Posts Tagged ‘bankruptcy’
April 8th, 2016 at 10:31 am
Puerto Rico: Representatives Say They Oppose Bailout, But That’s Exactly What “Super Chapter 9” Bill Means
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CFIF opposes the dangerous proposed “Super Chapter 9” bankruptcy legislation for Puerto Rico (under the title “Puerto Rico Oversight, Management, and Economic Stability Act” or “PROMESA”), which was recently released by the Committee on Natural Resources in the House of Representatives.

Believe it or not, that proposed bill constitutes an even more dangerous version of the Obama Administration’s unprecedented bailout proposal, leaving American savers and retirees to pay the price for the fiscal irresponsibility of politicians in Puerto Rico.  It also would create a dangerous precedent encouraging high-spending states like Illinois to seek the same bailout from Congress, it would raise borrowing costs for states, it would undermine the value of retirement funds across America and it would remove any incentive for fiscally irresponsible states to enact meaningful reform.

Unfortunately, some in Congress claim to oppose a bailout for Puerto Rico without recognizing and acknowledging that the proposed legislation means exactly that.  Representative Rob Bishop (R – Utah) offers a leading example, saying that, “there will be no bankruptcy, there will be no bailout.”

Fortunately, Mainstreet Bondholders, a project of the 60 Plus Association, provides a useful corrective appropriately entitled “Read the Bishop Bill – This Is Super Chapter 9”.  It itemizes in easily-understood bullet-point terms how, “Insisting that this bill is not Chapter 9, and simply renaming it something else, does not change the substance of the legislation.  Make no mistake – this is exactly what the Obama Administration asked for when it lobbied for Super Chapter 9!”  It is worth the quick read.

Those who support the proposed legislation, including Rep. Bishop, may have their hearts in the right place.  But that doesn’t change the fact that the bill would bring precisely the sort of bailout on the backs of Americans they purport to oppose.

We at CFIF therefore ask all Americans to contact their elected representatives in Congress to express their unequivocal opposition to the House’s “Super Chapter 9” bailout plan for Puerto Rico and its spendthrift politicians.

February 8th, 2016 at 2:53 pm
Puerto Rico: Lingering Questions for Banco Popular’s Richard Carrion
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Late last year, we posed several questions to Banco Popular President and CEO Richard Carrion, in conjunction with his appearance as a witness during a Congressional hearing on Puerto Rico’s public debt.

Our questions centered mainly upon his recent emergence as a staunch advocate of a unilateral restructuring of Puerto Rico’s debt, a bizarrely anti-lender stance for the head of the  Island’s largest bank.  Among our questions, we asked how Carrion’s bank had avoided the severe exposure to Puerto Rican debt experienced by the Island’s other lenders and citizens, and why Popular – a private sector leader by any definition – has been so reluctant to align with other private sector actors in negotiating a consensual debt solution between Puerto Rico and its lenders.

Needless to say, we found Carrion’s newfound fondness for complete restructuring puzzling.

A closer look at Popular’s financial disclosures, however, reveals the real reason the bank so proudly advocates in support of a super restructuring:  In 2014 and 2015, Popular shed massive amounts of government and public corporation debt that would be subject to a restructuring, enabling it to emerge as an ally for the Garcia Padilla Administration.

In December 2014, Popular was itself a large bondholder, with approximately $337 million of their $811 million (42%) exposure to Puerto Rican debt in public corporations PRASA and PREPA.  Its exposure to General Obligation debt was roughly $82 million, or 14% of its holdings.

Fast forward one year.  Banco has reduced its exposure to debt that would be subject to a restructuring drastically, now holding only $59 million of public corporation debt (10%) and $23 million (4%) of general obligation debt.  The remaining 86% of its exposure is to debt is in the form of loans to municipalities, which are not and never have been part of the restructuring discussion.  It has actually increased its exposure to this “safe” municipality debt by about $20 million over the same time span.

In other words, over the last year, Banco Popular has shed exposure to hundreds of millions in debt that would be subject to La Fortaleza’s scheme, while unsuspecting Puerto Ricans held various debts (PFCs, GOs, PREPA) and lost their hard-earned money.

Herein lies the twist:  Carrion’s timing was impeccable, but it also raises red flags.

In a recent news report, the Washington Free Beacon notes Carrion’s relationship with Antonio Garcia Padilla, the scandal-plagued brother of the governor who is the lone employee of a suspicious island-based non-profit.  That non-profit, of which Carrion is a board member, has received large contributions from Banco Popular and is housed in the bank’s San Juan headquarters.  Was Popular given advanced warning of this plan in exchange for that money?

As if that’s not already bad enough, there’s more.  Popular’s close relationship with the Garcia Padilla administration continues to pay dividends.  Banco stands to generate another $9 million in profit from the government’s recently proposed liquidation of Housing Finance Authority Assets, another windfall for what has already been a profitable financial crisis for the bank.

And what about the rest of the bondholders – those who will be wiped out by an unconstitutional restructuring, and don’t have the luxury of dumping their life savings in exchange for sweetheart deals from the Garcia Padilla administration?

If Popular truly seeks to restructure these debts for the good of Puerto Rico, will it support the same type of unilateral restructuring for other types of loans taken out by regular Puerto Ricans who are Popular customers?  Will Popular allow its own clients to restructure their mortgages and car loans and cease and desist from any and all foreclosure processes against these borrowers?

Call us skeptical.

December 1st, 2015 at 1:44 pm
Puerto Rico Should Work With Stakeholders to Reach Consensual Solution to Debt Crisis
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At today’s hearing, Richard Carrion testified that as a professional banker, he was “extremely reluctant” to testify in favor of debt restructuring.  Yet Carrion has given no weight to promising proposals put forth by the private sector, preferring instead to trumpet the agenda of his friend Governor Garcia Padilla.  As demonstrated by today’s bond payment, the Puerto Rican government has the means to meet its obligations, and should work with stakeholders to reach a consensual solution.

December 1st, 2015 at 10:43 am
Puerto Rico Debt Crisis: Richard Carrion Is a Problematic Witness Sitting Alongside Governor Garcia Padilla
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At today’s Senate Judiciary Committee hearing on Puerto Rico’s fiscal situation, Governor Alejandro Garcia Padilla will likely face tough questioning from Senators displeased with his handling of the island’s economy.  Sitting alongside Gov. Garcia Padilla to face those questions will be a close friend from the Commonwealth’s financial sector:  Banco Popular Chairman and CEO Richard Carrion.

Carrion, whose bank is no stranger to asking for federal assistance – it received almost $1 billion in TARP funding from the Treasury (which it did not repay until July 2014) – is a longtime Garcia Padilla supporter who continues to maintain a close relationship with the Puerto Rican government.  Additionally, Banco Popular’s General Counsel Javier Ferrer is the former GDB President under Gov. Garcia Padilla, and longer-tenured lawmakers will also be familiar with the bank’s previously cozy relationship with Representative Luis Gutierrez, who lobbied for that TARP funding for the bank in 2008.

The island’s largest lender holds unmatched influence over the Island’s financial sector, controlling over 40% of the Commonwealth’s credit market.  It has also benefited from Puerto Rico’s debt crisis by collecting underwriting fees on large swaths of the public debt and acting in a fiduciary capacity for many debt issuers.

At today’s hearing, we therefore urge Senators to consider the motivations behind Carrion’s testimony.

Over the years, Banco Popular stands as the biggest beneficiary of Puerto Rico’s debt crisis, collecting fees to underwrite huge swaths of Puerto Rican debt.  Since 2008, Banco Popular’s subsidiary, Popular Securities, has been involved in the underwriting of over $56 billion in Puerto Rican bond offerings, mostly for the Puerto Rican government.  In that capacity, Popular has had a direct hand in the issuance of billions of dollars of debt to investors on the island and mainland, including to small investors, pensions, and mutual funds.  As underwriter, Popular has performed due diligence on every bond offering in which it has been involved.  Yet in advocating for a complete restructuring of Puerto Rico’s debts, Popular is now asking to restructure the very same bonds it recommended to regular investors saving for retirement after having passed judgment on their suitability for such investors.

In addition to fees collected as underwriter, Popular also acts in a fiduciary capacity for several bond issuers, serving as paying agent, escrow agent, and trustee.  These issuers include institutions with deep ties to Gov. Garcia Padilla’s administration, including the Government Development Bank, COFINA, the University of Puerto Rico, and the recently defaulted Public Finance Corporation among others.

Despite having already profited handsomely on the debt crisis that it has helped to create, Popular is now advocating for a complete restructuring of the government’s public debts.  At first glance, it seems strange that a large lending institution like Popular would take such an anti-lender stance on Puerto Rico’s debt, especially given that it helped to issue so much of it.  Through an agreement with JP Morgan, and previously Morgan Stanley, however, Popular is only exposed to a small fraction of the underwriting exposure for any offering made to mainland US investors.  Further, most of Popular’s outstanding exposure to Puerto Rico debt is to several of the Island’s 78 municipalities, which has never been part of a restructuring proposal.  Their direct exposure to debt that would be subject to a restructuring is minimal.

Even after a total debt restructuring, Popular would no doubt choose to continue its practice of selling  loans made to struggling, regular Puerto Ricans to mainland institutional investors and hedge funds at steep discounts, who in turn seek 100% repayment from the borrowers.  To be clear, Popular has long engaged in these dealings with Wall Street, having already unloaded over $1.75 billion in loans to institutional investors which are in varying states of foreclosure.

All of this suggests a self-serving agenda.  While it carries minimal direct exposure to the debts that it seeks to restructure, Popular stands to profit handsomely on the backs of regular Puerto Ricans by continuing to sell their loans to Wall Street firms when they cannot pay their debts.

It triggers the question, then, that if Popular truly seeks to restructure these debts for the good of Puerto Rico, will it support the same type of unilateral restructuring for other types of loans taken out by regular Puerto Ricans who are Popular customers?  Will Popular allow its own clients to restructure their mortgages and car loans and cease and desist from any and all foreclosure processes against these borrowers?  Or will it reap the financial benefits of the crisis that it is creating for Puerto Rican borrowers?

In addition to those questions, here are some others that Senators would be wise to ask of Carrion:

  • What is your relationship, personally and professionally, with Gov. Garcia Padilla, his administration and his family?
  • How is it that your bank, the largest in Puerto Rico, has avoided the exposure to public securities experienced by other banks?
  • As a recipient of a large federal bailout resulting from poor lending practices, what qualifies you to advise on the best path forward for Puerto Rico’s recovery?
  • As a private sector leader, why are you not working with other members of the private sector to reach a consensual solution?
  • If you are willing to advocate for massive debt forgiveness to the Puerto Rican government, are you willing to provide similar debt forgiveness to regular Puerto Ricans that struggle to make loan payments to your bank?

Considering that the biggest beneficiary of the Puerto Rico debt crisis now calls for “Super Chapter 9” bankruptcy and broad restructuring powers, those are all reasonable questions.

November 2nd, 2015 at 9:37 am
WSJ’s O’Grady: “Puerto Rico Doesn’t Need Bankruptcy”
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We at CFIF have steadfastly opposed the effort by some to upend American bankruptcy laws in order to allow Puerto Rico to declare bankruptcy.  “American taxpayers,” we believe, “should not be saddled with yet another bailout and force Americans saving for retirement to take a financial hit.”  Rather, “Congressional Republicans should guide Puerto Rico into doing the right thing:  trim spending and taxes, stand up to unions and undertake badly-needed governing reforms.”

We’re therefore happy to find in this morning’s Wall Street Journal that weekly “Americas” columnist Mary Anastasia O’Grady agrees:

[T]here is little evidence that Puerto Rico faces a humanitarian crisis any more than the heavily indebted states of California and Illinois.  And as to the deteriorating fiscal environment, it seems to be largely the work of Gov. Alejandro Garcia Padilla, who has been signaling markets that default is a policy goal.  As Carlos Colon de Armas, a professor of finance at the Graduate School of Business at the University of Puerto Rico, told me last week, ‘If, instead of doing everything it can do in order not to pay, the government of Puerto Rico were doing everything it could do in order to pay, things would be very different.'”

The answers to Puerto Rico’s situation, as is the case with fiscally irresponsible states like Illinois and even the federal government itself, lie with the tried-and-true concepts of fiscal responsibility, lower taxes, fewer regulations and respect for established rule of law and contractual expectations.

August 24th, 2015 at 11:44 am
Puerto Rico: Rule of Law and Fidelity of Contract, Not Bankruptcy
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At CFIF, we stand for the rule of law and with American taxpayers, investors, savers and seniors against the destructive proposal floated by some in Washington, D.C. of changing longstanding law to allow Puerto Rico to declare bankruptcy.

Accordingly, we’re happy to see that in her weekly “The Americas” column in today’s Wall Street Journal, Mary Anastasia O’Grady highlights the way in which pro-bankruptcy advocates undermine the rule of law by disregarding contractual property rights:

The governor, and the legislature which his party controls, made a conscious decision when they approved the budget not to put the funds aside for that payment.  ‘They are explicitly legislating default because they think that puts the creditors on their knees.  Then the creditors will have to make concessions…  Creditors have protections [in bond contracts],’ he adds, ‘and a court of law is going to enforce those agreements.’  Securitized bonds provide bondholders with a property right to a designated cash-flow stream.”

As we specified previously, better alternatives exist:

For example, the Puerto Rican government could actually pay the hundreds of millions of dollars it owes to the power authority (PREPA), or Congress could impose greater oversight over Puerto Rico.  Remember, a financial control board was effective in reforming the District of Columbia’s finances 20 years ago, accomplished on a bipartisan basis by a Republican Congress and a Democratic president.  Ultimately, that might be the way to put in place comprehensive, structural reforms so that Puerto Rico never again spirals out of control.”

The solution is adherence to the rule of law and the enforcement of mutually bargained-for contract, not yet another bailout imposed upon American taxpayers.

June 1st, 2015 at 9:39 am
Bankruptcy for Puerto Rico? Bad Idea
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Puerto Rico’s years of fiscal mismanagement, cronyism and corruption have come to a head.  The island territory is at least $73 billion in debt, and guess who Congressional Democrats think should pick up the tab:  American taxpayers, savers and seniors.

Puerto Rico Resident Commissioner Pedro Pierliusi and Governor Alejandro Garcia Padilla are working with fellow Democrats to lure Republicans into passing a bill (H.R. 870) that would give Puerto Rico a bailout, and allow Puerto Rico to walk away from its debts.

We at CFIF are concerned that some Republicans in Congress are receptive to this taxpayer bailout.  Representative Goodlatte of Virginia, who chairs the House Judiciary, recently visited Puerto Rico to explore pursuing Chapter 9 having set the legislative process in motion when he consented to having a public hearing on the proposal back in February.

Chapter 9would hurt thousands of hardworking Americans on the mainland and in Puerto Rico who have invested savings in Puerto Rican bonds.  And longer-term, it would do nothing to reform a broken Island.  Furthermore, a Chapter 9 bailout flies in the face of principles for which Republicans are supposed to stand:  limited government, fiscal responsibility and the rule of law.  Some Puerto Rican apologists have even suggested that if Puerto Rico is not granted Chapter 9, the Island will just come calling for a bailout.  But that is a false choice, and a stick-up by San Juan and their cronies.

Fortunately, better alternatives exist.

For example, the Puerto Rican Government could actually pay the hundreds of millions of dollars it owes to the power authority (PREPA) or Congress could also impose greater oversight over Puerto Rico. Remember, a financial control board was effective in reforming the District of Columbia’s finances 20 years ago, accomplished on a bipartisan basis by a Republican Congress and a Democratic President.  Ultimately, that might be the way to put in place comprehensive, structural reforms so that Puerto Rico never again spirals out of control.

This brings us back to the Republican Congress, specifically Rep. Goodlatte.  At a minimum, holding a hearing signals openness to the bill.  Yet, this changes the rules in the middle of game and can have economic consequences, which Rep. Goodlatte has acknowledged.

Now that Rep. Goodlatte has met in Puerto Rico with its leaders, fellow conservatives are looking to him to put the brakes on this bailout.  As Jay Marts of the Virginia Northern Shenandoah Tea Party writes, “H.R 870 is not a conservative solution,” but “a gift to the Democrats.”

American taxpayers should not be saddled with yet another bailout and force Americans saving for retirement to take a financial hit.  Instead, Congressional Republicans should guide Puerto Rico into doing the right thing:  trim spending and taxes, stand up to unions and undertake badly-needed governing reforms.  The time is right for a control board.

July 18th, 2013 at 5:10 pm
The Wages of Liberalism
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This story would be slightly less depressing even if we hadn’t all seen it coming for years:

Detroit on Thursday became the largest city in U.S. history to file for bankruptcy, as the state-appointed emergency manager filed for Chapter 9 protection.

Kevyn Orr, a bankruptcy expert, was hired by the state in March to lead Detroit out of a fiscal free-fall and made the filing Thursday in federal bankruptcy court.

A number of factors — most notably steep population and tax base falls — have been blamed on Detroit’s tumble toward insolvency. Detroit lost a quarter-million residents between 2000 and 2010. A population that in the 1950s reached 1.8 million is struggling to stay above 700,000. Much of the middle-class and scores of businesses also have fled Detroit, taking their tax dollars with them.

This, of course, doesn’t take the analysis back quite far enough. The population and tax base are symptoms, not causes. Why did people actually leave? Well, there were local officials intent on driving out part of the population on racial grounds, the dominance of unions that ended up choking the auto industry, overwhelming crime rates, and a spate of corrupt politicians.

For decades now, Detroit has been a laboratory of liberalism. Today’s news only makes explicit what many of us concluded long ago: the experiment has failed.

May 8th, 2012 at 5:07 pm
Big Labor Attempts to Commandeer American Airlines
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Big Labor is at it again.  This time in the airline industry.

As you’ve probably heard, US Airways has proposed a merger with American Airlines, and the latter’s labor unions have eagerly pursued contract agreements with their potential new employer.  A benevolent effort meant to expedite the process?  Hardly.  Rather, it is a hasty, thinly-veiled act of desperation.  Instead of allowing American’s bankruptcy restructuring process to run its natural course, and a stronger airline to emerge, American’s unions have acted in a manner that can only serve to muddle and complicate the situation.

Here’s the critical fact to keep in mind: American Airlines reached its current predicament due primarily to its onerous labor costs.  Its industry-high labor costs, representing fully 28% of its revenue, led to bankruptcy.  Now, however, its unions seek to repeat that futile process by pursuing similar deals with US Airways.  It defies history and economic reality to believe that a new merger under similar conditions would create such a magical synergy allowing the new contracts to be sustained for a lasting amount of time.

On top of that, successfully integrating two separate workforces into one can be a logistical nightmare.  After all, US Airways itself has yet to fully integrate the new employees it acquired with its 2005 takeover of America West Airlines.  Pilots from both carriers have engaged in an ongoing dispute over seniority and pay scales, and to this day US Airways and America West essentially operate as two separate entities, with US Airways pilots only flying US Airways planes and vice-versa.  How could repeating that scenario be expected to create sudden synergies or cost savings?  What evidence is there that this union-proposed takeover might play out differently?

Make no mistake – we at CFIF don’t maintain any inherent antipathy toward mergers.  We do, however, recognize the pitfalls and dangers of mergers suspiciously pursued and negotiated by union bosses.  The unfortunate reality is that this appears to be yet another example of Big Labor pursuing its own interests at the expense of the rank-and-file employees it claims to represent.

By way of historical background, the airline industry has changed rapidly over the years due to rising fuel costs and other market forces.  Countless carriers have restructured union contracts or merged with competitors to reduce costs and remain in the market.

American Airlines stands as the lone exception.

American has never merged with another airline, and until this year it had never filed for bankruptcy.  As a result, its unionized employees have enjoyed arguably the best salaries and benefits packages in the industry.  And in an ironic bit of history, US Airways has itself gone through several bankruptcies over the years, and even frozen or terminated pensions and many of the types of benefits they’re apparently ceding to American’s labor unions in hopes of a quick deal.

We live in economically uncertain times, in which the cushy union contracts of old have become outdated and fiscally unsustainable.  The fact that American, once the nation’s model airline, is bankrupt is itself evidence of how challenging it has become to operate in the industry.  Big Labor knows this well.  After all, it represents a significant percentage of the industry workforce.  Sadly, however, it refuses to learn the straightforward lessons of recent history, and instead continues to demand unreasonable contracts that will put the longevity and viability of airlines at risk.  In so doing, shortsighted union leaders place their own survival above that of their members.  They concern themselves primarily with replenishing their coffers and pursuing political victories financed by union dues.

That imprudent approach may benefit the union leadership in the near term.  But in the end, it proves to the detriment of average unionized American Airlines employees, as well as customers due to the reduced long-term viability of a bloated, union-controlled airline.  The alternative is to allow American the opportunity to right the ship and carve out a new, mutually-beneficial agreement with its employees.  Concessions will need to be made by both management and labor, and it will necessary for American Airlines’ bankruptcy proceedings to run its course.

The Big Labor alternative to repeat the unsustainable cycle will merely prolong the misery at the expense of employees and consumers.

March 25th, 2011 at 11:03 am
Portugal Likely to Seek Bailout; Warnings for US Federalism?

When every opposition group voted down his austerity budget earlier this week, Portugal’s prime minister resigned.  Now, the European Union is preparing to bail out a third member nation in just over a year.  (The other two are Greece and Ireland.)

While the Portuguese mess probably won’t have an immediate fiscal impact on the United States, the EU’s crisis of federalism could soon be felt over here.

States like Illinois and California are teetering on the edge of insolvency after spending like a bunch of reckless European countries.  Because of the EU’s shared currency and the effects a default would have on the rest of the federation, the EU feels pressed into covering the costs of some members’ excess.

The same thinking seems likely to migrate across the Atlantic.  Members of Congress are mulling options like bankruptcy for failing state governments, though that risks undermining state sovereignty.  Also, bailouts run the risk of prolonging hard decisions, as well as deepening the dependency of states on the feds.

There are no easy answers, but there are some necessary decisions.  Time will tell if those in Sacramento and Springfield can come to better resolutions that the parliament in Lisbon.

March 24th, 2010 at 1:54 pm
What Does Anna Nicole Smith Have to Do with Property Rights? Plenty
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As CFIF has noted before, former Hollywood “star” Anna Nicole Smith has made quite a splash in the legal world – and not by diving nude off a roof into a pool at a trial lawyers’ convention in Cancun.

The litigious executors of Smith’s estate have attempted to manipulate our judicial system, filing multiple lawsuits in multiple jurisdictions to claim private property to which they have no right.  True to our federalist system, state courts were best situated to resolve this claim.  Unfortunately, her attorneys were able to successfully game the system by playing “jackpot justice” and filing duplicative suits in federal court elsewhere.  Their legal maneuvering has been so abusive that it’s dragged on for more than 15 years, and outlived every single one of the original litigants in the case.

Fortunately, it appears the end of the road may finally be in sight.

Late last week, the Ninth Circuit Court of Appeals vindicated federalism’s division of powers and ruled in favor of private property rights.  It did so by recognizing the autonomy of state courts and preventing federal bankruptcy courts from overstepping their bounds by improperly interfering in matters properly left to local law.  This is an important step in preventing any further erosions of the concept of federalism in our court system, and vital to preventing trial lawyers and perpetual lawsuit abusers from seeking out favorable rulings by circumventing the state courts best equipped to negotiate state specific estate laws.

It’s also important to note that this ruling impacts more than just Hollywood starlets like Anna Nicole.  If the courts had ruled in favor of Smith’s estate, any family inheritance or estate matter anywhere could have been subject to such frivolous forum shopping.  Legal expert Todd Zywicki, who has long followed the case and also filed an amicus brief in the suit, wrote more on the case on the popular legal blog, The Volokh Conspiracy.  His conclusion, in plain English:

“A clear line between state law and bankruptcy court is important to keep cases like this from arising in the future.”

We should be thankful that the Federal courts have drawn that line in favor of property rights, at least for now.  Unfortunately, Smith’s executor, coincidentally named Howard K. Stern, has indicated that he intends to appeal.  Accordingly, the United States Supreme Court could still overturn the Ninth Circuit’s ruling in a fit of misjudgment.  Let’s hope the second time around, the Supreme Court gets this right, and upholds the Ninth Circuit’s protection of property rights, the rule of law and federalism.

March 9th, 2010 at 2:19 pm
Government Bankruptcy and the Illusion of Orderly Crisis Management

Maybe it is 100 years of Progressive institution building that obscures the lessons of history, but the writers of Slate are kidding themselves if they think that just because there are no formal legal structures to handle California and Greece’s looming bankruptcies, then it must also be true that they cannot declare bankruptcy.  That view betrays the positivist’s creed that if a problem isn’t addressed in law, then it cannot be resolved by government. More likely, private creditors will get soaked while the larger governments negotiate a separate peace.

History teaches that the inability or refusal to pay sovereign debt (whether loans or tribute) typically leads to the expansion of government power.  Since both California and Greece are de facto sub-agencies of the US and EU, respectively, here’s betting that on net, the federal governments of the United States and European Union will emerge with even more power than before.