Showing posts with label bankruptcy. Show all posts
Showing posts with label bankruptcy. Show all posts

Happy New Year! Ready For Another Prediction? This Time Try 30-40% Unemployment Rates.

1/01/2009 12:35:00 AM

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2009-print-preview-blogSay goodbye to 2008.  Never to be here again and hello to 2009.  New Years Day, a new year, a new day, and a time for new hope.  And with that, why wait to begin the misery of what might be in store for next year.  What say you?

I happened across a strange prediction for our wonderful new year of hope.  It’s probably not what you want to hear, but hey, since when do I ever tell you what you want to hear, but instead write about what you should think about.

Now, I’ve never heard of this organization before.  I don’t know anything about them.  But.. well.. what they have to say is rather scary to even think about.

How about the notion of topping Great Depression numbers of 20-22% across the nation?  What if I said someone is predicting 30-40% unemployment by September 2009?  How’s that for scary?

This commentary comes from a “We Beat the Street” commentary, an Investment Strategy company, via KITCO.   The author is Roger Wiegand, who I’ve also never heard of before and don’t know too much about, other than his biography on We Beat the Street and a bio on IIC.  But , lets take a gander into his crystal ball, shall we? [Hat Tip to Nightblogger]

Our new president is determined to hand out $860 Billion to One Trillion dollars in a Herculean effort to literally buy a new economic recovery.  While some of his ideas are noble indeed the overall plan will have little effect and Great Depression II shall take hold in 2009 with crashing stock markets in May and September-October 2009.  We think the worst of the worst hits in late September 2009.

Hey, what do you know, the one year anniversary of when millions lost nearly all of their 401(k)s when the market dropped out.  What a time to choose!  But I’m getting ahead of myself… lets hear about spring.  A time of green, fresh air, and everything coming back to life.  But the death of the stock market according to Wiegand.

During the spring of next year we see:

(1)  A second larger wave of residential housing mortgage failures; [Now, to be honest, I heard about this about two months ago.  Its a different kind of mortgage than the ARMs but it’s more “deadly” to the market  and banks.  Good thing we don’t have to pay a mortgage!]

(2)  The first big wave of auto loan failures and repossessions; [I heard about this one too about two months ago.  But if people can’t pay their mortgages, the next big ticket item is their car.  Good thing we don’t have to pay a car loan or lease!]

(3)  Over $40 billion in credit card defaults, smashing the bank lenders; [This is already happening, and again, another “big ticket” item are peoples credit cards.  Good thing we’ve never EVER used them.  If you can’t pay for it in cash, you don’t need it.]

(4)  The first wave of commercial mortgage failures and foreclosures on shopping malls, office buildings and other commercials; [This too is inevitable.  It is estimated that over 16,000 businesses will fail in the next year, leaving a lot of empty space in malls, strip malls, and business complexes.  Already, Circuit City has left quite a few leases up in the air, due to them filing bankruptcy.  Whose next?]

(5)  And finally, the grand smashing finale of CDS Credit Default Swaps originated with No margin money or down payments!  We heard today the total is 500 trillion!  I cannot even fathom that number.  These five converging train wrecks could take the Dow from a dead cat bounce of 10400-10800 back to 7250, or even 6600, or 5600.  [My other half and I have said, the Dow will crash out around 5000 in 2009.  So much for our stocks.]

But if you think the Dow at 5000-6000 is bad, you haven’t heard it all yet.  The above is just in the spring of 2009.  There’s how many months in the year, and how many seasons?

Then, in late September and early October, the New York, London, Tokyo and Asian markets take a monster crash.  how low is low and how bad can it get?  We think the Dow could end-up on November 1st, 2009 anywhere from 5,600 to a low of 3,000 or even 1,500. 

Ouch…. and how interesting that it’s just about the same time that the stock market crashed in 1929.  But the best.. err.. worst is yet to come.  And the capitalization isn’t my emphasis, it’s Wiegand’s.

Unemployment nationally in the USA is now touching 16%.  The officially posted number is somewhere near half of that.  By the fall of 2009, American REAL UNEMPLOYMENT WILL BE NEAR THE ALL TIME 1930’S DEPRESSION HIGH OF 25% UNEMPLOYED.  SADLY, THAT IS NOT THE WORST AS IT GETS MORE DIRE.  WE PREDICT, USA UNEMPLOYMENT REACHES 30-40%.  IN THE RUST BELT STATES OF MICHIGAN AND OHIO, WHILE 40% IS NOT UNREALISTIC.

Great… wonderful.  Buy your tents, Coleman stoves and sleeping bags now.  And maybe a nice little 9mm and shotgun.  Aww heck, splurge for a Desert Eagle.  Size is intimidating!  Make sure to not forget the ammo!  And begin to stockpile food, you might need it.  This might be the “new” money and a good bartering tool, as long as people don’t kill ya for it.  And LOTS of stocking up on toilet paper and um.. ah… guys look away on this one… feminine items.  And don’t forget things like cold medicine, aspirin, and topical antibiotics!But more realistically, stockpiling at least two months of food is a good way to make sure you have a food supply and “other” items if you lose your job or have to choose between food and a house payment.

The American federal government departments for food stamps and the job of providing welfare provisions will be overwhelmed.  This will be a Katrina event for the hungry citizens of the United States.  Urban areas will see skyrocketing crime and in parts of some cities, life could become totally uninhabitable.

The last report we’ve seen on those receiving food handouts and related welfare amounted to 11 million USA citizens with 700,000 children going hungry each day.  We suspect the true amount of those needing food help will rise to 35 million with an untold tragic number of them being little, defenseless children.  Governments remain in denial and are not prepared for this national emergency whatsoever.  As things worsen, food riots and others with violence aimed at the “have” are common.

Did I happen to say that I am also professionally trained in sword fighting?  And raised by a Father who taught me to shoot a .38 & .45 around the age of 8 and a shotgun at the age of around 10?  Who would have ever thunk it that I would need those skills in my personal life!  And a chick to boot!

And as for that stockpiled food, didn’t I just say it was going to be the new “money”?  Dollars will be worthless. 

The number of bank failures over the next three years will be in the thousands.   In addition, the US Dollar’s valuation could break recent lows near 70.00 on the index, dropping to 46.00 by 2011 or 2012.  Inflation or potentially hyperinflation is quite real as the Federal Reserve and US Treasury strain to print and circulate cash to prod our stalled economy.  It is simply not working even with the dramatically lower interest rates of late.

But to continue, Wiegand says just like in the Great Depression, families are “renting” out rooms, or “bunking” up to pool their money.

Consumers are broke and going broker.  Households of interrelated families are doubling and tripling up even with several employed members being under one roof.  Basic costs of rent, mortgage payments, health care, food, utilities and taxes are too much to bear on stagnant and in some cases falling wages.  In some areas of America, there are entire subdivisions of homes totally abandoned or existing with only a hand full of occupants.  The millions thrown at lenders for new mortgages are not getting through to buyers, as there are fewer of them.  We are witnessing a system breakdown.

Isn’t this already happening?  I recently blogged about Detroit and how many of the homes are already empty, and have been gutted for their copper and such.  And additionally, many who are behind on their mortgages, and said bank gets a bailout, refinances the mortgage, only to increase the payment by $300 to $500 a month, and also demands several thousand dollars just to stop the foreclosure within 30 days!

And states and cities will be broke also, so forget about getting any help from them, which is already happening.  Say bye bye to welfare and to schools.

Municipalities and states are sinking into a spending, debt-ridden morass.  It was reported today that 22 of 50 USA states are in serious budgetary trouble.  California is one of those in terrible condition and Michigan is already technically broke as many of her cities. [Don’t forget Ohio as the governor called Rahm and said he needed $5 billion!]  Detroit will file bankruptcy in 2009 and there will [be] many other surprises as well.  There will be a cascade of bond defaults and the outcome will cap the ability of these cities, states and countries to borrow ever more.

Hey, at least we are all in this together….. *smirk*  True worldwide Socialism!  YIPPIE!

The shining light through all of this is the faster we find the bottom the faster we can recover.  Sadly, the recovery process will take years.  Futures and commodities traders should continue to earn steady profits as the stock markets slide into oblivion for years.  We see no recovery until 2015.

Let see… Obama Jan 2009 – Jan 2013.  I wonder if he will run for re-election?

I find it interesting that there is no mention of the Big 3, or of a company such as Wal-Mart still being in business.  If Wal-Mart collapses, we are in trouble.

But wait.. according to the Russian nutjob, by 2010 we will be in a civil war and the United States will be split between Canada, China/Japan, Mexico and the EU with Alaska going back to Russia and Hawaii going to China/Japan so all of this won’t happen!

Of course there’s always Gerald Celente’s prediction of a total collapse of the economy and a revolution by 2012.

So well.. there’s my first post of the new year…… oh and… um… might be a little late… but have a happy and prosperous  New Year, while you still can? *shrug* *nervous smile*

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The UAW Has Blood On Their Hands While We, The US Taxpayers Have Dirt In Our Faces. [Bailout]

12/19/2008 02:49:00 PM

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JCPenny catalog2Your own little Detroit, just in time for Christmas!   And again I state, if the UAW is so good, then why is Detroit in trouble?  Why don’t the import auto makers have problems?  Why aren’t they screaming for a bailout?  The difference between the two?  The UAW.

This morning President Bush announced that his Administration, acting unilaterally after Congress declined to intervene, due to the UAW refusing to make concessions, will bail out the auto industry to the tune of $13.4 billon now, and possibly another $4 billion in February.  “The time to make hard decisions to become viable is now, or the only option will be bankruptcy,” Bush said.  “The automakers and unions must understand what is at stake and make hard decisions necessary to reform.”

The White House admits that it consulted with Obama on the loan package.  They briefed the Obama transition team over the last several days and options under consideration, according to a transition aide not authorized to speak publicly.  White House spokesman Joel Kaplan confirmed that there had been “consultations ongoing” between the two sides but he declined to go into specifics.  The financing will be drawn from the $700 billion TARP, the fund set aside in October to bailout Wall Street firms and banks.

Obama issued a statement on the bailout loan to Detroit:

Today’s actions are a necessary step to help avoid a collapse in our auto industry that would have devastating consequences for our economy and our workers.  With the short-term assistance provided by this package, the auto companies must bring all their stakeholders together – including labor, dealers, creditors and suppliers – to make the hard choices necessary to achieve long-term viability.  The auto companies must not squander this chance to reform bad management practices and begin the long-term restricting that is absolutely required to save this critical industry and the millions of American jobs that depend on it.

DETAILS ON THE “LOAN”

Here’s a sneak peek of the plan, as released by the White House:

  • Amount:  Auto manufacturers will be provided with $13.4 billion in a short-term financing from the TARP, with an additional $4 billion available in February, contingent upon drawing down the second batch of TARP funds.
  • Viability Requirement:  The firms must use these funds to become financially viable.  Taxpayers will not be asked to provide financing for firms that do not become viable.  If the firms have not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury.
  • Definition of Viability:  A firm will only be deeded viable if it has a positive net present value, taking into account all current and future costs, and can fully repay the government loan.
  • Binding Terms and Conditions:  The binding terms and conditions established by the Treasury will mirror those that were voted favorably by a majority of both Houses of Congress, including:
    • Firms must provide warrants for non-voting stock.
    • Firms must accept limits on executive compensation and eliminate perks such as corporate jets. [The companies must show the White House they are “taking all reasonable steps” to sell aircraft or interest in aircraft.  And they must provide plans to control their expenses that would include details about spending on holiday parties, travel and new real estate.]
    • Debt owed to the government would be senior to other debts, to the extent permitted by law.
    • Firms must allow the government to examine their books and records.
    • Firms must report and the government has the power to block any large transactions (> $100 million).
    • Firms must comply with applicable Federal fuel efficiency and emissions requirements.
    • Firms must not issue new dividends while they owe government debt.
  • Targets:  The terms and conditions established by Treasury will include additional targets that were the subject of Congressional negotiations but did not come to a vote, including:
    • Reduce debts by 2/3 via a debt for equity exchange. [The companies would need to provide the government with restructuring plans by Feb 17.  Those plans would need to show the companies and their subsidiaries have used their best efforts to reduce outstanding unsecured public debt, with the exception of pension and employment benefits obligations, by two-thirds.]
    • Make one-half of VEBA payments in the form of stock.  [The White House has called for the automakers to make 1/2 of the approximate $21 billion owned to UAW retiree health-care trust in stock instead of cash.]
    • Eliminate the jobs bank. [The bank provides nearly full pay to union workers on long-term layoff.  The workers receive normal unemployment benefits however, the jobs bank provides compensation that would make the workers benefits, while on layoff, equal to about 95% of their weekly income.]
    • Work rules that are competitive with transplant auto manufactures by 12/31/09. [Meaning equal to that of Nissan, Toyota or Honda however, the U.S. Treasury has changed its stance, saying it had identified an error it wanted to correct to make terms of the package consistent with its intent.]
    • Wages that are competitive with those of transplant auto manufacturers by 12/31/09.
    In addition, the firm will be required to conclude new agreements with its other major stake holders, including dealers and suppliers, by March 31, 2009.


    These terms and conditions would be non-binding in the sense that negotiations can deviate from the quantitative targets above, providing that the firm reports the reasons for these deviations and make the business case to achieve long-term viability in spite of the deviations.

    Interest on the loans is currently set at 5% for three years.  In the event of a default, interest rates could rise to 800 basis points above either Libor or 2%, whichever is greater and is payable immediately.

    The companies would need to provide the government with weekly status reports, beginning this week.  The reports would need to detail companies’ 13—week rolling cash forecasts.  The companies also are required to provide biweekly liquidity status reports after loan disbursements and monthly certifications of expense policy and compensation compliance.

    WHO GETS WHAT, MAYBE

    GM     - $17.4 billion.  GM is set to draw $4 billion on Dec. 29, followed by another $5.4 billion on Jan. 16.  Should Congress release a second set of TARP funding, GM would get an additional $4 billion on Feb. 17.

    Chrysler - $4 billion on Dec. 29.

    Ford – Ford is not seeking any assistance.  “As we told Congress, Ford is in a different position.  We do not face a near-term liquidity issue, and we are not seeking short-term financial assistance from the government,” Ford President and CEO Alan Mulally said.  “But all of us at Ford appreciate the prudent step the administration has taken to address the near-term liquidity issues of GM and Chrysler.”

    MEANWHILE THE UAW IS NOT HAPPY ABOUT PAY AND BENEFIT CONCESSION

    If you remember, because the UAW would not make concession, that was the reason that the Republicans said no to the Detroit bailout.  Well, Bush added in that concession, and the UAW is not a happy camper.

    House Financial Services Committee Chairman Barney Frank (D) is calling the wage stipulation “an unfair assault on working men and women” that could force them to accept “a disproportionately large reduction in what is currently legally owed to them.”  The provision, Frank said, “could give foreign auto companies in effect the ability to dictate wages for all American auto workers,” and “it’s outrageous to be giving foreign companies the right to set wages for American workers.”  He is already pushing for Obama to change that portion of the emergency loan package, something the U.S. Treasury said the incoming Administration will have the power to do. 

    House speaker Nancy Pelosi (D) said the White House package “unfortunately singles out workers and clearly put them at a disadvantage before negotiations have even begun.”

    “All stakeholders – management, directors, bondholders, suppliers, dealers, workers – will have to participate in shared sacrifices to help the industry move forward,” UAW President Ron Gettelfinger said, noting that the UAW members have already made more substantial sacrifices to help make the domestic auto companies more competitive.  [Those concessions were over a year ago, in an totally different economy.]

    ”We are disappointed that,” President Bush, “has added unfair conditions signaling out workers,” Gettlefinger said.  “We will work with the Obama administration and the new Congress to ensure that these unfair conditions are removed, as we join in the coming months with all stakeholders to create a viable future for the U.S. auto industry.”

    “Because these provisions are unnecessary to achieve our goal and because they were unilaterally inserted by the President into what was otherwise a negotiated agreement, I believe that the incoming administration and the Congress should take whatever step are necessary to remove them,” he said. 

    The UAW has criticized the idea of cutting employment compensation.  “While we appreciate that President Bush has taken the emergency action needed to help America’s auto companies weather the current financial crisis, we are disappointed that he has added unfair conditions singling out workers,” UAW President Ron Gellelfinger said in a statement.

    What the UAW needs to remember, is that this money is a loan to GM and Chrysler, a bailout for the auto makers, the company itself, NOT to the workers.  Because if the company doesn’t exist, then the workers don’t have a job.  If the UAW needs money to continue giving their members the same lifestyle they are use to in pay and benefits, then they should solicit Congress for money and take a loan out themselves.

    TARP

    Then there is the entire issue of the second part of the TARP funds.  Currently of the first $350 billion allocated to the Treasury, the department has committed:

        ■  $315 billion to inject capital into banks and AIG
        ■  $20 billion to unfreeze consumer credit markets
        ■  $13.4 billion for GM and Chrysler

    This leaves the Treasury will less than $2 billion at its disposal.  Treasury Secretary Paulson said that Congress must release the second half of the $700 billion TARP, stating he would meet with lawmakers and Obama’s transition team to discuss when to ask for the rest of the rescue money. 

    But some administration officials suggested that the final decision to request the funds might not come until after Obama takes office.  Treasury officials have grown increasing concerned in recent weeks that they could be left without enough cash to stem another financial crisis, such as the collapse of a bank or other major institution.  But on the other side of the coin, many in Congress have been critical of how the US Treasury has handled the first part of the $350 billion in funding.

    In order for the Treasury to access the second half of TARP, the White House must send Congress a plan detailing how the money would be spent.  Congressional Democrats say they don’t expect a request to come before Jan. 4, when the new Congress is scheduled to convene.

    Once that submission is made to Congress, they have a 15 day window on voting to pass a measure to block release of the money.  If Congress passes a bill to not release the money, then the White House could veto and overrule the congressional vote, but then Congress could also overturn that veto.

    The reason Paulson is talking to the OBama team, is that the timeline for all of this, puts the passage into the first days of Obama’s presidency.  It is unlikely, and I would be very surprised, if Bush petitions Congress to release the money.

    Congressional Democrats say they don’t expect a request to come before Jan. 6, when the new Congress is scheduled to convene.  Once a request is made from the White House, Congress has 15 days to pass a measure that would block release of the money.  Six plus fifteen equals 21, meaning Obama is in office.  Or if Congress passed immediately, Bush could veto the funds which would mean that Obama would have to make the request to Congress, thus adding additional responsibility on Obama’s Administration. 

    OBAMA

    ”Today’s actions are a necessary step to help avoid a collapse in our auto industry that would have devastating consequences for our economy and our workers,” Obama said.  “With the short-term assistance provided by this package, the auto companies must bring all their stakeholders together including labor, dealers, creditors and suppliers to make the hard choices necessary to achieve long-term viability.”

    Obama has also said that “the American people’s patience is running out.”  He says the automakers should “seize the opportunity” to come up with a plan to make their companies sustainable.

    Obama also said a final restructuring package shouldn’t just include concessions from the workers.  He said they shouldn’t be the ones “taking all the hits”.  Obama says everyone involved with the auto industry has to be “part of the process.” 

    Obama wouldn’t say if he had any specific changes to the plan laid out by Bush this morning because he had yet not examined the exact details.

    Bush however, has handed off to Obama his probable first and major difficult decision when he becomes President regarding our economy.  Then his administration must politically and economically judge whether GM and Chrysler have become financially viable at the end of March.  If his new team concludes that the automakers have not become financially viable, it means bankruptcy for GM and Chrysler and widespread layoffs far beyond the automakers.  Meanwhile, Bush has insured that the automakers do not fall on his presidential watch, while it will be up to Obama and his administration to determine if GM and Chrysler are viable, and possibly fall.

    CERBERUS

    Cerberus owns 80 percent in Chrysler.  The White House package strips away the requirement that Cerebrus be held liable for any losses experienced by the taxpayers.  Lawmakers, both Democrat and Republican, have expressed outrage that Cerebrus, which is profitable, had refused to put up any more cash aid to Chrysler. 

    In an emailed statement, Cerberus said that it will hand over equity in the company’s automotive operations to labor and creditors as part of the loan agreement.  “Concessions by all relevant constituencies” are needed to restructure Chrysler.  The fund agreed today to put up another $2 billion into Chrysler.  Administration officials said the investment effectively put Cerberus on the hook for far more than just the government loan, and that taxpayers were being protected through tough restrictions imposed in the loan agreements – including provisions that would give the government an equity stake in GM and Chrysler.

    RANT ON

    First of all, this is a bailout plan, plain and simple.  Sure, the White House will point to a long list of requirement in the deal’s terms as proof that this isn’t just another bailout.  But that’s bogus:  this is a politically-driven plan and none of the important concessions listed by the White House are binding or likely to happen.  That’s because, unlike in bankruptcy court, this bailout offers no accountability.  There is a zero chance that the government will require GM or Chrysler to pay back these loans if they are unable to right themselves by March. 

    Second, the “deal” is non-binding.  Detroit could come back and simply say they haven’t obtained “viability” because no one is buying cars.  That’s their ticket out.

    Third, it’s an end-run around our representative democracy.  Congress spent over one month debating whether and how to support the automakers and, in the end, decided to put no taxpayer money on the line.  The White House’s action today nullifies that congressional decision, violating the constitutional command that the legislative branch makes law and the executive branch enforces it.

    Forth, it’s just a downpayment.  According to industry analysts and economists (e.g., Mark Zandi) future bailouts, or even bankruptcy, are inevitable.  How much will it cost?  Zandi says up to $150 billion.

    Fifth, according to the terms, if the auto makers have “not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury.”  What if they auto makers haven’t attained viability, and they don’t have any money to pay it back immediately?

    Sixth, there nothing in the loan terms to keep Detroit from continuing layoffs and sending jobs to Mexico.

    Seventh, is another small problem:  this bailout is ILLEGAL.  The administration does not have the legal authority to use funds from the bank bailout in this way.  Congress earmarked that money for “financial institutions,” which the UAW automakers clearly are not.  The funds were to be used to restore liquidity and stability in the overall financial system, not to help nonfinancial corporate companies in distress because of  the UAW.

    And finally, the fact is that this bailout probably isn’t going to work.  Put simply, if the goal is turning the automakers around to achieve long-term profitability, this bailout is clearly inferior to a straightforward reorganization under Chapter 11 of the bankruptcy code, which so many large corporations have relied upon to escape dire financial straights and return to profitability.  A bailout actually makes achieving this goal less likely.

    And then there is the fact that auto sales have been SLASHED at record lows.  Detroit can continue to make cars however, who is going to be buying them? 

    And where is the “car czar” in all of this?  Oh yea, its the U.S. Treasury secretary, and we all know how good he’s been with that, right?

    SIDE RANT

    Why aren’t the same type of restrictions or concessions given to the “too big to fail” banks, who are still laying off workers, paying stockholders, paying bonuses, buying other banks, increasing interest rates on current balances on credit cards, and not making any credit available to consumers and businesses?

    And do I feel sorry for current employees and retirees who benefits may end up being cut 60% in the end?  Nope.  Why should they be any different from any other American who is suffering right now?  Join the recession with the rest of the country where you must choose between housing, food and health care.  And if you say the UAW has acquired rights to those items, then why doesn’t the rest of the country have the same?

    As for those who paid into the pension fund, and may not get those funds?  Well, what about all the millions of people who have paid into FICA, and come to find out, those funds are probably going to be gone and thus then what?   I paid in enough funds within a 10 year period to acquire enough points to be eligible to retire and eligible for disability.  Why do I have to wait at least 32 years AFTER that to be eligible for 70% of my retirement benefits, and wait a total of 37 years AFTER I’ve paid in enough to be eligible for 100% of my measly $1000 a month.  Can I have interest on all that money over the years?  Nope.

    There is the option of the 401(k) however, the Democrats in Congress want to seize those funds.

    And why do average US workers, making $10 to $15 a hour, if not less, have to pay taxes to support the UAW for workers who make two or three times those hourly wages, not including all their benefits?

    The UAW has blood on their hands while we, the US taxpayers have dirt in our faces.

    MEANWHILE

    A bailout for Wall Street was done in days in Congress.  A bailout for the auto makers was done in a few weeks.  Why is it taking MONTHS to do a bailout for US taxpayers?  In the meantime, the US taxpayer, who is suffering from record high foreclosures and unemployment get to move into their new digs while the UAW wants to make sure that their workers have everything they have had in the past.  A box under an interstate, or bridge. Are you going to choose a refrigerator box or build one from wooden skids?

    If Unions are so good for the economy, then why are automakers in trouble?  If the auto workers are so good, then why are the US made cars mostly sub-standard compared to foreign autos?  And if UAW made cars are so good, then why isn’t the import car industry in trouble?  Why aren’t the import companies screaming for bailouts?  Why is Detroit in so much trouble, but the import auto companies not?  What is their difference?  The UAW.

    Let the auto workers know what it’s like to have to sleep in one of their own cars in the middle of winter as a home or they can take pay cuts and come back to Earth with the rest of the United States and suffer along with everyone else.   Settle with something, and not nothing.  The UAW’s greed will be the downfall of at least GM.  Greed and Vanity are two of my favorite sins.

    FINAL NOTE

    I never thought I would say this, but Bush is a smart man.  If you don’t understand that statement on the “loans”, then you are obviously not getting the ‘whole picture” and /or are an Obama supporter.

    SOURCES:

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    Are Newspapers Going To Ask For Bailouts Next?

    12/08/2008 06:31:00 PM

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    As more and more companies cut their marketing budgets because of the economy, more and more companies are choosing to cut their advertising costs, which includes TV stations, magazines, and newspapers.  More and more people who have to watch their budget choose to cut out the newspaper as an “luxury” expense.  And in the digital age, more and more readers are turning to the Internet to read up on the news, rather than pay for a newspaper.  Why pay for something you can get free?

    Also with less and less jobs available, thus the classified for employment also go down.  I know my paper’s employment section has gone from about 12-15 pages a year ago, to 4-6 pages on Sunday.

    THE NEW YORK TIMES

    The New York Times, the third-largest U.S. newspaper, is facing a $400 million debt repayment in May and may borrow as much as $225 million against its Manhattan headquarters although it only owns 58% of the building.

    The NYT, which finished the third quarter with $46 million in cash and equivalents, must refinance or repay a $400 million credit line that expires in May.  The company has about $366.3 million remaining under a second credit agreement that becomes payable in June 2011.

    Last month, the NYT said October ad revenue at its newspapers fell 17.2% and classified sales dropped nearly 35%.

    In the third quarter, NYT’s total advertising revenue dropped 14% and classified sales dropped 29%.

    What the NYT Has (Short Term)

      ■  $46 million in cash
      ■  $366 million owned to it by advertisers

    What the NYT Owes (Short Term)

      ■  $398 million of short-term debt due in May
      ■  $161 million of accounts payable (Newsprint, travel, etc.)
      ■  $100 million of payroll 
      ■  $159 million of other expenses
      ■  $50 million owned on long-term debt and rent

    Grand total:  $865 million

    Short Term Bottom line:  The NYT owes $453 million more than it has, thus it has a negative net wroth in the hundreds of millions.

    What the NYT Has (Long Term)

      ■  $1.355 billion of buildings, real-estate, printing presses, trucks, etc.
      ■  $146 million of investments in joint ventures (Red Sox, etc.)

    Total:  $1.501 billion

    What the NYT Owes (Long Term)

      ■  $673 million of long-term debt
      ■  $7 million of long-term rent
      ■  $284 million of pension benefits
      ■  $214 million of retiree healthcare and other benefits
      ■  $290 million of other liabilities

    Total:  $1.468 billion

    Bottom Line:  The NYT has only about $33 million more than it owes.

    CHICAGO TRIBUNE, LOS ANGELES TIMES, BALTIMORE SUN, ORLANDO SENTINEL

    The publisher of the Chicago Tribune and the Los Angeles Times declared bankruptcy on Monday.  Tribune Co., which owns eight major daily newspapers and several television stations, filed for Chapter 11 bankruptcy protection after collapsing under a heavy debt load just a year after real estate mogul Sam Zell took it private.  It too is suffering from declining advertising revenue and circulation and maybe just bad business.

    A year ago Zell loaded up the privately held publisher with about $8 billion in additional debt when he took the company private in a transaction largely financed by company contributions to an employee stock option plan.

    As it sits, Tribune Co. had about $7.6 billion in assets and $12.97 billion in debt as of December 8, according to its bankruptcy filing.

    The filing however, does not include Tribune’s Chicago Cubs Major League Baseball team or its ballpark, Wrigley Field – both of which Zell has struggled to sell.

    Tribune Co. has said its unsecured creditors include J.P. Morgan Chase & Co’s JPMorgan Chase Bank with an $8.57 billion claim under a senior faculty, and Merrill Lynch & Co Inc’s Merrill Lynch Capital Corp with a $1.6 billion claim under a bridge loan facility.

    Tribune Co. wholly owns “ForSalebyowner.com”, and partially owns CareerBuilder and Topix.  They are also owners of the Chicago Cubs and Wrigley Field, Tribune Media Services, Brass Ring, Zap2it, Chicago Magazine, Channel Guide Magazine, and partial owners of Classified Ventures, LLC.

    The newspapers that Tribune Co owns are:  AM New York, Los Angeles Times, Chicago Tribune, RedEye (Chicago), Baltimore Sun, South Florida Sun-Sentinel, Orlando Sentinel, Hartford Courant (CT), Morning Call (Allentown, PA), Daily Press (Newport News, VA), Hoy (Chicago, Los Angeles), and El Sentinel (Orlando, South Florida).

    In addition to owning the WGN-720 radio station, Tribune Co. also has assets in TV shows such as Andromeda, Mutant X, BeastMaster, Family Feud, South Park, Soul Train, Candid Camera, Ron Hazleton:  House Calls, Pet Keeping, City Guys, and Earth:  Final Conflict.

    Tribune Co, owns 23 television stations, which are expected to be hit by the typical advertising declines that follow major elections and also owns Chicagoland’s Television, better known as CLTV, a 24-hour cable news station based in Oak Brook, IL.

    The stations that Tribune Co owns are:

    New York City WPIX 11/33 CW
    Los Angeles KTLA 5/31 CW
    Chicago WGN 9/19 CW
    Philadelphia WPHL 17/54 MyNetworkTV
    Dallas-Fort Worth KDAF 33/32 CW
    Washington DC WDCW 50/51 CW
    Houston KIAH 39/38 CW
    Tacoma-Seattle KCPQ 13/18 Fox
    Tacoma-Seattle KMYQ 22/25 MyNetworkTV
    Miami-Ft. Lauderdale WSFL 39/19 CW
    Denver KWGN 2/34 CW
    Sacramento - Stockton - Modesto KTXL 40/55 Fox
    St. Louis KPLR 11/26 CW
    Salem – Portland, OR KRCW 32/33 CW
    Indianapolis WXIN 59/45 Fox
    Bloomington, IN WTTV 4/48 CW
    Kokomo, IN WTTK 26/54 CW
    San Diego KSWB 69/19 Fox
    Hartford – New Haven, CT WTIC 61/31 Fox
    Waterbury, CT WTXX 20/12 CW
    Grand Rapids – Battle Creek – Kalamazoo, MI WXMI 17/19 Fox
    York – Harrisburg – Lancaster – Lebanon, PA WPMT 43/47 Fox
    New Orleans WGNO 26/15 ABC
    New Orleans WNOL 38/40 CW

    OTHER NEWSPAPERS

    Media reports say McClatchy Co has approached potential buyers about a sale of the Miami Herald; The Minneapolis Star-Tribune is restructuring while its owner, private equity firm Avista Capital Partners, has skipped debt payments.

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    Circuit City Refund Checks Bouncing….

    11/26/2008 11:59:00 AM

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    circuit_city_logo[5][5][5] via:  The Consumerist

    If you have a Circuit City refund check not deposited before 11/10, it’s going to bounce.

    A posting on the internal Circuit City forums from an irate store manager upset over having to shrug his shoulders in response to a customer who had a $2,500 Circuit City refund check bounce elicited this response from the CC accounting team:

    Due to the Ch 11 filing, the bank had to put a stop on all checks that had not been deposited.  We WILL be reissuing all bounced checks.  I don’t have an exact date to tell you, but we intend to make good on every single mail refund that bounced.

    I wonder when the exact date will be?  Six months from now?  And are they going to issue refunds on the check being returned.  And any subsequent fees associated with said check being returned?

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    Circuit City Files Bankruptcy [Surprise!]

    11/10/2008 10:14:00 PM

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    circuit_city_logo[5][5] Circuit City's troubles just aren't stopping.  In October CC  according to the Wall Street Journal, was considering plans to shut down stores and layoff thousands in an effort to avoid filing for bankruptcy protection. 

    Additionally, CC hired the same firm that oversaw Kmart's Chapter 11 reorganization, as its bankruptcy counsel.  And they had also hired FTI Consulting to help the company devise a turnaround plan.

    Then in early November, CC received a warning from the New York Stock Exchange regarding the price of their stock, receiving a "below criteria" warning for CC's $0.26 per share stock price.  If a stock price falls below $1.00 over a 30 day average, a company is warned that their stock will be removed from the exchange, unless in six month they bring the price back up to $1.00 on average over 30 days.

    The very next day, CC announced that it was closing 155 stores and laying off thousands.  As a result of CC's dwindling company, suppliers began to demand payment in advance for shipments, or either flat out stopped shipments.

    Now, only six days later, CC has filed for Chapter 11 bankruptcy to try to stay ahead of their $898 million debt.  They have arranged $1.1 billion of debtor-in-possession financing from existing lenders led by Bank of America that will allow CC to continue operating under bankruptcy.  But it does require CC to bring that amount down to $900 million by December 29 and use proceeds from its holiday sales to repay other loans outstanding prior to the filing.

    The larger problem with this is that if CC does not succeed, landlords of land and spots in malls will be left holding the empty bag due to CC not being able to fulfill their lease obligations.  Under bankruptcy protection a retailer can break a lease with court consent; otherwise, rent is still due on a closed store.

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    AIG Wants More Money.... Again... [The Black Hole]

    11/07/2008 12:26:00 PM

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    black-hole Via the TWSJ, Federal officials are considering ways to ease the financial pressure on AIG, including changing the terms of the $85 billion loan.

    Now if you remember, AIG was the company that had the $440K "retreat" in California, on the taxpayers dime, was the company that was planning on "business as usual" with spending hundreds of thousands of dollars on conventions, retreats, and even included a hunting party in England.  AIG Liddy later said, as probably a result of negative media, and the fact that the NY Attorney General threatened to take AIG to court over such expenses, said AIG would  be making an effort to "identify activities that aren't critical and reviewing executive compensation."

    Additionally, only a few days after AIG was bailed out, they filed for bankruptcy.

    AIG has borrowed $61.3 billion under the original $85 billion loan, and an additional $19.9 billion under a second $37.8 billion program related to its securities-lending business.  The terms of the original $85 billion loan call for AIG to pay an interest rate of 8.5% for money it isn't borrowing.  It pays a higher rate -- three-month Libor, which is at 2.39%, plus 8.5 percentage points -- for what it actually draws down.  People close to the insurer complain that the terms of AIG's loans are onerous compared with the 5% interest charged by the government to banks and other financial institutions under the $700 billion Troubled Asset Relief Program.

    And a week ago, AIG said it would be able to access up to an additional $20.9 billion under the new commercial-paper-funding-facility program.  In total, the government has put about $144 billion at AIG's disposal.

    By using the commercial-paper program from the Feds, AIG has been able to reduce the amount it had borrowed under the original $85 billion line of credit.

    AIG officials hope these factors will help persuade the government to change it's loan terms, since the government would have the most to lose as both AIG's creditor and controlling shareholder although AIG has managed to pay back about $2.3 billion of their loan.  A week ago the Federal Reserve showed that AIG had loaned AIG $83.5 billion, this week, that number is $81.2 billion.

    If you remember, AIG agreed to the government's terms under duress in mid-September, with the expectation that it would be a short-term bridge until AIG could sell assets to meet its obligations.  AIG counterparties have demanded billions of dollars in collateral to ensure AIG stands behind its commitments to make payments in the event of defaults.  If it were unable to meet those obligations, it would prove a risk to the global economy.  This has become a concern for foreign governments, who are pressuring U.S. officials to find a solution.

    PERSONAL RANT

    AIG took the money, although at the time they state under duress, and now they want to change the terms of the loan because they are having problems paying back the money, that obviously the needed?  Does the word NO mean anything to them?  AIG has played the Feds more than they will ever know, and the Feds have bitten off more than they can chew.  AIG is reminding me of what I call a "bug" that you loan a quarter to because they want a drink at work and are short.  Then a few days later, they ask to borrow fifty cents.  Then a few days later they ask for a dollar.  Then they want to borrow five dollars so they can buy lunch for themselves.....

    Seriously, forget it.  Fix your business or let it die because if we keep giving AIG handouts, or changing loan terms, we the taxpayers are going to end up paying for it for the next fifty years.  Especially since Obama has stated only a day after he won the election, that after the economy stabilizes, our taxes are going up.

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    Bye, Bye Circuit City?

    10/21/2008 07:39:00 AM

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    circuit_city_logo Gee maybe those fees of $40 to install a USB keyboard are finally catching up with CC.  And maybe their less than desirable customer service (rude, uneducated, incompetent and simply just bad) has something to do with it......

    Last week CC announced that they decided that consumers want to see the same prices in the stores as on-line with a "One Price Promise" promotion in a press release basically announcing they are price matching what is listed on the Internet vs what is listed in store.  Of course they have had a policy of price matching competitors however, when you take the ad to the store, you get responses such as "they aren't our competitor", "the ad doesn't list the item number exactly", "we don't have anymore of those", or "we don't price match anymore if it's below our cost."  And then there is the possible issue of submitting for rebates when price matching, and CC refusing the rebate since the price of the item falls below their cost.

    And lets see how this goes, just like the 24 minute in-store pickup, which ends up being a disaster.  And "issues" of not honoring ads instore and guarantees.  Or just plain out selling you empty boxes.  For a few recent examples, check out The Consumerist here, here, here,  here, and here.

    Maybe if Circuit City would actually train their employees in customer service, and follow established corporate rules for customer service, returns and just business operations, then CC wouldn't be in the position they are.

    "One Price Promise assures CC shoppers that they will be treated fairly and equally regardless of how they shop with us," said Jeff Maynard, vice president, marketing at Circuit City Stores, Inc. in a press release. 

    "We plan to let consumers know about One Price Promise in a big way," added Maynard. "We are launching an aggressive national advertising campaign that includes print, broadcast, Internet and in-store marketing tools..."

    Yesterday however, Circuit City according to the Wall Street Journal, is considering a plan to shut down at least 150 stores and cut thousands of jobs to avoid filing for bankruptcy protection.  By shutting the stores, CC hopes to liquidate about $350 million in inventory, which it could use to pay off certain real-estate costs and pressure existing landlords to renegotiate some leases many of which CC regards as overpriced.  Of CC's $3.98 billion in off-balance sheet obligations related to operating lease commitments, more than half is tied to leases with more than four years remaining and about 80 are for vacant locations.

    In the meantime, CC's advisors are doing what they can to line up additional financing, but so far lenders have shown little or no interest at all.

    Seems that CC has hired the same firm that oversaw Kmart's Chapter 11 reorganization, as its bankruptcy counsel.  If Circuit City would file, it would make it the largest retailer to enter bankruptcy protection in several years, said the WSJ.

    CC has also hired FTI Consulting to help the company devise a turnaround plan.  FTI has advised on several troubled retailers, including Bombay Co and Winn-Dixie Stores.

    They have also hired investment bank Rothschild Inc. to guide talks with banks in hopes of securing emergency financing.

    "We're not going to speculate on rumors and comment beyond our original statement," said CC spokesman Jim Babb in a response to an emailed question by Market Watch.  The company's management team, board of directors, and its strategic financial advisers are conducting a "comprehensive review" of all aspects of its business to determine the best methods of accelerating its turnaround and delivering substantially improved operating and financial performance, the company said in a written statement.

    "While we would appreciate [Circuit City] for its attempt to stay solvent, we remain highly pessimistic on holiday sales and on consumer spending in 2009," said S&P Michael Souers.

    As of Aug 31, CC had 714 stores in the U.S> and 772 stores and dealer outlets in Canada, employing about 45,000 people.  Share of CC fell 2.6% to $0.38 a share yesterday afternoon, erasing earlier gains and wiping out 91% of their value this year.

    Perhaps bargains will be found for Christmas via CC.  Remember, your TV needs to be digital soon!  And perhaps CC is "banking" on this to help them out of their hole however, I don't think it's going to happen.

    And if they do a go out of sale, chances are Gordon Brothers Retail Partners, who were responsible for the liquidation of CompUSA, Sharper Image and Tweeter will almost certainly buy what's left or at least get hired to run the "Clearance".  Gordon Bros has a reputation of increasing prices, and then discounting and also shipping out all the good items before the clearance sales even begin, leaving nothing but high price junk to sell.

    And I wouldn't even "think" of purchasing an "extended warranty" on anything bought there now, as if I would ever recommend purchasing an "extended warranty" from CC anyway.  Which brings up a question, if CC goes bankrupt, and if you purchased an extended warranty from CC, what happens then?

    And we as consumers are left with only Best Buy to monopolize the market.

    And recently Mad Magazine did a parody of a Circuit City advertisement, needless to say, a higher up demanded that all issues of Mad Magazine in store on the racks be destroyed.

    mmfull
    CCletter
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    In the US, States Are Going Broke

    10/09/2008 09:02:00 AM

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    StateGovernmentDeficit According to a study by the Center on Budget and Policy Priorities released at the end of September, an alarming 34 states are in "trouble" due to rather large budget gaps.  Their report shows the states that have seen the biggest shortfalls in tax revenue in their fiscal 2009 budgets.  In alphabetical order the worst are, Alabama, Arizona, California, Florida, Georgia, Maryland, Nevada, New Jersey, New York and Rhode Island.  And just because you don't see your state on that list, doesn't mean it's met its budget.

    States NOT on the list are Alaska, Colorado, Idaho, Kansas, Louisiana, Missouri, Montana, Nebraska, New Mexico, North Carolina, North Dakota, Oregon, Pennsylvania, South Dakota, West Virginia and Wyoming.  These states can meet their budget requirements however, it does not mean that major cuts haven't been made.

    The snowballing is beginning on the state levels.  If no one believes that this country is in a recession think of this:  First more and more people are without jobs, thus their income falls, thus they are no longer paying in state income tax.  This of course means the state does not receive the amount of income as it did.  So, state's don't have the funds as they once did.  In the states that are coming up seriously short, it will directly effect you.

    How are the states trying to "fix" their budget problems?  But cutting out that which Americans need the most right now due to their income dropping like a stone in water.  And some states are getting around the Federal reduction in taxes from the federal economic stimulus legislation enacted earlier this year, by changing their state codes thus raising your state taxes.

    The total of all the "gaps" for 34 states is $53.4 billion.  Aren't you glad your government is looking out for your best interest by giving $700 billion to all the banks?  Aren't you glad that we aren't in a recession.  Aren't you glad that President Bush says everything is going to be alright, but it's just gonna take time... ya okay... I'll just live off the interest of my investments.. oh wait............

    More with examples of cuts, all the states that have a "gap" and the worst states for "gaps".

    Examples of cuts:

    • Public health programs: At least 14 states have implemented or are considering cuts that will affect low-income children’s or families’ eligibility for health insurance or reduce their access to health care services.  For example, Rhode Island has eliminated health coverage for 1,000 low-income parents, and New Jersey has cut funds for charity care in hospitals.  In Tennessee, an estimated 30,000 to 40,000 seriously ill people are expected to lose hospitalization and other medical services provided through TennCare.

    • Programs for the elderly and disabled:  At least 11 states are cutting medical, rehabilitative, home care, or other services needed by low-income people who are elderly or have disabilities, or significantly increasing the cost of these services.  For example, Florida has frozen reimbursements to nursing homes and relaxed staffing standards and Rhode Island is requiring low-income elderly people to pay more for adult daycare.  Tennessee has reduced community-based services for people who are mentally retarded.

    • K-12 education:  At least 13 states are cutting or proposing to cut K-12 and early education; For example: Florida cut school aid by an estimated $130 per pupil, Nevada eliminated funds for gifted and talented programs, and Rhode Island is eliminating early education funding for 550 children.

    • Children's Services:  Illinois has reduced funding for child welfare, mental health, youth services and other programs.

    • Colleges and universities: At least 17 states have implemented or proposed cuts to public colleges and universities.  For example, Alabama, Kentucky, and Virginia have all cut university budgets and/or community-college funding, resulting in tuition increases of 5 percent to 14 percent.

    • State workforce: At least 19 states have proposed or implemented reductions to their state workforce.  New Jersey is reducing its workforce by 2,000 employees through early retirement, lay-offs and attrition.  In Tennessee, the governor announced the elimination of over 2,000 state positions - about 5 percent of the state workforce.  Some 1,500 employees accepted buy-outs for early retirement.  In Kentucky, the public defender will eliminate 10 percent of positions (54 positions) and decline certain types of cases including family court cases, probation and parole revocations and some types of involuntary commitments and misdemeanors; hiring freezes have been instituted in Arizona, California, Connecticut, Delaware, Georgia, Minnesota,  New Hampshire, Virginia and Washington.

    • Raising Taxes and "Sin" Tax:  New York has enacted tax and fee increases.  Large liquor retailers in New Hampshire, will pay more in state taxes along with a tobacco tax increase.  Several states, including Maine, Oklahoma, Rhode Island and Vermont, changed their tax codes to avoid revenue loss that would otherwise have occurred due to the federal economic stimulus legislation enacted earlier this year.

    • Various:  New Mexico was forced to put off a $500 million bond sale.  Massachusetts had to pull the plug halfway into a $400 million offering.  Maine is considering canceling road projects that were to be funded with bonds.  South Carolina Governor Sanford said legislators shouldn't be paid to return to Columbia to fix a state budget shortfall because they created the problem, saving taxpayers $50K daily.

    In order of budget gap (as a % of the total budget), from lowest to highest of the worst.  (NOTE:  The unemployment rates are the most current state rates available, being August 2008 published on September 16, 2008.  The national unemployment for September, 2008 was 6.1%):

    Rhode Island

    Budget Gap:  31.1%
    Gap:  $430 Million
    August Unemployment Rate:  8.8%

    Proposed cuts to the public college system and aid for municipalities, as well as tighter limits on welfare benefits are planned.  The state has reduced the maximum income level at which parents can receive public health insurance from 185 percent of the federal poverty line to 175 percent.  This will eliminate coverage for approximately 1,000 parents.  More than 7,800 low-income families will also have to pay higher monthly premiums for public health insurance.

    Low-income elderly people now must pay higher rates for subsidized adult daycare.  This is estimated to affect more than 1,200 people with incomes below $20,000.

    State aid has been frozen for K-12 education at last year's levels in nominal terms and reduced the number of children who can be served by Head Start and similar services by more than 550.

    Fund have been cut for affordable housing, eliminated health insurance for home-based child care providers, restricted TANF cash assistance for children, reduced health insurance for retired state workers and cut support to localities by $10 million.

    A reduction in the state workforce by 2,000 or more employees via encouraging early retirement, but has announced that it will lay off workers if needed.

    A tax credit for foreign taxes paid was eliminated, a tax credit for motion picture production was capped, a moratorium on new projects qualifying for the historic structure tax credit was placed, and fees were increased.

    Connecticut

    Budget Gap:  2.6%
    Gap:  $450 Million
    August Unemployment Rate:  6.4%

    In Connecticut, home to many Wall Street employees, the state budget hole has more than doubled in a month to $300 million and now to $450 million.  The governor has ordered budget cuts to programs that help prevent child abuse and provide legal services for foster children.  There is currently a freeze on hiring.

    Alabama

    Budget Gap:  9.5%
    Gap:  $784 MIllion
    August Unemployment Rate:  5.3%

    Alabama closed some corporate tax loopholes, and made cuts to colleges and universities.  The Department of Human Resources has announced it will end in August home-makers services of approximately 1,100 older adults.  These services often allow people to stay in their own homes and avoid nursing homes.

    Minnesota

    Budget Gap:  5.4%
    Gap:  $935 Million
    August Unemployment Rate:  5.8%

    Policymakers capped enrollment at current levels for a program that provides expanded health services and care coordination for people with disabilities.

    There is currently a freeze on hiring.

    Maryland

    Budget Gap:  7.2%
    Gap:  $1.1 Billion
    August Unemployment Rate:  4.5%

    Maryland enacted a $1.35 billion tax increase in late 2007, which along with $277 million in budget cuts, is designed to help address the state's deficit.  However, due to the declining economy an additional gap of $270 million has occurred.  This is likely to be addressed by further spending cuts.

    Nevada

    Budget Gap:  16%
    Gap:  $1.2 Billion
    August Unemployment Rate:  6.9%

    Nevada has the worst foreclosure rate in the nation and its economy has slowed dramatically this year.  Nevada has no state income and derives its income from sales tax and casino tax.  Since people do not have the amount of "extra" money to use on vacations, and since Reno, Las Vegas and most of the rest of the state lives of tourism, income has drastically declined.  The governor capped the state's children's health program and increased children's health-care premiums, and cut funding for K-12 education, higher education and welfare.

    The governor has capped the State Children's Health Insurance Program at its approximate current number of enrollees and increased the premiums that families must pay.  As a result, many applicants will be denied coverage, even though the economy is weakening and need consequently is rising.  Health services for some pregnant women have also been eliminated.

    The welfare agency will make it harder for low-income families to receive cash assistance and health insurance, for instance by increasing the amount of time before which some families that have lost benefits may reapply.

    The governor has ordered various cuts to K-12 education, including delaying an all-day kindergarten expansion, cutting per pupil expenditures by $400 in a pilot program, eliminating funds for gifted and talented programs, eliminating funds for a magnet program for students who are deaf or hard of hearing, and made across-the-board cuts.

    Massachusetts

    Budget Gap:  4.3 - 4.5%
    Gap:  $1.2 - $1.3 billion
    August Unemployment Rate:  5.1%

    Whenver Administration and Finance (A&F) determines that revenues will be "insufficient to meet all fo the expenditures authorized to be made from any fund, whether by appropriation or distribution," the commissioner must notify the governor and the House and Senate committees on Ways and Means, in writing, and certify the amount of the "probably deficiency."  The governor must act within 15 days of receiving notification.

    Governor Patrick is preparing to make budget cuts using the emergency powers granted to him under his section "9C" which refers to a section of the MA General Laws - Chapter 29 - that governs state finances.  Section 9C deals specifically with revenue deficiencies, and what steps the executive branch should take to ensure a balanced budget.

    There are some restrictions to the 9C and use, for example, the governor cannot renege on contractual obligations, nor can he cut accounts governing pensions or Medicaid.

    Ohio

    Budget Gap:  4.5%
    Gap:  $1.3 Billion
    August Unemployment Rate:  7.1%

    Ohio plans to close two mental health facilities.

    The governor has announced plans to eliminate as many as 2,700 positions, about 4.5 percent of the state workforce.  The reductions will be achieved through a combination of early retirements, lay-offs, and unfilled vacancies.

    Georgia

    Budget Gap:  8.7%
    Gap:  $1.8 Billion
    August Unemployment Rate:  6.4%

    The governor has asked state agencies to cut 4% to make up an expected shortfall in the $21 billion budget for the coming fiscal year. 

    The Governor has withheld funds from the Homeowners Tax Relief Grant which passes state money to counties sot hat they can provide property tax credits to homeowners, thus casing localities to roll back the credits, or fund them from their own resources.

    Six out of seven state run parks lodges are money losers, according to the state.  Toilets at the Amicalola Falls State Park Visitor Centers have been closed due to budget cuts and portable toilets are put in place.  The park doesn't have the money from the state to fix a sewage problem in the bathrooms.  Hours are being reduced at many parks.  One of every eight jobs at state parks remains vacant.  Half a dozen parks and historic sites have been closed for two to four days a week, as fewer staff cover more than one property. 

    At Fort Yargo State Park there are only two "badges" on the 1,814 acre park who carry guns, write traffic tickets, and answer the calls for 3am unruly campers.  How they control costs is by leaving one position vacant, and reducing the number of times they patrol the campgrounds.

    Arizona

    Budget Gap:  19.9%
    Gap:  $2 Billion
    August Unemployment Rate:  5.8%

    The state reduced the Medicade rolls by increasing the frequency with which some adult recipients must reapply for benefits.  Arizona has also cut funding for community health centers and state universities along with vaccines.  They have also put a freeze on hiring.

    Eliminated was temporary health insurance for people with disabilities coping with serious medical problems.

    New Jersey

    Budget Gap:  7.7%
    Gap:  $2.5 Billion
    August Unemployment Rate:  5.7%

    The state legislature passed a $32.8 billion budget that is $600 million less than last year's budget.  New Jersey plans to trim the budget by offering early-retirement incentives for state employees through attrition, or a reduction in number by 2,000 by leaving vacancies and laying off staff.

    Property tax rebates for households with incomes over $150,000 are eliminated and reduced for others.  A public utility tax that was scheduled to end in 2010 has been extended to 2013.  A renters' credit for families with incomes under $50,000, previously worth $200 or more per family, has been cut to a maximum $80 per family for non-elderly, non-disabled renters.

    Florida

    Budget Gap:  19.9%
    Gap:  $5.1 Billion
    August Unemployment Rate:  6.8%

    Florida also has no state income tax.  The $66 billion Florida budget for the coming year is about $6 billion less than the one approved the previous year.  It includes a $332 million reduction in public school spending and cuts to state hospitals, nursing homes, and various social programs.

    Aid has been cut to local school districts for the current  year by $130 per pupil.

    Nursing homes and other providers will not get scheduled cost-of-living adjustments in their reimbursements and staffing standards will be relaxed for one year in the expectation that the freeze would result in staffing cuts.  Medicade reimbursements to hospitals and community based services for the elderly, such as meals and homemaker services, have also been cut.

    New York

    Budget Gap:  9.8%
    Gap:  $5.5 Billion
    August Unemployment Rate:  5.6% (NY State), 5.9% (NYC)

    Governor Patterson said the state could face an "economic blood bath" as the budget hold continued to worsen.  "We are in a very serious economic crisis.  There's no way to sugarcoat it," he said in a public meeting last Friday.

    The state made cuts to the health insurance program for low-income families, and enacted tax and fee increases.  There is a hiring freeze and further agency reductions of 7 percent, in addition to a 3.35 percent reduction in spending in April.

    The budget raises approximately $1.5 billion in revenue through a variety of measures including closing tax loopholes, delaying tax credits, raising cigarette taxes, requiring collection of taxes for more on-line purchases, and increasing various fees.

    Paterson said that he will also seek some $2 billion worth of cuts, because of his fears that the state's taxpayers will continue to decline.  And he said he was taking the steps to try to hold off a downgrade in the states credit rating.

    California

    Budget Gap:  22%
    Gap:  $22.2 Billion + $250 million court ordered
    August Unemployment Rate:  7.6%

    As of today, California sits $1 billion in the red.  Governor Arnie sent a letter  (PDF) last week warning Paulson, the Secretary of the Treasury, this week that the great state of California "might" need to borrow $7 Billion from the Feds, if credit market's don't ease and banks don't start loaning money again, to pay for salaries and other operating costs.    The money needs to be in the state's bank account by October 28th to be able to fund a scheduled $3 billion payment to more than 1,000 school districts.  The state was also thinking about planning a $7 billion bond sale.

    The state did however, enact a budget that imposed cuts to the state's health insurance program for the poor and other social service programs.

    There is currently a freeze on hiring.

    They also reduced the State Children's Health Insurance Program, increasing co-payments and reductions in dental services.  The state will also require more frequent eligibility determinations for Medi-Cal recipients and is cutting payments to health care providers significantly through February of next year.

    Cost-of-living adjustments are suspended to cash assistance programs for low-income families and cutting child care subsidies.

    Revenues will be increased in the current fiscal year by limiting certain business tax credits and suspending corporate "net operating loss deductions."  Other revenue increases in the current year will come from accelerating tax withholding.

    And if all that isn't enough, U.S. District Court Judge Thelton Henderson on Wednesday ordered the state to prepare to turn over $250 million to the federal receiver charged with improving health care in the state's prisons.  Altogether, the receiver is seeking $8 billion.

    States Budget Gaps:

     

    TABLE 2:
    SIZE OF FY2009 BUDGET GAPS

    State

    Gap before budget was adopted

    Additional mid-year gap

    Total

    Total Gap as Percent of FY2009 General Fund
    Alabama

    $784 million

     

    $784 million

    9.5%
    Arizona

    $1.9 billion

    $100 million

    $2.0 billion

    19.9%
    Arkansas

    $107 million

     

    $107 million

    2.4%
    California

    $22.2 billion

     

    $22.2 billion

    22.0%
    Connecticut

    $150 million

    $300 million

    $450 million

    2.6%
    Delaware

    $217 million

     

    $217 million

    6.0%
    District of Columbia

    $96 million

    $131 million

    $227 million

    3.6%
    Florida

    $3.4 billion

    $1.7 billion

    $5.1 billion

    19.9%
    Georgia

    $245 million

    $1.6 billion

    $1.8 billion

    8.7%
    Hawaii

     

    $162 million

    $162 million

    2.8%
    Illinois

    $1.8 billion

    Yes, DK size

    $1.8 billion

    6.3%
    Iowa

    $350 million

     

    $350 million

    5.5%
    Kentucky

    $266 million

     

    $266 million

    2.9%
    Maine

    $124 million

     

    $124 million

    4.1%
    Maryland

    $808 million

    $269 million

    $1.1 billion

    7.2%
    Massachusetts

    $1.2 billion

    Yes, DK size

    $1.2 billion

    4.3%
    Michigan

    $472 million

     

    $472 million

    4.8%
    Minnesota

    $935 million

     

    $935 million

    5.4%
    Mississippi

    $90 million

     

    $90 million

    1.8%
    Nevada

    $898 million

    $275 million

    $1.2 billion

    16.0%
    New Hampshire

    $200 million

    Yes, DK size

    $200 million

    6.4%
    New Jersey

    $2.5 billion

     

    $2.5 billion

    7.7%
    New York

    $4.9 billion

    $630 million

    $5.5 billion

    9.8%
    Ohio

    $733 million

    $540 million

    $1.3 billion

    4.5%
    Oklahoma

    $114 million

     

    $114 million

    1.7%
    Rhode Island

    $430 million

     

    $430 million

    13.1%
    South Carolina

    $250 million

    $140 million

    $390 million

    5.7%
    Tennessee

    $468 million

     

    $468 million

    4.1%
    Vermont

    $59 million

    $24 million

    $83 million

    6.8%
    Virginia

    $1.2 billion

    Yes, DK size

    $1.2 billion

    7.1%
    Wisconsin

    $652 million

     

    $652 million

    4.6%
    TOTAL

    $47.6 billion

    $5.9 billion

    $53.4 billion

    10.0%

     

    FEDERAL BUDGET

    If you would like to see what your state receives from the Federal Government, head on over to the White House website for Fiscal Year 2009, State by State, Federal Budget.

    RANT ON

    So, States are considering going to the Feds for help, with California officially saying that "might" need help.  Now, we've already seen bailouts of banks and various financial institutions, that "officially" are to the tune of $700 Million, but have been estimated to be more than $1.8 Billion by the time it's done and over with.  So how long do you think all this money from the Feds is going to last?  I mean if the states are suffering from lower income tax, isn't the Federal Government going to suffer from the same? - RANT OFF.

    SOURCES

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