Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Bankruptcy

With Brazil’s Primary Cancer Excised, Can the Country heal?

This article was published by The McAlvany Intelligence Advisor on Friday, September 16, 2016:  

Português: Logomarca da Petrobras.

If one assumes that collectivism in any form is like a cancer (eating away its host’s vital organs until the host dies), then Cancer Treatment Centers of America’s strategy is apropos to Brazil:

At CTCA our cancer experts use state-of-the-art technologies to treat cancer … we help you maintain the strength and stamina to continue treatment and get back to life.

Deltan Dallagriol used state-of-the-art technology to treat the Lula cancer that has been infecting Brazil for decades: he created a flowchart of all the criminals tied into the Petrobras scandal showing Lula at the center, and then presented it on public television on Wednesday. Said Dallagriol:

Lula was the commander of the scheme. Lula was the conductor of this big orchestra formed to loot the resources of Petrobras and other public organs. Lula was the common and necessary link between [his] party and the government scheme….

 

Lula was the big boss of the Petrobras corruption scheme. Lula was on top of the power pyramid. Lula appointed several senior executives at Petrobras so that they could raise funds for political parties in the governing coalition….

 

Without Lula’s decision power, it would be impossible for this scheme to exist.

Lula hasn’t been arrested yet, but for all intents and purposes the magic is gone. The emperor has been exposed and is naked, and any chance for a comeback in the 2018 elections by Brazil’s former president has evaporated.

Aside from the inherent corruption attendant to any form of government, especially unlimited government, the temptation to tap into Petrobras was simply overwhelming. The numbers were too large, and access to them was too easy, for Lula not to take advantage.

Petrobras first announced huge oil finds in 2006 and then again in 2011, which would require massive billions to develop. Petrobras itself set aside $150 billion to start the development. Contracts were to be let. Opportunities for fraud were ubiquitous.

By setting up operatives inside Petrobras, Lula arranged to funnel hundreds of millions from overpriced contracts arranged by company executives with equally hungry developers into Lula’s Workers Party. Part of the scam was uncovered when it was learned that Lula was paying $12,000 a month to politicians in exchange for their votes. The Mensalao scandal nearly ended Lula’s administration.

Examples abound. One will suffice: OAS. OAS is (or was) a gigantic construction company employing 100,000 people at its peak. It enjoyed special treatment from Lula and in appreciation it purchased and renovated a private residence for Lula and his wife, Marisa, to enjoy on holiday.

Today OAS is a shell of its former self. Once the deal was exposed, the company’s funding sources dried up. It was forced to declare bankruptcy for nine of its units, suspend dividends, and sell off valuable properties.

Of course, Lula declares himself to be innocent. After all, he didn’t own the property!

“Operation Car Wash” exposed the pay-to-play scheme: funds from overpriced contracts were funneled through Petrobras employees to corporate executives and politicians, with the bulk of the funds going to support Lula’s communist Workers Party. The funds were so large that recipients couldn’t hide them in local banks without being detected so they tried to launder money through the accounts of an electronic components manufacturer. When the owner uncovered the scheme, he called the police in 2008. Through plea bargains with those charged, the whole plan slowly began to be revealed. Initially, four large criminal rings were uncovered, but the total soon expanded. Some of the funds were moved offshore through a bank transfer agency located in a building operated by a car wash company, hence the name “Operation Car Wash.”

It was just a matter of time before the entire scheme was exposed. Hundreds of warrants were issued and dozens were jailed, including top executives of some of Brazil’s largest construction companies.

Lula is going to have his hands full. Not only is he facing these charges, he was just indicted by a court in Brasilia for obstruction of justice stemming from his involvement in trying to silence a Petrobras executive from testifying against him in the Petrobras scandal. Other charges are still to come, according to Marcos Troyjo, a former Brazilian diplomat. Said Troyjo:

That means [that] the Workers Party, which may have thought it would move comfortably into the opposition after Dilma [Rousseff’s] impeachment, will confront extreme challenges.

 

It’s certainly the beginning of the end to Lula’s presidential aspirations for 2018.

Back to CTCA: once the Lula cancer is excised, is the patient strong enough and healthy enough to recover? Is the patient, like a young man – sturdy, strong, resilient, going to be able to recover following an extended period of rehab? Or is Brazil more like an older person – already weakened through years of abuse and neglect – whose chances of recovery are marginal, and the reappearance of cancer more likely in just a few years?

With Lula gone, will Brazil recover? Or will another cancer, perhaps even more vicious than the one just removed, invade the weakened patient?


Sources:

Cancer Treatment Centers of America

Reuters: Brazil’s Lula charged as ‘top boss’ of Petrobras graft scheme

BBC:   Brazil ex-president Lula and wife face charges in corruption scandal

Bio of Lula

The Wall Street Journal: Brazil Prosecutors File Charges Against Ex-President da Silva and His Wife

Washington Post: Former Brazilian president Lula charged in massive corruption scandal

Zacks: Petrobras and Oil Discoveries

Forbes: Brazil’s Petrobras Says Its Discoveries Developing Faster Than Gulf Of Mexico

History of Operation Car Wash

The Wall Street Journal: OAS files for bankruptcy

The Mensalao Scandal

Brazil’s Former President Charged in Petrobras Scandal

This article appeared online at TheNewAmerican.com on Thursday, September 15, 2016:  

Luiz Inácio Lula da Silva, 35th President of t...

Luiz Inácio Lula da Silva – Lula

Luiz Inácio Lula da Silva, popularly known simply as Lula, was formally and publicly charged by federal prosecutor Deltan Dallagriol with heading up a massive money-laundering and political-kickback scheme dating back to at least 2005. Lula and his wife, Marisa Leticia, were charged in a public presentation Wednesday carried live on Brazil’s main news stations, with flow charts showing the network of politicians, corporate executives, and Petrobras employees being linked directly or indirectly to Lula.

Said Dallagriol:

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The Global Recession Claims its First Victim: Hanjin Shipping

This article was published by The McAlvany Intelligence Advisor on Friday, September 9, 2016:  

English: Hanjin container ship

One of Hanjin’s container ships looking for a place to unload.

When the question about a tree falling in the forest is asked, it’s usually posed as a philosophical one: “If a tree falls in a forest and no one is around to hear it, does it make a sound?” The question is never asked: “What if someone is around who doesn’t want to hear it?”

That appears to explain the kept media’s deafness over the state of the global economy. Even when the Wall Street Journal reported on the bankruptcy of Hanjin Shipping, the world’s seventh largest container shipping company, not one word was spent on asking why. Instead

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Hanjin Bankruptcy: a Harbinger for the Global Economy?

This article appeared online at TheNewAmerican.com on Thursday, September 8, 2016:  

English: A Delmas operated Container ship NICO...

South Korea’s Hanjin Shipping was the world’s seventh-largest container shipping company, moving (until last week) 100 million tons of cargo on its 200 cargo ships from manufacturers to retailers across the globe. Last week, following years of losses as the global economy has slowed, Hanjin declared bankruptcy. That move stranded 90 of those ships as off-loading companies refused to unload them over concerns that they wouldn’t be paid.

Even an offer of $90 million from what’s left of Hanjin (including $36 million from the personal assets of its chairman) fell far short of the necessary $543 million estimated to unload all of its ships that are now circling ports around the world.

Concerns are mounting that

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The Coming Puerto Rican Bailout

This article appeared online at TheNewAmerican.com on Monday, August 29, 2016:  

On or before September 1, President Obama will complete the eight appointments to the oversight board created when he signed PROMESA (Puerto Rico Oversight, Management and Economic Stability Act) into law on June 30. Those already on the board include Republican Senators Orrin Hatch and Marco Rubio, Democrat Senator Bill Nelson and Congresswoman Nydia Velázquez.

In theory the board will have the power to override the island’s government, delay litigation, fire government workers, and “suggest” other ways the island can begin to recover from its present economic implosion. It has been described as a “de facto” Chapter 9 bankruptcy. In practice it is likely that,

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Vulture Funds Expecting to Profit Handsomely from Puerto Rico’s Problems

This article was published by The McAlvany Intelligence Advisor on Monday, August 29, 2016:  

English: Map of Peuto Rico, with inset showing...

Map of Peuto Rico, with inset showing it’s position in relation to American continents.

George W. Plunkitt was not the world’s first dishonest politician, but he might have been one of the first ones to be honest about his dishonesty. Plunkitt was a Tammany Hall pol who served in the New York State Assembly and then in the New York State Senate around the turn of the 20th century. He called what he did – and what made him wealthy – “honest graft.” He defined “dishonest graft” as efforts to work solely for his own interests. “Honest graft,” on the other hand, was graft that worked for the interests of his own party.

He made his money by

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Comeuppance in the Oil Patch

This article was published by The McAlvany Intelligence Advisor on Wednesday, August 3, 2016:  

Looking down from Heaven, George Mitchell must be pleased with what’s going on below: oil inventories are growing to the point where offshore tankers and railroad tank cars are having to be used for storage, oil and gas prices are dropping along with the costs of all the other 6,000 consumer products made from petroleum, rig counts are increasing, production costs are dropping, and, best of all, OPEC’s influence is waning daily.

The Economist called Mitchell the father of fracking in its eulogy following his death in July, 2013. They referred to him as

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U.S. Oil Shale Producers Putting OPEC Into Financial Bind

This article appeared online at TheNewAmerican.com on Tuesday, August 2, 2016:  

This wasn’t supposed to happen. When OPEC decided in November 2014 to keep producing crude oil at or near maximum rates, it was following an unspoken strategy to force the U.S. oil shale industry to back off. That would allow prices to rise back to levels needed to fund the cartel’s military adventures and their welfare states.

Marginal producers in the United States did declare bankruptcy, while other producers stacked most of their oil rigs, cutting daily production in the country from 9.7 million barrels per day (mpd) to 8.5 mpd. This caused crude oil prices to rise from the low 30s to the mid 50s.

But then oil prices levelled off and began to decline,

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Undercover Video Confirms Hillary’s Strategy to Ban All Firearms

This article appeared online at TheNewAmerican.com on Tuesday, July 26, 2016:  

Rules for Radicals

The first 57 seconds of James O’Keefe’s latest undercover video interview, of a Clinton delegate from California, confirms what many have long suspected: Hillary Clinton’s real goal of complete and total confiscation of all firearms from every American citizen is being hidden behind benign and persuasive phrases such as “common sense gun control” and “protect our families,” etc.

It also reveals what happens when the “useful idiot” in the video learns that she has been exposed for what she is: a mouthpiece for the movement to disarm America and ultimately turn it into a totalitarian state.

Most importantly it reveals

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California’s Pension Plans Report Dismal Results, Increasing Shortfalls

This article appeared online at TheNewAmerican.com on Wednesday, July 20, 2016:  

Ted Eliopoulos, the chief investment officer of the country’s largest pension plan, the California Public Employees Retirement System (CalPERS), did the best he could with the bad news: “Positive performance in a year of turbulent financial markets is an accomplishment that we are proud of.” That “positive performance” was a measly 0.61-percent return from July 1, 2015 through June 30, 2016, on his $300 billion pension plan. That means that the fund is now about $100 billion short of meeting its future obligations.

But that $100 billion number greatly understates the real liability because it’s based on a pixie-dust assumption that the plan can earn an average

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Day of Reckoning for Chicago Taxpayers

This article was published by The McAlvany Intelligence Advisor on Monday, July 11, 2016:  

Chicago landsat image

Chicago landsat image

Chicago just experienced a great irony. Its bill for past extravagances run up by its corrupt politicians arrived over the July 4th weekend. It was of course then that Americans were celebrating Independence from British politicians seeking to impose taxes without representation.

With representation, Chicago taxpayers have allowed themselves to be saddled with taxes far exceeding those that triggered the American Revolution. The trouble is that the realization just hit home over that weekend.

The second half of 2016 property taxes was due on July 1st, and on Tuesday unhappy taxpayers were lined up outside the tax assessor’s door to complain. It was a little late. About two decades late.

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Rio 2016 Olympic Games Likely to Hasten Brazil’s Bankruptcy

This article was published by The McAlvany Intelligence Advisor on Monday, June 20, 2016:  

Rio de Janeiro 2016 Summer Olympics bid logo.

A postmortem on Rio 2016 is likely to show a loss. History might record a cataclysmic disaster. Seven years ago when the IOC awarded the 2016 summer Olympics to Brazil, the main concern was crime in the city of Rio de Janeiro. At the time IOC spokesman Mark Adams told the AP: “We have confidence in [Brazil’s] capacity to deliver a safe Games in seven years. Security is of course a very important aspect of any Olympic Games….”

At the time Rio was one of the top ten most crime-ridden cities in the world. But everything else seemed to bode well:

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Illinois Governor Vetoes Plan to Reduce Chicago’s Pension Contributions

This article appeared online at TheNewAmerican.com on Monday, May 30, 2016: 

Chicago’s pension contributions to its four dreadfully underfunded pension plans were supposed to double this year to $1.1 billion, up from $478 billion in 2015. But state legislators passed a bill (which had been bottled up for nearly a year) to cut that back to under $900 million. On Friday Illinois Governor Bruce Rauner (above) vetoed the bill, expressing in no uncertain terms that he was tired of politicians kicking the can down the road:

By deferring responsible funding decisions until 2021 and then extending the timeline for reaching responsible funding levels from 2040 to 2055, Chicago is borrowing against its taxpayers to the tune of $18.6 billion.

 

This practice has got to stop. If we continue, we’ve learned nothing from our past mistakes.

Those past “mistakes” have got Chicago Mayor Rahm Emanuel in a pickle.

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Meet Michael Madigan, AKA “the Real Governor of Illinois”

This article was published by The McAlvany Intelligence Advisor on Monday, May 30, 2016:  

Little happens legislatively in Illinois without the approval or acquiescence of House Speaker Michael Madigan (shaking hands with another corruptocrat, above). A Chicago pol, he has been speaker for 31 out of the last 33 years. When a bill arrives, it is shunted immediately to his Rules Committee, run by his second-in-command, Rep. Barbara Flynn Currie, also from Chicago, also a Democrat who was appointed Majority Leader of the House by Madigan.

If a bill ever sees the light of day (most don’t) it then is assigned to one of 50 committees, each of them chaired by a Madigan selectee.

A present example is SB 777, which

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Puerto Rico Bailout Deceptively Called “Restructuring”

This article appeared online at TheNewAmerican.com on Friday, May 20, 2016:  

Corcho Beach in Vieques island, Puerto Rico.

Corcho Beach in Vieques island, Puerto Rico.

Hidden behind the tentative agreement announced by House Speaker Paul Ryan on Thursday that would allow Puerto Rico some breathing room over its massive $73-billion national debt are the bailouts that are already in place.

The agreement is based on the bill by Rep. Rob Bishop (R-Utah) that creates another government bureaucracy to oversee the orderly “restructuring” (read: massive haircut for PR’s bondholders). When he presented his bill, Bishop said it would “give Puerto Rico access to a court-enforced debt restructuring in exchange for the imposition of a federal fiscal oversight board.”

Ryan said the agreement would allow the island territory to

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Puerto Rico to Default on $422M Payment Today; Likely Another $2B in July

This article appeared online at TheNewAmerican.com on Monday, May 2, 2016:  

Puerto Rico continued its “death spiral,” with its failure to make a $422 million interest payment on Monday on some of the island’s gigantic $73 billion debt. This comes on the heels of missed payments over the last year, and will be followed up by a $2 billion payment due on July 1, which it is also widely anticipated to miss. The payment is due from the island’s Government Development Bank (GDB), the main bond issuer and the island’s fiscal agent.

So far Governor Alejandro Garcia Padilla (above) has, as noted previously in The New American, been able to keep the lights on and the water running by moving money around on the island’s balance sheet, paying only those with the highest and most enforceable claims and dealing as best he can with those holding lower credits. It was Padilla who said his island was in a “death spiral” as far back as last July, because his 3.5 million inhabitants, half of whom live in poverty, didn’t have the money.

But for decades Padilla and his predecessors acted as if they did have it,

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Nothing is Likely to Change in Brazil

This article was published by The McAlvany Intelligence Advisor on Wednesday, April 20, 2016: 

One of Warren Buffett’s favorite expressions is “when the tide goes out, everyone will see who’s been swimming naked.”  In Brazil the tide went out at the start of the Great Recession and now the whole world can see who was swimming naked.

When President Lula was elected in 2002 the commodity boom was underway, and Brazil was enjoying the ride. Its major exports are soybeans, sugar, and iron ore, and under Lula Brazil’s GDP was running 10 percent a year. Lula implemented major expansions of the welfare state, including putting in place such generous pension plans that state workers could retire at age 54 for men and at age 52 for women at 90 percent of their final pay. The average Brazilian’s household income rose, and statists worldwide pointed to Brazil’s success story, naming it as one of the BRIC countries that would soon overtake the developed nations of the world, and doing it while expanding government spending.

But when Dilma Rousseff took over in 2011 the Great Recession was revealing the true nature of spending far beyond the ability of the economy to sustain it. In 2014 the government’s finances were in such dreadful shape that

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Are Federal Bailouts of States’ Pension Plans Inevitable?

This article was published by The McAlvany Intelligence Advisor on Wednesday, April 13, 2016:

English: Devin Nunes, U.S. Representative from California (Photo credit: Wikipedia)

California Representative Devin Nunes, a middle-of-the-road Republican from the state’s 22ndDistrict with a middling voting record (a Freedom Index rating of just 53), got something right: he sees the coming implosion of underfunded pension and health care plans across the country, and offered a bill to do something about it: force the states and the pension managers to tell the truth about the numbers:

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Revolving Credit Lines to Oil Industry Pose New Hazards to Banks

This article appeared online at TheNewAmerican.com on Tuesday, April 12, 2016:  

One Wells Fargo Center – Charlotte, North Caro...

One Wells Fargo Center – Charlotte, North Carolina

As earnings season on Wall Street starts, investors in the big banks are just now learning about unfunded revolving lines of credit (revolvers) that those banks extended to oil and energy related companies when times were better.

Ten of the largest U.S. banks, including JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo, just disclosed that they have $147 billion in unfunded revolvers, which are likely to expand their exposure to the energy industry just when they would rather reduce it.

Those banks have been setting aside loan loss reserves amounting to billions in anticipation of the inevitable:

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States’ Pension, Health Plans Increasingly Vastly Underfunded

This article appeared online at TheNewAmerican.com on Monday, April 11, 2016:  

The numbers being reported by pension fund managers are so out of touch with reality that Representative Devin Nunes (R-Calif.) has proposed legislation to correct them. Said Nunes: “It has been clear for years that many cities and states are critically underfunding their pension programs and hiding the fiscal holes with accounting tricks. When these pension funds go insolvent, they will create problems so disastrous that the fund officials assume the federal government will have to bail them out.”

According to Joshua Rauh, a senior fellow at the Hoover Institute, the amount of underfunding is

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.