Posts Tagged ‘bankruptcy’

Texas vs. California Update for May 21, 2015

Thursday, May 21st, 2015

Time for another Texas vs. California update:

  • “March marked a phenomenal run of 99 consecutive months when Texas’ unemployment rate was at or below the national average.” Also: “Texas employs an impressive two and a half times more people since December 2007 than the rest of the nation combined.”
  • The Texas state legislature is on the verge of passing an actual conservative budget.
  • Will Franklin looks at local bond debt in Texas. It’s creeping up, partially due to big government advocates scheduling off-year bond elections when fewer people are voting. Even so, voters seem willing to reject big-ticket bond items.
  • San Bernardino’s bankruptcy plan: CalPERS gets theirs, bondholders get screwed.
  • And San Bernardino is planning to outsource their firefighting operations, not least of which because the fire department sucks up $7 million worth of overtime a year. And the fact their union stopped participating in bankruptcy talks didn’t help… (Hat tip: Pension Tsunami.)
  • How a few wealthy California environmentalists give the illusion of a mass movement.
  • How retroactive pension increases destroyed California budgets. (Hat tip: Pension Tsunami.)
  • California is a victim of repeated short-sighted thinking.
  • Los Angeles joins the minimum wage hike bandwagon. Expect another wave of small business closure stories over the next few months…
  • Why public employee unions are the elephant in the room for California’s debt crisis. (Hat tip: Pension Tsunami.)
  • California’s majority Democrats shelve legislative transparency bill written by Republican. This is my shocked face.
  • Compton teachers get laid off, Do-Da, Do-Da…
  • “In another corporate exodus from Torrance, California, to North Texas, Kubota Tractor Corp. and Kubota Credit Corp. announced Thursday that they will move their headquarters to Grapevine from the Los Angeles area.”
  • “The number of young adults admitted to California hospital emergency rooms with heroin poisoning increased sixfold over the past decade.” (Hat tip: Cal WatchDog.)
  • The Weinstein Company hit with $130 million lawsuit. File under: Hollywood Accounting.
  • Chicago Is Detroit Is California Is Greece

    Sunday, April 5th, 2015

    National Journal has a piece up by moderate lefty John B. Judis on all the problems plaguing Chicago.

    Perhaps more than any other major city in America, Chicago is facing a truly grave set of problems—problems that are essentially more extreme versions of the challenges confronting city governments across the country.

    But there’s a vital piece of information omitted from that sentence: “problems that are essentially more extreme versions of the challenges confronting city governments across the country run by the Democratic Party.” Though Republican cities are not immune to such problems, make no mistake that the very worst examples are cities run by the Democratic Party, most for a very long time (Detroit hasn’t had a Republican Mayor since 1962, Chicago since 1931), and most are in states with solid (if not overwhelming) Democratic Party majorities.

    The failure of America’s bankrupt cities is a microcosm of the failure of the Blue model of big government liberalism. And the reason I have spent so much time on covering California and Greece is that they are part of the same story: The failure of American liberalism is a microcosm of the bankruptcy of the welfare state, and the bankruptcy of the welfare state is a subset of the failure of socialism.

    The quandaries begin with Chicago’s dramatic social divide. To an even greater extent than is the case in, say, New York or Philadelphia, Chicago has become two entirely separate cities. One is a bustling metropolis that includes the Loop, Michigan Avenue’s Magnificent Mile, and the Gold Coast, as well as the city’s well-to-do, working-class, and upwardly mobile immigrant neighborhoods. The other Chicago consists of impoverished neighborhoods on the far South and West Sides, primarily populated by African-Americans. These places have remained beyond the reach of the city’s recovery from the Great Recession.

    As we have known since Charles Murray’s Losing Ground in 1984, welfare programs don’t lift the poor out of poverty, but keep them ensnared in it. Indeed, a cynic might observe that welfare programs are designed to create a voting clientele for the welfare state and the liberal party that runs it.

    The problem, as Mark Steyn put it, is that “the 20th century Bismarckian welfare state has run out of people to stick it to. In America, the feckless insatiable boobs in Washington, Sacramento, Albany and elsewhere are screwing over our kids and grandkids. In Europe, they’ve reached the next stage in social democratic evolution: There are no kids or grandkids to screw over.”

    As Steyn further noted:

    A government big enough to give you everything you want isn’t big enough to get you to give any of it back. That’s the point Greece is at. Its socialist government has been forced into supporting a package of austerity measures. The Greek people’s response is: Nuts to that. Public sector workers have succeeded in redefining time itself: Every year, they receive 14 monthly payments. You do the math. And for about seven months’ work – for many of them the workday ends at 2:30 p.m. When they retire, they get 14 monthly pension payments. In other words: Economic reality is not my problem. I want my benefits. And, if it bankrupts the entire state a generation from now, who cares as long as they keep the checks coming until I croak?

    The story of Detroit’s current bankruptcy is the story of Chicago’s coming bankruptcy, and the similar problems of California. All are dealing with bloated public sector pensions that are making their cities insolvent. All promised and spent money they didn’t have against their decedents, not realizing (or not caring) that the debt burden will ruin the worlds of those decedents before they could ever pay it off.

    The theme with all is that deficit spending destroys, and the only cure is to force governments to pare back the welfare state and stop spending money they don’t have. As the example of Greece shows, there reaches a point in welfare state dependency at which actually curtailing welfare state spending, even at the point of financial ruin, is politically impossible. The looting of the public treasury cannot be stopped because that looting is the only thing that holds left-wing coalitions in power anymore.

    One of the many reasons the Tea Party exists is to hold American politician’s collective feet to the fire to make sure the terminal phase of the welfare state Greece is now enjoying never gets that bad in America. (To this end, they’ve had the tiniest little glimmer of success.)

    Chicago is Detroit is California is Greece is, eventually, America. It’s all part of the same story, and one any voting public ignores at its peril.

    (Hat tip: Instapundit.)

    Previously Bankrupt Stockton Suddenly Has Enough Money for an Affordable Housing Development

    Tuesday, March 10th, 2015

    As part of my regular Texas vs. California updates, I’ve been keeping close tabs on the city of Stockton, which just emerged from bankruptcy proceedings last month.

    So what’s one of the first thing Stockton does after exiting bankruptcy? Would you believe spending $14 million for 40 units of affordable housing? For a city that owes $1.6 billion in pension debt to CalPERs, that’s like someone who can barely afford food deciding to buy spinning rims for his 19-year-old Civic.

    To my mind, this has all the hallmarks of a politic payoffs.

    The project would evidently entail “renovation of the 123-year-old Cal Weber Building and the 88-year-old McKeegan Building.”

    Who controls the Cal-Weber building? Dan Cort.

    Who controls the McKeegan building? Dan Cort.

    Who’s Don Cort? A Stockton commercial real estate developer and “urban renewal expert.” He was also Mayor of Pacific Grove (which is a good two and a half hours away from Stockton) until he resigned in advanced of a recall election in 2009. Pacific Grove, like many California cities, got in financial trouble due to outrageous public employee pension costs, and bond debt to cover same.

    Is Cort tied-in to Stockton’s City Council? Given that six of the seven members, including the Mayor and Vice Mayor, are among Cort’s Facebook friends, I’m going to answer “Yes.” (The seventh, Dan Wright, has only been in office since January.)

    None of this is conclusive proof that underhanded financial shenanigans and/or kickback are going on. But it is an indication that reporters, bloggers and Stockton taxpayers should be taking a good, hard look at this project.

    Also, I can’t imagine that Franklin Templeton, the mutual fund company and Stockton bondholder which was forced to take a haircut in bankruptcy hearings can be too happy about it either…

    Texas vs. California Update for January 21, 2015

    Wednesday, January 21st, 2015
  • The working poor benefit from a lower cost of living in red states.
  • Five of the top ten U.S. cities in economic growth in 2014 were in Texas: Austin, Houston, Ft. Worth. Dallas and San Antonio. (There were also two in California: San Francisco and San Jose.)
  • The Texas Comptroller has released the Biennial Revenue Estimate 2016-2017, which estimates $113 billion in general revenue-related funds available. The report details also notes that “In the past six years, Texas created two-thirds of all net new jobs in the U.S.”

  • By contrast, with the California budget more or less temporarily balanced, Democrats want to start spending like drunken sailors with a stolen credit card again. Legislative analyst: You don’t want to do that.
  • The average CalPERS pension is up to five times comparable Social Security payouts.
  • Jerry Brown says he wants to tackle California’s pension crisis. Good luck with that. While Brown has occasionally been willing to buck his party, and may feel he has nothing to lose in his last term, there’s no reason to believe the Democrat-dominated state House and Senate share his sentiments. I predict a few cosmetic measures passing combined with a whole lot more can kicking until actual default looms. (Hat tip: Pension Tsunami.)
  • “Central Valley farmers say farming is doomed in their areas.” California’s water regulations are driving them out of business.
  • Stockton’s bankruptcy judge: screw secured debtors, we’ve got to start paying retirees.
  • Key figure in CalPERS pension fraud case apparently committed suicide. Hmmm…..
  • California’s Set Seal retail chain files for bankruptcy.
  • John G. Westine of California convicted of 26 counts of mail fraud in a phony Kentucky oil well scheme.
  • Bankruptcy lawyers gone wild!
  • Texas vs. California Update for July 16, 2014

    Wednesday, July 16th, 2014

    Some other stuff bubbling up, so here’s a Texas vs. California update to tide you over for a while:

  • Former Calpers CEO Pleads Guilty to Corruption Conspiracy.
  • As part of his plea, Fred Buenrostro also agreed to testify to testify against his friend and former CalPERS board member Alfred Villalobos. Sing, canary, sing!
  • How CalPERs corrupts California politics.
  • Jobs are leaving California and coming to Texas.
  • Texas’ low-tax, low-regulation approach favors job creation.
  • How Texas compares to both California and New York.
  • Why California’s high speed rail boondoggle is still doomed.
  • Stockton’s bankruptcy judge may declare that CalPERS is just another creditor.
  • Bell City Councilman sentenced.
  • Texas vs. California Update for March 13, 2014

    Thursday, March 13th, 2014

    Time for another roundup of Texas vs. California:

  • Texas surpasses California as the top tech exporter.
  • Victor Davis Hanson wants to “save” California by making liberals eat their own dogfood.
  • Texas is creating jobs at all income levels.
  • Vallejo still can’t afford its pensions:

    The California city of Vallejo emerged from bankruptcy just over two years ago, but it is still struggling to pay its bills.

    The main culprit: Ballooning pension costs, which will hit more than $14 million this year, a nearly 40% increase from two years ago.
    Amid threats of legal action from the state’s pension giant, CalPERS, Vallejo did little during its nearly three-year stint in bankruptcy to stem the growth in its pension bills.

  • Rising CalPERS pension costs are also threatening Long Beach’s financial stability.
  • Berkeley is looking a little better for the short term, but after that they too will be feeling the CalPERS squeeze.
  • Pacific Grove is having a referendum to roll back pension increases.
  • California is getting ready to hike gas taxes again, adding another 12¢ a gallon to gas prices.
  • Is there a Democrat-on-Democrat battle over unions brewing in California?
  • California nursing home chain files for bankruptcy. “The dagger in the heart is that we have been overwhelmed by a wave of class-action lawsuits.”
  • A list of former Los Angeles city employees earning six figure pensions. (Hat tip: Pension Tsunami.)
  • California rancher’s are selling their cattle to Texas ranchers due to drought.
  • Cagney Global Logistics relocates from Denver to Irving, Texas.
  • San Jose-based sheet metal manufacturer Cortec is expanding in Pflugerville.
  • Even punk rock queen Exene Cervenka is getting out of California while the getting is good:

    Now when I think about California, I think of a liberal oppressive police state and regulations and taxes and fees. I’d rather go someplace and have my own little place out on the edge of town. I’m a country girl at heart. It makes me happy when I see people in Texas open-carrying. It makes me feel safe. I’m not even a gun owner, but I’d like to see a gun rack in every pickup truck, like my boyfriend had when I was fifteen years old in Florida. An armed society is a polite society.

  • No End In Sight for Texas Oil Boom.
  • Texas vs. California Roundup for December 11, 2013

    Wednesday, December 11th, 2013

    Time for another roundup of Texas, Red State Champion, versus Blue State California:

  • Texas is the tenth best run state in the union, while California is the worst.
  • The vast gap between California’s haves and Have Nots.
  • The federal court Detroit bankruptcy ruling has made CalPERS nervous. As well it should.
  • Ditto public employee unions. “Government agencies should have the right to reduce future accruals, just as private-sector employers can — and they shouldn’t have to wait until they’re insolvent to do so…In California, prospective benefits are sacrosanct because of a series of poorly reasoned legal rulings…The system must be fixed before more municipalities reach bankruptcy. For state and local governments to climb out of their deep holes of pension debt, they must first stop digging.”
  • A succinct statement of the problem “California local governments cannot thrive if escalating retirement costs crowd out money for public service.” Plus: “Bargaining effectively occurs between unions and those elected largely because of money from unions.”
  • Today’s California city teetering on the edge of bankruptcy: Fresno. (“Fresno? No one goes to Fresno anymore!”)
  • 18 LA County Sheriffs department deputies indicted for “beating jail inmates and visitors, trying to intimidate an FBI agent and other crimes.” (Hat tip: Dwight, who notes “They tried to intimidate an FBI agent? Does LACSD make it a practice to hire and promote deputies who are dumber than a bag of hair?”)
  • Speaking of police behaving badly, 28 Santa Monica cops took home more than $200,000 last year. For comparison, Austin’s chief of police earns $198,819 a year.
  • Even California isn’t wild about Obama anymore.
  • California lobbyist organizes a second junket to Cuba.
  • Charting the Texas oil bool.
  • Cognizant moves operations center from New Jersey to College Station.
  • Texas vs. California Roundup for November 11, 2013

    Monday, November 11th, 2013

    Time for another roundup of Texas vs. California:

  • California’s high tax, high regulation government, and its resultant high cost of living, has given the state the nation’s worst poverty rate. How’s that blue State model working out for you?
  • Fresno is completely broke. “Now the city doesn’t even have a day’s worth of cash in its general fund.”
  • Given the tough economy, CalPERS cuts back on staff bonuses. Ha, just kidding! They doubled them.
  • Desert Hot Springs is the next California city eyeing bankruptcy.
  • Stockton’s Lavish pensions contributed to it’s bankruptcy. But guess who doesn’t have to take a haircut?
  • The message Stockton’s bankruptcy has for other California cities is obvious: Just screw taxpayers.
  • Bankrupt San Bernardino throws the bums out. And the new team looks like they’re willing to take on CalPERS. A case of mixed messages.
  • Covered California, California’s ObamaCare agency, is hair plugs and fat camp.
  • There’s a magazine called Time that says that Texas is the nation’s future. (There’s a longter story, but I don’t feel compelled to obtain a login to read it.) I’m sure Texas has a much brighter future than Time
  • Your tears, Lakers fans! Let me taste them! (Missing from that piece: Dwight Howard will no longer give 10.3% of his income to the state of California, and Texas has no state income tax.)
  • Texas vs. California Update for July 24, 2013

    Wednesday, July 24th, 2013

    Smart denizens of California must be eying Detroit’s bankruptcy warily. After all, 60 years ago Detroit was the wealthiest city in America. And California seems hellbent on following Detroit’s Blue State path to bankruptcy sooner rather than later…

  • Problem: California public employees union members getting outrageous retirement benefits on the taxpayer’s dime. Solution: Hide their pension figures from the public.
  • From Dwight comes this gem of a news story:

    Bruce Malkenhorst took home more than $911,000 a year as city manager of the tiny city of Vernon. His reign ended shortly
    before he was convicted of misappropriating public funds, and he walked away with an annual pension that eventually topped $500,000,
    the largest in the California Public Employees’ Retirement System.

    But CalPERS last year decided to cut his pension to $115,000, concluding he’d derived some of his hefty salary improperly.

    So now the 78-year-old Malkenhorst is suing Vernon to make up the difference.

    And if you’re interested in California corruption, you should be following Dwight’s regular updates on Vernon and Bell.

  • Resignation Media, another California company, is moving to Austin. (Hat tip: Urban Grounds. )
  • Meanwhile, California e-discovery firm Daegis Inc. is also moving its headquarters to Texas.
  • Navarre Corporation relocates from Minnesota to Texas.
  • Houston edges out New York City as the nation’s largest goods exporter.
  • More on Dwight Howard and others fleeing California’s income tax burden.
  • Detroit won’t be the last city to declare bankruptcy.
  • California Latino supermarket chain Mi Pueblo declares bankruptcy. The article says that creditor Wells Fargo wanted to “change the terms” of loans, but something doesn’t add up. Turns out that profits dived when Mi Pueblo was forced to fire illegal aliens after an audit, and that put their profitability under the level dictated by the terms of the loan.
  • Parallels between Detroit and San Bernardino.
  • The Ten California Cities Most Likely To Declare Bankruptcy

    Tuesday, May 21st, 2013

    Who’s next on the California bankrupt city hit list? Well, USA Today has been kind enough to take a stab at it, and offers up the following likely candidates, listed alphabetically:

  • Atwater
  • Asuza
  • Compton
  • Fresno
  • Hercules
  • Mammoth Lakes
  • Monrovia
  • Oakland
  • San Jose
  • Vernon
  • Wait, Vernon? Vernon hasn’t already declared bankruptcy? The city that would probably win “Most Corrupt City in California” if not for stiff competition from Bell?

    If I had to wager, I’d pick Vernon, though Compton and Mammoth Lake are also good candidates…