigrant and refugee families. To ensure that immigrant and refugee families are not left out again, the chairman of the U.S. bishops’ migration committee has asked Congress to include them the next time they send coronavirus stimulus checks.

Q2 2020 hedge fund letters, conferences and more

Coronavirus stim...

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Zero Hedge

"Very Sorry": Kim Jong-Un Issues Ultra Rare Apology Over Killing Of South Official

Courtesy of ZeroHedge View original post here.

North Korean leader Kim Jong-Un has issued an extremely rare apology over the Thursday killing of a South Korean fisheries official who breached the border in the water off the coast while allegedly trying to defect. He had been shot on site by the north's border patrol in a boat who happened upon the life jacket wearing man, his body also immediately burned on coronavirus fears.

Kim's messag...



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Phil's Favorites

Why do bankers behave so badly? They make too much money to ask questions

 

Why do bankers behave so badly? They make too much money to ask questions

Rudy Balasko/Shutterstock

Courtesy of Mark Crosby, Monash University

Over the past 16 months journalists have been scouring through more than 2,000 Suspicious Activity Reports originally sent by banks to the United States Treasury, before being leaked to Buzzfeed and then passed along to the International Consortium of Investigative Journalists.

The reports relate to more than US$2 trillion in transactions over the period from 2000 to 2017. Some of these transactions will already have been investigated, and may be legitimate. In the case o...



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Kimble Charting Solutions

Key Inflation Indicators Facing Big Test In September!

Courtesy of Chris Kimble

Inflation has long been a word that the Federal Reserve uses but the general markets have forgotten about.

Why? Well because it’s been virtually non-existent for years. Key indicators like commodities (i.e. copper) have been in a down-trends and the Materials Sector (XLB) has lagged… until this year.

In today’s chart 3-pack, we take a look at the Equal Weight Commodity Index, ...



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Digital Currencies

The Great Unbanking: How DeFi Is Completing The Job Bitcoin Started

Courtesy of ZeroHedge View original post here.

Authored by Paul De Havilland via CoinTelegraph.com,

While most of us will prefer to forget the horrors of 2020, DeFi may well prove to be the guarantee of a better, more liberated future...

...



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Politics

'Colossal Backdoor Bailout': Outrage as Pentagon Funnels Hundreds of Millions Meant for Covid Supplies to Private Defense Contractors

 

'Colossal Backdoor Bailout': Outrage as Pentagon Funnels Hundreds of Millions Meant for Covid Supplies to Private Defense Contractors

"If you can't get a Covid test or find an N95, it’s because these contractors stole from the American people to make faster jets and fancy uniforms."

By Jake Johnson

Secretary of Defense Mark Esper and Chairman of the Joint Chiefs of Staff Army Gen. Mark Milley hold an end of year press conference at the Pentagon on December 20, 2019 in Arlington, Virginia. (Photo: Drew Angerer/Getty Images)

Instead of adhering to congressional inten...



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Biotech/COVID-19

How and when will we know that a COVID-19 vaccine is safe and effective?

 

How and when will we know that a COVID-19 vaccine is safe and effective?

How much longer must society wait for a vaccine? ANDRZEJ WOJCICKI/Getty Images

By William Petri, University of Virginia

With COVID-19 vaccines currently in the final phase of study, you’ve probably been wondering how the FDA will decide if a vaccine is safe and effective.

Based on the status of the Phase 3 trials currently underway, it i...



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Chart School

Stocks are not done yet - Update

Courtesy of Read the Ticker

There are a few times in history when a third party said this US paper (stocks, funds or bonds) is worthless.

Here is two.

1) 1965 Nixon Shock - The French said to US we do not want your paper dollars please pay us in gold. This of course led to the US going off the gold standard.

2) 2007 Bear Stern Fund Collapse - Investors said their funds collateral was worth much less than stated. This of course was the beginning of the great america housing bust of 2008.


In both cases it was stated .."look the Emperor is naked!"... (The Empe...

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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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