| Allen Park Michigan Sent Layoff Notices to Entire Fire Department; Allen Park, Hamtramck, Detroit are Bankrupt Posted: 24 Feb 2011 06:42 PM PST Allen Park, Michigan, a town of about 28,000, sent layoff notices to its entire fire department. This is a procedural move because the town is unsure how many it will need to lay off. However, the situation looks grim. Please consider Allen Park official says layoffs needed to plug $600K deficitThe city's finance director said today that Allen Park must lay off 25 to 30 employees by June to avoid a $600,000 deficit for the current fiscal year.
Tim McCurley said in an interview that the city sent layoff notices to everyone in the fire department to comply with a clause in the firefighters' union contract requiring a 30-day notice. He said some or all of the firefighters could lose their jobs, and that the police department faces layoffs too.
"It's not easy to lay people off," McCurley said. "No one wants to do that. It's never easy, but we are trying to work through it."
The finance director said the layoffs would only keep the city's books balanced for this year and have nothing to do with any funding cuts in Gov. Rick Snyder's proposed budget for fiscal 2012.
According to McCurley, the city faces a fiscal crunch because revenue in several areas has fallen short of projections. Collections from traffic tickets are $819,000 below what was budgeted, and ambulance billing collections are $200,000 under budget, he said.
McCurley said the city also had to refund $80,000 under order of the Michigan Tax Tribunal.
In other areas, spending has exceeded projections, including $130,000 in parks and recreation. McCurley said the city failed to budget for $150,000 for unused sick and vacation time for employees who have retired.
Overtime in the fire department is $150,000 over budget, even after firefighters agreed to limit overtime pay as part of concessions negotiated last year, McCurley said.
City Council members approved laying off the 25-person fire department Tuesday night.
Fire Chief Doug LaFond said he would be laid off as well.
But LaFond questioned the need to eliminate his entire force to make up for shrinking revenue.
"The bottom line is there aren't any other cities in the state of Michigan that are eliminating fire departments because of it," LaFond said.
The fire chief said he did not believe the entire police department was being threatened with layoff, but said the police force is about double the size of his department and could see significant cuts. This is the second such maneuver we have seen recently where a town sent layoffs to an entire department. In case you missed it, please consider Providence School Superintendent to Send Dismissal Notices to All 1,926 Teachers; Providence is BankruptAllen Park, Hamtramck,Detroit are BankruptI recommend Allen Park outsource its entire police and fire departments. Moreover, the Mayor should be in touch with the governor about petitioning for bankruptcy. I have written about Detroit and Hamtramck before. Here are a few links. It is virtually impossible to solve problems in those cities outside of bankruptcy. Contracts needs to be rewritten, pension obligations shed, and new wage structures mandated (not negotiated). That cannot be done via collective bargaining, or indeed any kind of bargaining. The mayors and city managers of those towns should all get together and announce intention to default if the governor will not approve a valid bankruptcy process. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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| Libyan Rebels Close In on Capital; Qaddafi Blames Violence on “Hallucinogenic” Drugs and bin Laden; PIMCO Co-CEO Calls Oil Spike "Stagflationary" Posted: 24 Feb 2011 11:50 AM PST Libyan Rebels control most of the oil coast and have moved within 30 miles of Tripoli. Oil prices have risen along with the violence and PIMCO Co-CEO Calls Oil Spike "Stagflationary". The New York Times reports Qaddafi Strikes Back as Rebels Close In on Libyan CapitalThousands of mercenary and irregular forces struck back at a tightening circle of rebellions around the capital, Tripoli, on Thursday, trying to fend off an uprising against the 40-year rule of Col. Muammar el-Qaddafi, who blamed the violence on "hallucinogenic" drugs and Osama bin Laden.
The fighting on Thursday centered on Zawiya, a gateway city to the capital, just 30 miles west of Tripoli, where government opponents had briefly claimed victory. Colonel Qaddafi's forces — a mixture of special brigades and African mercenaries — fought back, blasting a mosque that had been used as a refuge by protesters, a witness told The Associated Press.
An exiled Libyan who had been in contact with members of the opposition in Zawiya said Colonel Qaddafi's forces attacked beginning about 5 a.m., initiating a battle that lasted 4 hours. The rebel forces fought back with hunting rifles and about 100 were killed, he said.
Fighting intensified in other cities near Tripoli — Misurata, 130 miles to the east, and Sabratha, about 50 miles west. There were also reports that Zuara, 75 miles west of the capital, had fallen to anti-government militias.
To the east, at least half of the nation's 1,000-mile Mediterranean coast, up to the port of Ra's Lanuf, appeared to have fallen to opposition forces, a Guardian correspondent in the area reported. Rebels Control Much of Oil-Rich EastBloomberg reports Qaddafi Urges End to Violence as Foes Increase Control in EastLibya's Muammar Qaddafi, who has lost control of much of the country's oil-rich east, appealed to citizens to end violence as his forces stepped up a crackdown on opponents and more than 100 people were reportedly shot dead.
Qaddafi blamed the uprising against his 41-year rule on "drugged kids" and al-Qaeda, speaking by telephone on state television today for the first time since a Feb. 22 speech in which he vowed to fight "until his last drop of blood." He said he regretted the deaths during the unrest.
In the east, Qaddafi's opponents organized committees of civilians to run and defend their cities with the help of troops who deserted his forces. In Benghazi, the country's second- largest city, anti-Qaddafi militias in front of the courthouse were collecting weapons from people who had seized them from army supplies, a local resident said by phone, declining to be identified due to concern over reprisals.
Anti-government protesters appeared to be in control of the entire eastern coastline, Al Jazeera reported today, as clashes between pro- and anti-government forces broke out in other cities, including Sabha in the southwest, and Sabhatha and Az- Zawiyah, both west of Tripoli.
Major General Suleiman Mahmoud, commander of the Libyan army in Tobruk, told Al Jazeera that his forces have deserted Qaddafi and are siding with local residents. "We are supporting the Libyan people," he said in a phone interview with the channel. He said Tobruk was peaceful and that residents were organizing themselves.
Civil War
"The possibility of civil war only exists if Qaddafi stays," Mohammed Ali Abdallah, deputy head of the National Front for the Salvation of Libya, the main exiled opposition group, said today. Possibility of Civil War is 100%I wonder what definition of "civil war" the deputy head of the National Front for the Salvation of Libya is using. That name alone implies a civil war movement, but more importantly what else can it be called with the military splits between pro and anti-government forces with rebels attacking the capital? Clinton, El-Erian, Khelil Own Words on Libya, Oil Prices Bloomberg has an interesting video on Libya and oil prices with Secretary of State Clinton, and PIMCO co-CEO Mohamed El-Erian. Select El-Erian Points From Video - Western world will not grow as rapidly as before
- Unemployment will be a persistent issue
- Social safety nets will be stretched
- On top of that we have headwinds of higher oil prices and higher geopolitical risk
- Commodity prices may overshoot on stockpiling, just as happened in 2008. That is the concern of a stagflationary headwind.
If one views inflation as a function of prices there may be merit to a stagflation argument. If one properly views inflation in terms of money supply and credit, the term is confusing, because it is about prices, regardless of cause. Please remember the origin of the term came about in the 70's when the Keynesian theory at the time was that inflation and recession could not happen at the same time. Obviously it did, proving Keynesian theory belongs in the ashcan. This is not 1970, and the ability and willingness of consumers to expand credit at this point in time is not the same, no matter how hard Bernanke tries. However, we are in the midst of another oil price shock, compounded by peak oil and a rapidly overheating Chinese economy. Thus the idea of "headwinds" is very real, regardless of what "flation" label one chooses to use. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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| Arab Unrest Propels Iran; Saudi King Rolls Out Reforms; Violence Shakes Kurdistan; Bahrain, Saudi Kings Discuss Unrest; Brent Crude Spikes Near $120 Posted: 24 Feb 2011 03:30 AM PST The civil war in Libya continues but much of Iraq is now in the hands of the rebellion. As the revolt spreads, Qaddafi Masses Forces in Tripoli for a final showdown or a counterstrike against the rebels. As rebellion crept closer to the capital and defections of military officers multiplied, Col. Muammar el-Qaddafi called on thousands of mercenaries and irregular security forces on Wednesday to defend his bastion in Tripoli, in what residents said was a desperate and dangerous turn in the week-old uprising.
Distrustful of even his own generals, Colonel Qaddafi has for years quietly built up this ruthless and loyal force. It is made up of special brigades headed by his sons, segments of the military loyal to his native tribe and its allies, and legions of African mercenaries he has helped train and equip.
Witnesses said thousands of members of this irregular army were massing on roads to the capital, Tripoli, where one resident described scenes evocative of anarchic Somalia: clusters of heavily armed men in mismatched uniforms clutching machine guns and willing to carry out orders to kill Libyans that other police and military units, and even fighter pilots, have refused.
But amid spreading rebellion and growing defections by top officials, diplomats and segments of the regular army, Colonel Qaddafi's preparations for a defense of Tripoli also reframed the question of who might still be enforcing his rule.
Colonel Qaddafi, who took power in a military coup, has always kept the Libyan military too weak and divided to do the same thing to him. About half its relatively small 50,000-member army is made up of poorly trained and unreliable conscripts, according to the Center for Strategic and International Studies.
Colonel Qaddafi's own clan dominates the air force and the upper level of army officers, and they are believed to have remained loyal to him, in part because his clan has the most to lose from his ouster.
But perhaps the most significant force that Colonel Qaddafi has deployed against the current insurrection is one believed to consist of about 2,500 mercenaries from countries like Chad, Sudan and Niger that he calls his Islamic Pan African Brigade.
Elsewhere, there were signs that Colonel Qaddafi's forces were refortifying. For the first time, witnesses said, at least four army tanks had rolled into the streets of the capital. Saudi Arabia King Rolls Out Reforms Fearful of uprisings in the region Saudi Arabia King Rolls Out Reforms Saudi Arabia's King Abdullah returned to the kingdom Wednesday after a three-month absence for medical treatment and introduced a number of nonpolitical reforms amid regional uprisings that have toppled regimes in Tunisia and Egypt and infected neighboring Bahrain.
The social and economic overhaul, estimated to cost around 135 billion Saudi riyals ($36 billion), include housing support, funding to offset inflation and guarantee of payment for students overseas, according to a series of royal decrees published on the official Saudi Press Agency, or SPA. They come as political upheaval continues to sweep the Arab world.
"The measures are paying particular attention to housing, unemployment, education and helping the brunt of Saudis who work for the public sector be better protected from cost of living pressures. The unemployment benefits are the first of its kind in Saudi Arabia," said John Sfakianakis, chief economist at Banque Saudi Fransi. "The message from King Abdullah is that he's aware of the challenges facing the economy and steps are taken to address immediate and more medium-term issues."
"Saudis want more from the king and his regime. They want more political and social freedom, more rights for women, better education and more job opportunities," said a Saudi businessman who declined to be named. "The region is changing rapidly and the Saudis want to feel this change in their country too."
A few hundred Facebook users called for a "day of rage in Saudi Arabia" earlier this week, demanding more political freedom and an elected leader. A few Facebook pages called for protests on March 11 in the Arab world's largest economy, but it was too early to judge if these demonstrations will take place. Bahrain King in Saudi Arabia to Discuss UnrestPlease consider Bahrain King in Saudi Arabia to Discuss UnrestA day after one of the largest pro-democracy demonstrations this tiny Persian Gulf nation had ever seen, its king was in Saudi Arabia, a close ally and neighbor, to discuss the unrest engulfing the region.
The visit of King Hamad bin Isa al-Khalifa on Wednesday came just as the aging Saudi ruler, King Abdullah, returned to the country after three months of medical treatment in the United States and Morocco.
King Hamad had already tried his own payout — offering $2,650 to every Bahraini family in the days before large protests broke out more than a week ago — but the economic concession was not enough to stem the tide of opposition from the country's Shiite majority. Sunnis, the majority in Saudi Arabia, also form the ruling class in Bahrain, where Sunnis are a minority.
In a nation of only 500,000 citizens, the sheer size of the gathering on Tuesday in Manama, Bahrain's capital, was astonishing. Tens of thousands of men, women and children, mostly members of the Shiite majority, formed a ribbon of protest for several miles along the Sheik Khalifa bin Salman Highway as they headed for the square, calling for the downfall of the government in a march that was intended to show national unity.
"This is the first time in the history of Bahrain that the majority of people, of Bahraini people, got together with one message: this regime must fall," said Muhammad Abdullah, 43, who was almost shaking with emotion as he watched the swelling crowd.
"It is a revolution," said Hussein Mohammed, 37, a bookstore owner and volunteer for Al Wefaq. "It is a big revolution. It is unbelievable." Three Questions- Given that payouts failed in Bahrain, will payouts work in Saudi Arabia?
- Saudi Arabia is much wealthier of course, but are Saudi concerns about money or political freedom?
- How long can can King Abdullah last at age 86, given he is not in especially good health?
Please note that the crown prince and next in line is Prince Sultan bin Abdul Aziz Al Saud, and if anything, Sultan is even in worse medical condition. In 2004, [Sultan] was diagnosed with colon cancer and reportedly underwent several corrective surgeries. He underwent an operation to remove an intestinal polyp. In April 2009, it was reported that he was, again, seriously ill, and had spent several months in New York City at New York Presbyterian Hospital undergoing surgery and shuttling thereafter between the United States and Agadir, Morocco. He has spent much of the last year abroad for medical treatment and rest.
A leaked March 2009 diplomatic cable from WikiLeaks showed that U.S. diplomats view Crown Prince Sultan as "for all intents and purposes incapacitated". Sultan, who will be eighty-seven this year, is believed to be suffering from a form of dementia, possibly Alzheimer's disease. Bonus 4th Question: Will the people readily accept the new king? Violence Shakes KurdistanThe New York Times reports Iraqi Kurdistan, Known as Haven, Faces UnrestThis is a place that calls itself "the other Iraq," a haven of social and economic stability that largely escaped the bloodshed and chaos that have ravaged the rest of the nation.
But over the past week a wave of sometimes violent unrest has shaken Kurdistan, posing a rare challenge to the political powers that have led Iraq's mountainous north for decades, during and after Saddam Hussein.
Thousands of people — many of them university students — have been filling the central square here to wave Kurdish flags and voice the calls for change that echo those ringing across northern Africa and the Middle East. The protests here, reflecting a long-festering anger with government corruption and partisan politics, have grown larger in recent days, and have support from this eclectic city's legions of poets, writers, artists and unions.
"Everyone is angry," said Asos Hardi, manager of Awena, one of the few newspapers not tied to one of the region's political or religious parties. "Everyone from the taxi driver to the shopkeeper to intellectuals and students." Balance of Power Shifts Towards IranThe New York Times reports Arab Unrest Propels Iran as Saudi Influence DeclinesThe popular revolts shaking the Arab world have begun to shift the balance of power in the region, bolstering Iran's position while weakening and unnerving its rival, Saudi Arabia, regional experts said.
While it is far too soon to write the final chapter on the uprisings' impact, Iran has already benefited from the ouster or undermining of Arab leaders who were its strong adversaries and has begun to project its growing influence, the analysts said. This week Iran sent two warships through the Suez Canal for the first time since its revolution in 1979, and Egypt's new military leaders allowed them to pass.
The Sunni leaders in Saudi Arabia and Bahrain accuse their Shiite populations of loyalty to Iran, a charge rejected by Shiites who say it is intended to stoke sectarian tensions and justify opposition to democracy.
The uprisings are driven by domestic concerns. But they have already shredded a regional paradigm in which a trio of states aligned with the West supported engaging Israel and containing Israel's enemies, including Hamas and Hezbollah, experts said. The pro-engagement camp of Egypt, Jordan and Saudi Arabia is now in tatters. Hosni Mubarak of Egypt has been forced to resign, King Abdullah of Jordan is struggling to control discontent in his kingdom and Saudi Arabia has been left alone to face a rising challenge to its regional role.
"I think the Saudis are worried that they're encircled — Iraq, Syria, Lebanon; Yemen is unstable; Bahrain is very uncertain," said Alireza Nader, an expert in international affairs with the RAND Corporation. "They worry that the region is ripe for Iranian exploitation. Iran has shown that it is very capable of taking advantage of regional instability."
"Iran is the big winner here," said a regional adviser to the United States government who spoke on the condition of anonymity because he was not authorized to speak to reporters.
For now, Iran and Syria are emboldened. Qatar and Oman are tilting toward Iran, and Egypt, Tunisia, Bahrain and Yemen are in play.
"If these 'pro-American' Arab political orders currently being challenged by significant protest movements become at all more representative of their populations, they will for sure become less enthusiastic about strategic cooperation with the United States," Flynt Leverett and Hillary Mann Leverett, former National Security Council staff members, wrote in an e-mail. The balance of power may have shifted to Iran, but Iran is certainly not immune from similar uprisings. Bidding War For Light Crude?With all that turmoil, the price of oil has once again spiked overnight. I have some charts below, but first consider Why the Disruption of Libyan Oil Has Led to a Price SpikeCrude oil prices reached $100 a barrel in the United States on Wednesday, the highest price in more than two years, as Middle East oil flows were interrupted this week for the first time since the region's turmoil began.
Analysts estimate that as many as a million barrels of Libyan oil a day have been removed from world markets in recent days, and investors fear that more oil production could be disrupted if the unrest spreads to other crucial producing nations, like Algeria.
More broadly, economists are concerned that if oil prices stay high this year, they could slow the already fragile global economic recovery. As a general rule of thumb, every $10 increase in the price of a barrel of oil reduces the growth of the gross domestic product by half a percentage point within two years.
Libya produces less than 2 percent of the world's oil, and exports little to the United States. But the high quality of its reserves magnifies its importance in world markets.
Libya's "sweet" crude oil cannot be easily replaced in the production of gasoline, diesel and jet fuel, particularly by the many European and Asian refineries that are not equipped to refine "sour" crude, which is higher in sulfur content. Saudi Arabia has more than four million barrels of spare capacity and has promised to tap it if necessary, but that capacity is mostly for sour grades of oil.
Should the turmoil in Libya last for more than a few weeks, oil experts predict that European refiners will be forced to buy sweet crude from Algeria and Nigeria, two principal sources of sweet crude for the United States. That would probably push up American gasoline prices, which have already risen 6 cents a gallon over the last week to an average of $3.19 for regular grade.
"It will force all sweet crude refiners into a bidding war," said Lawrence J. Goldstein, a director at the Energy Policy Research Foundation, an organization partly financed by the oil industry. "Quality matters more than quantity."
The price of the benchmark American oil, West Texas Intermediate, briefly touched $100 on Wednesday before settling at $98.10 in New York trading, up $2.68 from Tuesday. In London, the benchmark Brent crude rose $5.47, to $111.25.
A gauge of jet fuel prices, known as Gulf Coast jet fuel, soared 10.7 cents, to $2.99 a gallon in the spot market on Wednesday, putting pressure on airlines to raise fares. Meanwhile, diesel prices have risen 4 cents in the last week, to $3.57 a gallon, the highest level since October 2008. Brent Crude Spikes Near $120Both Brent and WTI spiked higher early Thursday morning. As happened yesterday, much of the spike retraced, only to shoot up again. Will we see yet another spike tomorrow? While pondering that, here are a couple charts. Brent Daily Chart click on chart for sharper imageWTI Daily Chart click on chart for sharper imageSupply Shock on Top of SpeculationWTI has gone from $75 to over $100 since September. If that rise was a result of a strengthening economy and millions of new jobs it would be one thing. However, it's not. Much of the rise is speculative and/or a result of a hugely overheating situation in China. Top that off with a supply shock spike, and there is nothing inflationary about the situation at all. These oil spikes will certainly not help the European or US economies. Amusingly I read stories that higher oil prices will force the ECB to hike. No they won't. For starters, supply shocks have nothing to do with inflation. Second, ECB president Jean-Claude Trichet, for all his anti-inflation talk over the years, has turned out to be nothing but a pussycat. Besides Trichet will be gone in October (unless via some emergency he is asked to stay on). Were Axel Weber to take Trichet's spot, a genuine hawk would be in line to head up the ECB. However, Weber has bowed out of the race. The ECB presidency is now up for grabs, and with most of the board on the doveish side, I do not see the ECB hiking anytime soon given sovereign contagion worries are still intact and now there is an oil supply shock on top of it. Nonetheless, the idea of interest rates hikes in Europe is holding the Euro firm for a moment. How long that lasts is anyone's guess. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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