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City of Vallejo Files For Bankruptcy
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06:48 am
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Vallejo to become largest Calif. city to file for bankruptcy
By JASON DEAREN – 4 hours ago
VALLEJO, Calif. (AP) — Vallejo is set to become the largest California city to declare bankruptcy after leaders voted in favor of it to solve the San Francisco Bay Area suburb's spiraling budget crisis.
The city council voted unanimously Tuesday night following hours of public comment.
City Manager Joseph Tanner had advised filing for bankruptcy before the city's fiscal year ends on June 30 because Vallejo faces a projected budget deficit of $16 million and has no money in its reserves.
Many officials and residents attribute Vallejo's fiscal troubles to overly generous pay and benefits to the city's police and firefighters.
The decision came after two years of negotiations with the police and firefighter unions failed. |
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Hezbullah Struggles With Siniora Government In Lebanon
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02:47 pm
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BEIRUT (Reuters) - Supporters of Lebanon's U.S.-backed government fought battles in Beirut on Wednesday with gunmen loyal to the Hezbollah-led opposition, escalating the worst internal crisis since the 1975-90 civil war.
Followers of the Iran-backed Hezbollah paralyzed the capital and cut routes to its sea and air ports by blocking roads with blazing tires, old cars, heaps of earth and concrete blocks.
An opposition source said the protest campaign would continue until the government rescinded decisions affecting Hezbollah, including a move to take steps against a telecommunications network operated by the group.
Hezbollah, a Shi'ite Muslim group backed by Syria and Iran, has led a 17-month-long political campaign against Prime Minister Fouad Siniora's anti-Syrian cabinet. Friction has already led to bouts of lethal violence.
Security sources said pro-government supporters exchanged assault rifle and grenade fire with Hezbollah sympathizers in the Beirut neighborhoods of Noueiri, Ras al Nabae and Wata al-Musaitbeh. Some 10 people were wounded in the violence.
Opposition gunmen took over an office of the Future political group led by Saad al-Hariri, leader of the governing coalition, Lebanon's most influential Sunni politician and a close ally of Saudi Arabia.
Youths loyal to the rival sides pelted each other with stones in Mazraa, one of the Beirut districts where sectarian tensions between Sunnis and Shi'ites have been high.
The army, mostly regarded as neutral during the crisis, deployed in force but did not attempt to remove the barricades.
Siniora told Future News television that his government was considering declaring a state of emergency and a curfew. "This issue is the subject of discussions and I won't speak about anything until it becomes a reality," he said.
FED UP
Sunni Mufti Sheikh Mohammad Rachid Kabbani denounced the actions of "outlawed armed gangs" in Beirut and said Hezbollah had now transformed itself from a resistance movement to an armed force to occupy Beirut.
"The Sunni Muslims in Lebanon are fed up," he said in a televised address to the Lebanese. "I appeal to the leadership of Hezbollah from my national and religious position to take the initiative and withdraw the gunmen from Beirut."
Tension between the government and Hezbollah escalated sharply on Tuesday when the cabinet said the group's communication network was "an attack on the sovereignty of the state." Hezbollah said it was part of its security apparatus and played a major role in its war with Israel in 2006.
Hezbollah was also infuriated by government allegations it was spying on the airport and by the cabinet's decision to remove the head of airport security, a figure close to the opposition, from his post.
Provoked by the government's moves, Hezbollah was "flexing its muscles" in the streets, said Oussama Safa, director of the Lebanese Center for Policy Studies.
"The heat has been turned up. But it's probably not going to unfold into war. A confrontation is not winnable," he said.
"Things could get very ugly, but I don't think they will spread out of hand," said Paul Salem, director of the Carnegie Middle East Center in Beirut. "Everyone is armed and angry."
Hezbollah was the only Lebanese faction allowed to keep its weapons after the civil war to fight Israeli forces occupying the south. Israel withdrew in 2000 and the fate of Hezbollah's weapons is at the heart of the political crisis.
Hezbollah has deemed Siniora's cabinet illegitimate since its Shi'ite ministers resigned in 2006. The governing coalition has refused to yield to the opposition's demand for effective veto power in cabinet. The crisis has paralyzed much of government and left Lebanon without a president for five months.
Air traffic was suspended for six hours on Wednesday because of a strike by staff taking part in labor union action to demand more pay. The opposition had urged its supporters to back the strike. |
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Us Consumer Borrowing 15.3bn, In March, From 6.5bn In February
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04:59 pm
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U.S. Consumer Debt Rises More Than Forecast in March (Update2)
By Vincent Del Giudice
May 7 (Bloomberg) -- U.S. consumer borrowing jumped more than double the amount economists forecast in March, indicating a slowing economy is forcing Americans to accumulate credit-card and other forms of debt.
Consumer credit increased by $15.3 billion for the month to $2.56 trillion, the biggest monthly rise since November, the Federal Reserve said today in Washington. In February, credit rose by $6.5 billion, previously reported as an increase of $5.2 billion. The Fed's report doesn't cover borrowing secured by real estate, such as home-equity loans.
Consumers are turning to credit cards after banks tightened standards for home-equity loans and other borrowing. The March figures brought U.S. consumer borrowing in the first quarter to $34 billion, the most since the first three months of 2001, when the economy entered its last official recession.
``Consumers are strapped as incomes are not keeping up with inflation and this is leading them to rely increasingly on credit to see them through the worst housing downturn since the Great Depression,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York. ``The days of extracting cash from one's home to spend on goods and services are long gone.''
Economists forecast an increase of $6 billion in consumer credit for March, according to the median of 34 estimates in a survey conducted by Bloomberg News.
By category, revolving debt such as credit cards rose $6.3 billion during March and non-revolving debt, including auto loans, increased $9 billion for the month, according to the Fed's statistics.
Household Spending
Total borrowing, a key element of consumer spending, increased at a 7.2 percent annual rate in March after rising at a 3.1 percent pace during February, the Fed said.
Household spending grew at the slowest pace since the 2001 recession in the first quarter, according to Commerce Department statistics. Consumer spending accounts for about two-thirds of economic growth.
A Fed report two days ago showed the proportion of banks making it tougher for companies and consumers to borrow approached a record in the past three months.
About half of U.S. banks said they tightened terms on existing home-equity loans, mainly because of declines in home values below appraised values, as well as increased defaults and changes in borrowers' finances, according to the Fed's quarterly survey of senior loan officers released May 5.
Late Payments
``A few years back banks would lend to anyone who could fog a mirror,'' said Richard Yamarone, chief economist at Argus Research Corp in New York. ``Now, banks are reluctant to lend to anyone.''
Overdue payments at the six largest U.S. credit-card lenders reached the highest since November 2004, according to data compiled by Bloomberg. An average of 4.11 percent of loans were at least 30 days late in February and March, according to reports filed by American Express Co., Bank of America Corp., Capital One Financial Corp., JPMorgan Chase & Co., Citigroup Inc. and Discover Financial Services.
General Electric Co. will stop writing new consumer loans for recreational vehicles in North America because financial returns are too low, the Fairfield, Connecticut-based company announced May 5. GE is paring its exposure to consumers in developed economies, though it will still service its existing $3.6 billion loan portfolio mostly in the U.S. and Canada.
In response to criticism from Congress, the Fed released a proposal May 2 to prevent ``unfair or deceptive'' credit-card lending. The rules would bar rate increases on existing balances and prohibit so-called double-cycle billing that often results in higher finance charges for customers who don't pay off their balances each month. |
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