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Central Falls, Rhode Island Files For Bankruptcy

Tyler Durden's picture





 

It's not Jefferson County, yet, but it could certainly be seen as the precursor to the first domino. "The state-appointed receiver overseeing the cash-strapped Rhode Island town of Central Falls has filed for bankruptcy on the city's behalf in an effort to help it get back on its feet. Receiver Robert G. Flanders and Rhode Island Gov. Lincoln Chafee announced the step - which Flanders has described as a last resort - at a news conference at City Hall. Flanders filed the legal paperwork seeking bankruptcy protection Monday. "From the ashes of bankruptcy Central Falls will rise again," Flanders said." The biggest losers: unions. "With the city now seeking bankruptcy protection, Flanders said he plans to reduce pension benefits beginning in late August. He has asked the federal court to immediately reject collective bargaining agreements. He said the next set of pension payments will reflect at least the cuts he outlined to city retirees. In addition, he said city workers will face layoffs. Flanders called the step unavoidable, as taxes have already been raised and city services have been cut "to the bone." Expect Barack Obama to thaw Steve Rattner from carbonite explain to creditors, using a variety of four letter words, that they will be last in line of payment after every single union claim has been satisfied, with the resultant husk of a town reverse merged with GM.

"We're not going with a band aid-approach," Chafee said.  "We're going to tackle this and that's a positive."

 

Flanders said he would hope to have a plan of recovery to present to the judge at the outset of proceedings in an effort to prevent a protracted bankruptcy.

 

"We need to come out of this with a sustainable plan for recovery," he said last month after a meeting with retirees.

 

Central Falls, a city of 19,000 residents about a 15-minute drive north of Providence, has $80 million in unfunded pension and benefits obligations and $5 million deficits projected for each of the next five years. The city has found itself the subject of national headlines over its floundering finances and a high school so troubled that all its teachers were fired in one fell swoop last year, but eventually rehired.

 

The mayor, Charles Moreau, and City Council president, William Benson Jr., who were demoted to advisers after the state stepped in last year, have been critical of the receiver. They say it was clear long ago that bankruptcy was the only option.

 

"That's what we wanted to do almost a year and a half ago," Benson said Monday. "It can't be any worse than it is. It just can't."

 

Moreau said the city has no choice. "Unfortunately this is the route we've got to go. At the end of the day, fiscal stability is of the utmost importance," he said.

 

U.S. Bankruptcy Judge Frank Bailey of Massachusetts has been named the judge in the case.

And a video of the bankruptcy announcement, brought to your very, very appropriately by Mario Hilario:

h/t Papa Swamp

 


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Mon, 08/01/2011 - 14:03 | Link to Comment snowball777
snowball777's picture

Couldn't pick a better name to begin the muni collapse with, bitchez.

Mon, 08/01/2011 - 14:16 | Link to Comment Ahmeexnal
Ahmeexnal's picture

 

 

Welcome to the recovery!

 

This is evidently a joke. Can't really take it serious from someone named "Hilarious Marius".

Please stay calm in your couch, and stay tuned to your next episode of "As the Worm Turns".

Mon, 08/01/2011 - 14:24 | Link to Comment anynonmous
anynonmous's picture

the town's website is priceless

they actually have a welcome page for the reciever

"A City with A Bright Future"

 

Central Falls

Welcomes

Office of the Receiver

 

Receiver : Robert G. Flanders, Esq.

 

 

Nestled between the City of Pawtucket and the Towns of Cumberland and Lincoln, Central  Falls' History dates back to 1731 and the early History of the Town of Smithfield. This tiny City with 1.5 square miles and over 18,000 residents proudly boasts its distinction as recorded in "Ripley's Believe It Or Not" as the Smallest most densely populated City, not only in Rhode Island, but  in the Nation.  Proud home of Elizabeth Buffum Chace, Conductor in the Underground Railroad, abolitionist and the first woman in Rhode Island History to be commemorated with a statue in the Rhode Island State House. Learn more interesting and notable facts about this proud little City, its Government and its Leaders by browsing and viewing this website.

http://www.centralfallsri.us/

Mon, 08/01/2011 - 15:14 | Link to Comment Yen Cross
Yen Cross's picture

  I wonder if Flanders took his { Bar Exam} on a stone tablet,  whilst digging for ( XAU) nuggets?...

Mon, 08/01/2011 - 14:24 | Link to Comment Fish Gone Bad
Fish Gone Bad's picture

This is truly bad.  I was listening to a retiree this morning on the radio complaining that he was going to have to take $6000 cut, so he rejected the deal.  I am thinking that the $6000 cut looks really good right about now.

Mon, 08/01/2011 - 14:40 | Link to Comment Popo
Popo's picture

Zero sympathy for any mentally-competent person who is asked to take a cut or settle in bankruptcy court,  and opts for the latter.

These people do not seem aware of the fact that generations of corrupt politicians literally BOUGHT their votes with promises that could not be kept.

 

On another note:   Meredith Whitney is probably going through her rolodex and asking about 10,000 of her peers, one at a time "How you like them apples bitch?"

 

 

 

 

 

 

Mon, 08/01/2011 - 15:20 | Link to Comment SwingForce
SwingForce's picture

I think Providence had a Mayor who was serving a prison sentence while at the same time holding office! Mebbe 10 yrs ago? Just to prove your point that there are corrupt politicians up there, generations perhaps as you say Pops.

Mon, 08/01/2011 - 15:55 | Link to Comment Shitters_Full
Shitters_Full's picture

Buddy Cianci was the guy you're thinking of.

Mon, 08/01/2011 - 16:35 | Link to Comment G-R-U-N-T
G-R-U-N-T's picture

 

http://abcnews.go.com/US/rhode-island-city-turns-pensioners-avoid-bankru...

Cry me a river...One policeman says he would rather sacrifice his whole pension than settle for what the city is offering....What an idiot!

One rule of fight club...Never ever depend on the government to take care of you!!!

Mon, 08/01/2011 - 20:19 | Link to Comment dizzyfingers
dizzyfingers's picture

Wouldn't it more accurately be "as the screw turns?"

Mon, 08/01/2011 - 14:03 | Link to Comment docj
docj's picture

The first of many.

Mon, 08/01/2011 - 14:12 | Link to Comment TSA Thug
TSA Thug's picture

These are just legal tricks used to shaft their creditors. Do you really think they have no assets?

Come on get realz!

Mon, 08/01/2011 - 14:15 | Link to Comment docj
docj's picture

Have you ever been to Central Falls, RI?

I cut through there every once in a while on my way home from Providence, where I work.

I could easily believe they have precisely zero in the way of marketable assets.

Mon, 08/01/2011 - 14:23 | Link to Comment Larry Darrell
Larry Darrell's picture

You're not following his trolling very well.

See his handle -?> TSA Thug

Most of the comments I've seen him/her post have been support of the status quo in the manner of HamyWanger.

It's not the best trolling I've seen, but he/she has given me a few chuckles over the past week or so.

 

Mon, 08/01/2011 - 14:27 | Link to Comment anynonmous
anynonmous's picture

perhaps hamy was reincarnated

Mon, 08/01/2011 - 16:15 | Link to Comment Max Hunter
Max Hunter's picture

Yeah.. I noticed him.. Noticed the same thing you did.. but.. but.. he has a welcoming user name that everyone can relate to.. Expect more of this as the criminals step up their campaign to fool people into thinking we are getting upset about nothing...

Mon, 08/01/2011 - 14:25 | Link to Comment TSA Thug
TSA Thug's picture

no land/buildings/cash/water.sewer revenue/water or mineral rights/schools/jenks park?

drunk driver with impaired vision?

sell assets, settle debt, start over. Simple!

Mon, 08/01/2011 - 14:29 | Link to Comment Boston
Boston's picture

Yup, a total dump.  Don't know why you'd risk cutting thru it.

Mon, 08/01/2011 - 16:26 | Link to Comment docj
docj's picture

Generally only do it if the traffic is simply unpassable on I-95 going north. Happens pretty much whenever there's an accident in the S-curves, which is, blessedly, not often.

As long as you stick to the main road(s) it's only about as bad as the dump I work in around the west-side of Providence (out near Johnston). I don't ever take any secondary roads, though. Nasty.

Mon, 08/01/2011 - 15:20 | Link to Comment chunga
chunga's picture

If you're willing to take the (very real) risk of having your car stolen, Stanley's Hamburgers on Dexter Street is great. At least it was years ago.

Mon, 08/01/2011 - 14:28 | Link to Comment Ryman1075
Ryman1075's picture

I used to live in Pawtucket, RI.  I can confirm that they have no assets.  Only 30% of the houses in this one square mile city are owned by people who reside in the homes.  The majority of the properties are owned by people that are out of state landlords (the marjority are owned by MA residents).  This has been coming for a long time, the only thing that surprises me is that the ratings agencies didn't have them listed as AAA+. /SARC

Mon, 08/01/2011 - 14:56 | Link to Comment Smiddywesson
Smiddywesson's picture

I grew up in Pawtucket, and can support Ryman's observations.  Every day, it is either too hot or too cold.  Everyone speaks like they were raised by Jersey City mobsters, and the rivers run a different color each day due to the textile mills.  USAToday ranked Pawtucket 298 out of the 300 worst places to live in 1990.  It has only gone downhill since then.  Still, Pawtucket beat Central Fall hands down.

RI is a very small, and very corrupt state.  Corruption is the issue, not just finances.  That's why you see Illinois failing.  This is just the beginning.

Mon, 08/01/2011 - 19:26 | Link to Comment krispkritter
krispkritter's picture

19,000 people in a square mile? Are you nucking futs? I wouldn't live there if you paid me...y'know, like a pension or something...

Mon, 08/01/2011 - 15:34 | Link to Comment Oboneterm
Oboneterm's picture

Uhm....wrong City of Vallejo in bankrupt California has the distinction of being first to declare BK

 

http://www.ci.vallejo.ca.us/GovSite/default.asp?serviceID1=712&Frame=L1

Mon, 08/01/2011 - 16:30 | Link to Comment docj
docj's picture

Ah, good catch. I stand corrected.

Mon, 08/01/2011 - 14:04 | Link to Comment Dick Darlington
Dick Darlington's picture

Related to Ned Flanders?

Mon, 08/01/2011 - 14:07 | Link to Comment snowball777
snowball777's picture

In-deedley-doodley, neighbor.

Mon, 08/01/2011 - 14:04 | Link to Comment EscapeKey
EscapeKey's picture

B-b-but they told me Meredith Whitney was wrong!

Mon, 08/01/2011 - 14:30 | Link to Comment Fish Gone Bad
Fish Gone Bad's picture

+1

Mon, 08/01/2011 - 16:17 | Link to Comment Max Hunter
Max Hunter's picture

B-b-but they told me Meredith Whitney was wrong!

That's right.. She even got called to the principal's office to explain her actions

Mon, 08/01/2011 - 14:05 | Link to Comment orangedrinkandchips
orangedrinkandchips's picture

"Hens love roosters....

Geese love Ganders....

Everyone loves Robert Flanders!"

 

NOT ME!!! (Homer and the Unions)

Mon, 08/01/2011 - 17:35 | Link to Comment andybev01
andybev01's picture

'Nedna' YES?

'Nedna' NO?

Mon, 08/01/2011 - 14:24 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Meredith Whitney just had her first climax.  More to come.

Mon, 08/01/2011 - 15:05 | Link to Comment stormsailor
stormsailor's picture

NOW THAT I WOULD LIKE TO SEE

Mon, 08/01/2011 - 15:18 | Link to Comment Mr Kurtz
Mr Kurtz's picture

Ughh..a pun. Still it is funny.

Mon, 08/01/2011 - 16:24 | Link to Comment Tortfeasor
Tortfeasor's picture

On CNBC now!  Hope she does it live!!

Mon, 08/01/2011 - 14:06 | Link to Comment Forgiven
Forgiven's picture

<-----  There be more Municide on the horizon.

<-----  Transitory bitchez

Mon, 08/01/2011 - 18:29 | Link to Comment docj
docj's picture

And yet, the radio continues to be filled with commercials of investment houses selling "TRIPLE TAX FREE" municipal bonds. Assuming you have $10K or more to spend, of course.

Count me in!! Where can I sign-up for some Freddie/Fannie paper while I'm at it?

Mon, 08/01/2011 - 14:06 | Link to Comment Variance Doc
Variance Doc's picture

But, but, CNBC told me Meredith was wrong.

 

 

 

 

Mon, 08/01/2011 - 14:08 | Link to Comment g
g's picture

This is great actually, busting the unsustainable public unions. I have no problems with unions if they can compete in the private market, but they have no business in the public sector. A great precedent for future municipal and state bankruptcies. Public unions better look at this closely and decide that they to need to share in the bleeding that everyone else is experiencing.

And for the public sector, scrap Davis-Bacon and end collective bargaining.

Mon, 08/01/2011 - 14:43 | Link to Comment weinerdog43
weinerdog43's picture

Exactly!  Jim the janitor doesn't need a dental plan.  Soros, Icahn & Blankfein are looking for enough $$$ for another island or two.

Mon, 08/01/2011 - 18:32 | Link to Comment g
g's picture

I am fine with public employees receiving health insurance, but they should have to pay for it like the rest of us, instead of the taxpayer footing the whole bill. Lets consider pensions, that is the big 'back breaker' for most municipalities, it is unsustainable, moreover it is unjust, to the taxpayer who pays for it, that fact that it bankrupts these municipalities, and that the taxpayer gets no such benefits.

Mon, 08/01/2011 - 14:08 | Link to Comment Mad Max
Mad Max's picture

It's time to outlaw conventional pensions.  In bankruptcy the pensioners get completely screwed, and many of them are not living large and just want to have a decent retirement, not yachts and jets.  But the pension promises, often made absurdly large by union demands and/or undermined by underfunding of the pension funds for immediate gains, are unfair to the people now living and working in the cities or companies that once committed to them.  Either go to defined-contribution plans, or if you still want a defined benefit plan, require that the cost of it be paid to an unrelated, separate, well capitalized entity with each and every paycheck to the worker, so that the worker's employer can't cheat on their commitments now only to be found out decades later when the people doing the cheating are gone and mostly dead.

Mon, 08/01/2011 - 14:39 | Link to Comment CH1
CH1's picture

How about just abandoning the system and looking after ourselves?

Mon, 08/01/2011 - 14:50 | Link to Comment Mad Max
Mad Max's picture

Oh, but that's not the American Way!  Hasn't been for years!

 

You must have us confused with some freedom-loving capitalistic society.  Like China in 2020, for example.

Mon, 08/01/2011 - 20:25 | Link to Comment dizzyfingers
dizzyfingers's picture

That's anarchy. Is that allowed?

Would doctors then comes to our homes?

Would manufacturing return to the US?

Would the authority for schools return to the communities where they're located and where people actually pay for them?

Could we get home delivery of milk again, with top cream?

Mon, 08/01/2011 - 14:48 | Link to Comment SWCroaker
SWCroaker's picture

Option 1:  Make it illegal to lie, cheat and steal.  End result feels good, but relies upon a portion of the current perps (government) to regulate unpopular laws against their friends (states and corps), resulting in null change that merely gets you shafted by some novel dodge in place of the current one.

Option 2: Peeps grow up, embrace TANSTAAFL (There Ain't No Such Thing As A Free Lunch) as a mantra to live by, and scoff/reject/callBS on any future employer offering of a convential pension, be it corp, public, or something as established as Social Security.  "How 'bout you just give me my money now, and I'll see to my own welfare, thank you kindly."

Mon, 08/01/2011 - 15:25 | Link to Comment SwingForce
SwingForce's picture

Nobody would agree to that, better take a number at the Chapter 9 counter.

Mon, 08/01/2011 - 14:09 | Link to Comment Eagle Keeper
Eagle Keeper's picture

What, no bailout?!

 

Mon, 08/01/2011 - 14:17 | Link to Comment docj
docj's picture

RI is also broke - and since RI as a state and RI-1 as a CONgressional district are both rock-solid, reliably "blue" there's no need for Barky to spend what little political capital he has remaining on this.

Mon, 08/01/2011 - 14:09 | Link to Comment slaughterer
slaughterer's picture

ZH is really machine-gunning negative news today (this municipal BK, Fukushima, repo market collapse, etc.), a day already so stressful for most traders to parse.  Beware of opening short positions on major indexes on these pieces of news today, because you will get your face ripped off overnight   Wait until Friday, if you go along with the negative NFP print call.    

Mon, 08/01/2011 - 14:14 | Link to Comment monopoly
monopoly's picture

Shorting this broken market is asking for trouble. Sure, we can get lucky and punch one out of the park, but how many strike outs to achieve that. For the most part have not shorted for over 2 years and still waiting for my pitch.

Mon, 08/01/2011 - 14:35 | Link to Comment snowball777
snowball777's picture

Will you swing after they turn off the stadium lights?

Mon, 08/01/2011 - 14:17 | Link to Comment Dave Thomas
Dave Thomas's picture

Yeah I know isn't it funny. Everytime I look at Zerohedge I start biting my nails and start oiling the hinges on my blast doors in the shelter. But then I look on CNBC and eyeball the markets and everything's usually peachy keen. If the world is coming to an end, it sure is taking a long time. Either that or Zerohedge is in some sort of a time wrinkle.

 

 

Mon, 08/01/2011 - 14:23 | Link to Comment papaswamp
papaswamp's picture

Then why come here? Enjoy your paper while you can.

Mon, 08/01/2011 - 15:41 | Link to Comment Seasmoke
Seasmoke's picture

they are the ones trying to stick their fingers in the holes in the dam, but we are able to stand back and see all the other holes that are popping up and see they dont have enough fingers to plus all the holes

Mon, 08/01/2011 - 14:49 | Link to Comment treemagnet
treemagnet's picture

Early isn't wrong - especially when highlighting the flaws in judgement that are leading to a certain crash.  If there were no chinks in the armor, there would be no ZH.  Use this time to prepare, its a gift.

Mon, 08/01/2011 - 20:50 | Link to Comment Iam_Silverman
Iam_Silverman's picture

"If there were no chinks in the armor"

Ah ainta skeered of no damn chinaman, even if he's a wearin' armor.  Just loaded up some AP aught-six tonight!

Sorry.  The bourbon is starting to take hold now.  This whole sellout by the COngress is really upsetting, to say the least.

More bourbon!

Mon, 08/01/2011 - 15:47 | Link to Comment Use of Weapons
Use of Weapons's picture

If you need to shit your pants, don't do it in public. Btw, Tyler isn't the only one measuring shit-stains & using it to predict the market:

 

Predicting Stock Market Indicators Through Twitter “I hope it is not as bad as I fear”

Xue Zhang1,2*, Hauke Fuehres2, Peter A. Gloor2
1National University of Defense Technology, Changsha, Hunan,China
2MIT Center for Collective Intelligence, Cambridge MA, USA

http://www.ickn.org/documents/COINs2010_Twitter4.pdf

 

Did you tweet today? If so, thanks for helping make other people money! (and not in a directed advert way)

 

 

p,s. Yes, you did just see Chinese military & MIT data mining Tweets for financial gain. DELICIOUS.

Mon, 08/01/2011 - 14:09 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Just another MUNI domino.  Gosh it takes awhile for these things to fall.

Mon, 08/01/2011 - 14:51 | Link to Comment treemagnet
treemagnet's picture

Agree - although now we're at the end of the second year and all the low hanging fruits been picked.  Most municipalities have "budgets" held together with nothing but hope stemming from prior "turnarounds".

Mon, 08/01/2011 - 14:10 | Link to Comment Larry Darrell
Larry Darrell's picture

I can't wait until we finally see Washington Central(ly planned) Fall(s) DC.

 

Mon, 08/01/2011 - 14:10 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Municipal Bankruptcy, Bitchez.

Expect a lot more of this.

The Bernank said it would violate the charter of the Federal Reserve to try and monetize the debt of state, county or more local units of government.

He also said the economic recovery would be robust, that inflation is too low, that the Fed would never monetize Federal Government deficit spending, and he made the following astute predictions /sarc/:

 

Bernanke Plays Tragic Weatherman
Mon, 08/01/2011 - 14:15 | Link to Comment Silver Dreamer
Silver Dreamer's picture

Which makes sense since banksters do not give a damn about anything but the federal government, the source of their enormous and tax free wealth.

Mon, 08/01/2011 - 14:11 | Link to Comment monopoly
monopoly's picture

That is #1. Next!!! Get in line please and do not push.

Mon, 08/01/2011 - 14:14 | Link to Comment Temporalist
Temporalist's picture

Layoffs, pensions reductions, govt. employees, this is just a microcosm of the global ponzi shitstorm that is building.

Mon, 08/01/2011 - 14:15 | Link to Comment Commander Cody
Commander Cody's picture

Looks like Central Falls retirees will be cancelling their upcoming cruises.

Mon, 08/01/2011 - 14:15 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

How gold is your parachute now, union thugs?

Bond holders should suffer. Anyone stupid enough to invest in a heavily unionized anything don't deserve to eat, much less profit on the backs of taxpayers.

Mon, 08/01/2011 - 14:16 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

No union or pension is truly busted until PRESENT BENEFITS are cut.

Not inflation adjustements.  Not increased contributions from present workers.

Cuts To Present Pension Payouts.

Nothing else means anything.

Mon, 08/01/2011 - 14:17 | Link to Comment Long-John-Silver
Long-John-Silver's picture

 

Shave and a Haircut -Today!

Mon, 08/01/2011 - 15:01 | Link to Comment snowball777
snowball777's picture

Two-bits == 1/4 of 451 grains == .234895 troy oz == $9.22

Mon, 08/01/2011 - 16:29 | Link to Comment Sudden Debt
Sudden Debt's picture

We should all be glad it's not a bikini wax...

the last time I got one of those was when I was a student. It really sobers you up in 10 seconds!

Mon, 08/01/2011 - 14:17 | Link to Comment WW
WW's picture

When do you think congress will go after US military retirements?

Mon, 08/01/2011 - 15:04 | Link to Comment snowball777
snowball777's picture

The Tea Party? Today!

Congress as a whole? Never.

Mon, 08/01/2011 - 15:06 | Link to Comment Smiddywesson
Smiddywesson's picture

Oops, they already did!  They cut the cola under the Reagan Administration.  The game is to slowly suck the juices out of these promises to avoid a confrontation.  The politicians don't want to lose the votes, so they resort to subterfuge.

Even the Russians honored the pension promises of the former (Soviet) government, it's just that the pension people got wasn't really what was promised and was nowhere near enough to live on.

Mon, 08/01/2011 - 15:22 | Link to Comment Mr Kurtz
Mr Kurtz's picture

Right after Congressional and SCOTUS retirements.

Mon, 08/01/2011 - 14:17 | Link to Comment Josh Randall
Josh Randall's picture

Dominos are falling down like Michael Douglas. Once other muni's see it's a popular idea amongst their peers, they'll jump off the bridge too and then the whole State's will get involved (i.e. CA, IL, et al) in filing

Mon, 08/01/2011 - 14:19 | Link to Comment Long-John-Silver
Long-John-Silver's picture

Falling Dominoes Bitchez!

Mon, 08/01/2011 - 14:21 | Link to Comment Dr. Engali
Dr. Engali's picture

Damn that Merideth Whitney for being right again!

Mon, 08/01/2011 - 14:20 | Link to Comment caerus
caerus's picture

in other news...randy moss retired...Merideth Whitney bitchez!

Mon, 08/01/2011 - 14:21 | Link to Comment ThirdCoastSurfer
ThirdCoastSurfer's picture

Central Falls folds without a fight as this issue deals with pensions while Jefferson County will drag on forever as it deals with bondholders. 

Mon, 08/01/2011 - 14:22 | Link to Comment monopoly
monopoly's picture

Tyler, I think I am mistaken on that. Vallejo in CA. filed for bankruptcy in May of 2008.  Sorry, I should have double checked that.

That would make this #2.

Mon, 08/01/2011 - 14:26 | Link to Comment NumberNone
NumberNone's picture

Classic..."At the end of the day, fiscal stability is of the utmost importance"...why is it only at the time of bankruptcy do they come to that realization?

Mon, 08/01/2011 - 14:28 | Link to Comment Bruno the Bear
Bruno the Bear's picture

Employees and retirees, effective today, must pay:

a higher health insurance deductible

changes in medical co-payments

a 20 percent co-share of health insurance premiums

Pensioners' next payment in late August / early September will be reduced as Flanders explained July 19

A motion was filed to immediately reject the Collective Bargaining Agreements with:

the Police Union, which expires on June 30, 2012

the Firefighters' Union, which also expires on June 30, 2012

and the Municipal Workers' Union, which expired on June 30, 2011.

Mon, 08/01/2011 - 14:28 | Link to Comment 10044
10044's picture

How does a city of only 15k (hence with only few hundred municipal workers) have 80 MILLION dollars of pension liabilities? That's why this whole thing is so f'ing broke... Bargaining rights? How bout BULLYING rights

Mon, 08/01/2011 - 15:20 | Link to Comment snowball777
snowball777's picture

Were they always 15k? Or is that a recent phenomenon? 80M over how many years? For how many retirees?

20 years * $800/mo * N == $80M

N == 5000 employees...over the course of how many decades?

And then there's the little thing about them contributing their earnings to said pensions over that time.

I supposed you'd be happiest if no one was ever allowed to retire...or these people had lost everything in a 401k in 2008.

This says more about the collapse in tax revenue from the GFC than it does about unions gone wild.

Mon, 08/01/2011 - 16:17 | Link to Comment msamour
msamour's picture

Let's not also forget all the money that was siphoned towards Wall Street. Maybe it's because Americans are too close to Wall Street they don't see it. From up here in Canada, it sure looks like the real culprit in the whole castle of cards is Wall Street. Banksters still pulling profit while everything else around is crumbling has got to be somewhat a bit suspicious.

Go long pitch forks, boiled ropes tar and feathers. I have a feeling you guys will need them before long...

 

A concerned Canadian.

Mon, 08/01/2011 - 20:56 | Link to Comment Iam_Silverman
Iam_Silverman's picture

"A concerned Canadian."

How much would the Canadian Air Force charge to carpet bomb Wall Street?  Oh, and a certain building in uptown Charlotte N.C.?  Oh wait, never mind the Charlotte target - they seem to be on a path to self-destruction on their own.  Money saved!

Mon, 08/01/2011 - 14:28 | Link to Comment r101958
r101958's picture

ZH just reporting what IS. Not what they hope it is.

Mon, 08/01/2011 - 14:29 | Link to Comment Jonas Parker
Jonas Parker's picture

Stephen Hopkins is rotating rapidly counterclockwise in his coffin...

Mon, 08/01/2011 - 14:30 | Link to Comment Pancho3
Pancho3's picture

I can't wait for the Unions to go down!

Mon, 08/01/2011 - 14:56 | Link to Comment JW n FL
JW n FL's picture

I can't wait for "We the People" to hang the Government for Treason!

Mon, 08/01/2011 - 15:33 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

I am applying for the job of Executioner.

Salary paid in metal only.

Mon, 08/01/2011 - 14:35 | Link to Comment Oh regional Indian
Oh regional Indian's picture

The USA is one big nested bankruptcy!

Cities/Counties/States/Nation, all broke for 40 years almost to the day now, but have lived high on the hog too long.

I'm telling you, if not already prepared, watch for big signs before August 15th. It's a loaded date. Dollar Demise Date by my reckoning. At least the first big knife in it's side, from it's own handlers.

Absolutely loaded.

ORI

http://aadivaahan.wordpress.com/2011/07/30/pre-cursor-01/

Mon, 08/01/2011 - 20:59 | Link to Comment Iam_Silverman
Iam_Silverman's picture

"Dollar Demise"

Thanks for the warning.  I'm going to the bank tomorrow and loading up on Rupees before it's too late.

Tue, 08/02/2011 - 00:10 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Who said rupees Iam? I'm sure you are beign sarcastic.

Your handle suggests you know better.

ORI

Tue, 08/02/2011 - 11:43 | Link to Comment Iam_Silverman
Iam_Silverman's picture

" I'm sure you are beign sarcastic."

Yes.  I forgot the <> and </> toggles for sarcastic font.  Sorry.  All monetary systems not backed by some form of commodity are doomed to fail.

"Your handle suggests you know better."

While I do espouse the benefits of having some PM's in hand for periods of economic distress, I actually owe my moniker to my father  (for generations).

Regards,

Benjamin Iambic Silvermann

Mon, 08/01/2011 - 14:36 | Link to Comment JR
JR's picture

Updates from Nate...

Business credit cards on the rise for small businesses | Puget Sound Business Journal

August 1, 2011 - Faced with a tough economy and tight lending requirements, many small businesses are increasingly relying on credit cards for funding -- and also dealing with credit cards' unannounced rate changes, unrestricted penalties and more. According to the Federal Reserve, more than 80 percent of the nation's estimated 27 million small businesses use credit cards to provide working capital, the Federal Reserve reported last year.

Lawmakers are looking at extending the protections that consumers received under the Credit Card Accountability Responsibility and Disclosure Act, which prevents card issuers from raising rates without notice, applying penalty rates to existing balances and charging over-limit fees that are higher than the amounts owed, to small businesses as well, The Wall Street Journal reported.

http://www.bizjournals.com/seattle/morning_call/2011/08/business-credit-cards-on-the-rise-for.html?s=newsletter&ed=2011-08-01&ana=e_sea_rdup

Meanwhile...

Northwest CEO Pay Grows by 13%

Pay for CEOs in the Northwest grew in 2010 after falling for the previous two years.  Among CEOs on the job for all of 2009 and 2010 at 124 publicly traded companies headquartered in Washington, Oregon, and Idaho, median pay rose 13 percent, according to a survey prepared by The Seattle Times by executive-pay research firm Equilar.

http://www.bizjournals.com/seattle/morning_call/2011/08/business-credit-cards-on-the-rise-for.html?s=newsletter&ed=2011-08-01&ana=e_sea_rdup

http://economicedge.blogspot.com/2011/08/morning-update-market-thread-729-its.html

Mon, 08/01/2011 - 14:36 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

Preference cascades favor default.

Stand the fuck by.

Mon, 08/01/2011 - 14:37 | Link to Comment Cone of Uncertainty
Cone of Uncertainty's picture

Hilaritus Ensuitis.

Mon, 08/01/2011 - 14:38 | Link to Comment anynonmous
anynonmous's picture

CITY OF CENTRAL FALLS, RHODE ISLAND
Relating to
$8,700,000 General Obligation Bonds  (2007)

 

 

The Bonds will be rated by Moody’s Investors Service Inc. (“Moody’s) and Standard & Poor’s Ratings Service (“S&P”). Moody's, upon request, rates bonds insured by the Bond Insurer "Aaa" designated to be of the highest quality. S&P, upon request, rates new issues insured by the Bond Insurer “AAA”.

The Moody's rating of the Bond Insurer should be evaluated independently of the S&P rating of the Bond Insurer.No application has been made to any other rating agency in order to obtain additional ratings on the Bonds. The ratings reflect the respective rating agency's current assessment of the creditworthiness of the Bond Insurer and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above ratings may be obtained from the applicable rating agency. The above ratings are not a recommendation to buy, sell or hold the Bonds, and such ratings may be subject to revision or withdrawal at any time by the rating agencies.

http://emma.msrb.org/SecurityView/SecurityDetails.aspx?cusip=153447KX4

 

http://emma.msrb.org/MS264103-MS239411-MD467262.pdf

 

Mon, 08/01/2011 - 15:37 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

AAA bitchez for a detention facility-led town!

Largest Employers
The following is a list of the largest employers in the City of Central Falls.

Donald W. Wyatt Detention Facility Criminal Detention Facility 204
Fuller Packaging, Inc. Packaging Company 200
Murdock Webbing Co., Inc. Fibers & Elastic Manufacturing 150
Osram Sylvania, Inc. Manufacturer 150
First Student, Inc. Transportation (School Busing) 54

Mon, 08/01/2011 - 21:02 | Link to Comment Iam_Silverman
Iam_Silverman's picture

"Osram Sylvania, Inc. Manufacturer 150"

I believe this plant might be slated for closure due to outsourcing.  I'll check my back issues of the IBEW Journal when I sober up.

Mon, 08/01/2011 - 14:41 | Link to Comment Bangin7GramRocks
Bangin7GramRocks's picture

Why do you assholes take such glee in watching working-class people get robbed of contractually agreed upon pension payments. Most of these people get less than 1000 per month. Is that a golden retirement? Unions are not perfect, but cheering these developments only accelerates the "race to the bottom". And then they came for me..........

Mon, 08/01/2011 - 14:51 | Link to Comment anynonmous
anynonmous's picture

I think you mistake glee for vindication

Mon, 08/01/2011 - 14:58 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

In the age of Barrack the First, being a union member is proof of being a traitor to the US.

Won't shed a tear for people who are willing to kill the US for a few dollars more per hour.

Mon, 08/01/2011 - 15:26 | Link to Comment Mr Kurtz
Mr Kurtz's picture

What, no tears for the squids at GS?

Mon, 08/01/2011 - 16:58 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

No tears for anyone.

With the advent of the internet, no one has any excuse for being ignorant.

Mon, 08/01/2011 - 15:01 | Link to Comment MachoMan
MachoMan's picture

Because in bailout america, we have to foot the bill?

Mon, 08/01/2011 - 15:02 | Link to Comment Cone of Uncertainty
Cone of Uncertainty's picture

Moonbat!!!

Mon, 08/01/2011 - 15:06 | Link to Comment treemagnet
treemagnet's picture

Because the system is so fucked it has to start anew - and the quicker we get it over with the quicker we can all go long and forget about it for 20 years or so until the sociopaths ascend to the thrones of the next corporate frontier and we start all over.  See, wasn't that simple?  Oh yeah, and cause unions are for losers that can't stand on their own merits and have to form packs to prey on the sick and helpless gov'ts who have no spines to stand up to them since they're usually sent to "bargain" with buddies, relatives, or friends waiting to agree to something stupid in the now cause tomorrow is somebody else's problem.....sound familiar?  Good talk.

Mon, 08/01/2011 - 15:24 | Link to Comment Agent P
Agent P's picture

From the article:

"Central Falls, a city of 19,000 residents about a 15-minute drive north of Providence, has $80 million in unfunded pension and benefits obligations..."

Your statement:

"...Most of these people get less than 1000 per month."

Please, if you would, help me reconcile this math.

 

 

Mon, 08/01/2011 - 16:16 | Link to Comment Use of Weapons
Use of Weapons's picture

Going by statistics, your 19k already has 2.1k of pensioners drawing, @ $12k / annum, that's about $252,000,000 of pension liabilities right there (roughly - 20 years from the age of 65, factoring in 50% usage, so 10 years or so left on them all).

You've got perhaps 7k workers (12k roughly statistically, factor in a 40% 'stay at home' for a rural crappy town that isn't modern for the mums), 9.2% unemployed so 3-5k of non-earning benefits (child care allowances etc etc). So, yes - $80 million is fairly small time. The $80 million isn't per annum btw - it is unfunded. If you can't fund year #3 of a 20 year pension, its unfunded.

 

 

Oh. PLEASE don't tell me you thought the $80 mil was a yearly figure? PLEASE.

Mon, 08/01/2011 - 16:34 | Link to Comment Agent P
Agent P's picture

No, I know it's not the annual run rate.  $80M is the unfunded portion of pension and OPEB (shortfall on the PV of assets and liabilities)...I get that. 

As for the rest, 19k is the total population, not the municipal workforce...so, boil down a total pop of 19k to the estimated active and retired muni workforce for a town that is approx 1.5 square miles (how big could city gov really be?) and re-run the numbers. 

Mon, 08/01/2011 - 15:32 | Link to Comment Seasmoke
Seasmoke's picture

because due to their greed (or worse corruption) and closed door deals , its well deserved

Mon, 08/01/2011 - 16:28 | Link to Comment msamour
msamour's picture

I think the point really is, when all those people that lose their pensions cannot feed themselves, they will have to lose it and March on New York (Shouldn't be a problem it's close enough) and bitch slap the Wall Street Banksters (if you can find them by the time people start to run out of money they will have left)

It is unfortunate for all those workers who put in an honest day's work for decades, but at some point all those people should have realized they were getting screwed. I am 33 years old, and I am well aware there will be no pension system left for me when the time comes, and I live in Canada. Hell I am quite certain there will be no medical, or any other system left for that matter. Too many people come from other countries and leech off the system. They do it in exchange for votes. That is how it works for now. Till the people wake up and throw the usurers (read Wall Street Bankers) out of your country, or better yet hang them, nothing will change, and more and more people will suffer while politicians and banksters grin.

Mon, 08/01/2011 - 14:45 | Link to Comment Yen Cross
Yen Cross's picture

  This has " LIB TARD' Written all over it!   Can someone flush the city of " Berkley" as well?   I'm out shopping for new Book Ends...

Mon, 08/01/2011 - 14:45 | Link to Comment zorba THE GREEK
zorba THE GREEK's picture

I wonder if this bankruptcy triggers any CDS's. Probably nothing to worry about, but when a major city goes down, 

the CDS's could cause a Lehman-like event. The federal government will have to bail them out to avoid bank failures.

Central Falls may be small like Greece, but our 'Italy' may be just around the corner. The U.S. is raising the debt ceiling

to build the house of cards higher with the winds picking up all around. 

Mon, 08/01/2011 - 14:47 | Link to Comment Mort
Mort's picture

Dominos?

Mon, 08/01/2011 - 14:48 | Link to Comment Mort
Mort's picture

Dominos?

Mon, 08/01/2011 - 14:48 | Link to Comment Arch Duke Ferdinand
Arch Duke Ferdinand's picture

Ladies and Gents...should the Debt Bill fail, look to see Obama initiate New Wars..."In the Name of Peace" and to take American minds off their country's Bankruptcy.

...Wouldn't take much to attack and conquer Canada.

Manifest Destiny and all that Jeffersonian history.

Canada factoids,

...humongous land area

...natural resources up its Ying Yang

...only 34 million citizens

Mon, 08/01/2011 - 14:51 | Link to Comment Yen Cross
Yen Cross's picture

  At least they buy their GUNS legally from us!   Earth calling ERIC HOLDER?

Mon, 08/01/2011 - 15:00 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

Barrets for the Zetas.

Probably hoping for the drug cartel funding for The One's re-election.

China is all in for our first commie president.

Mon, 08/01/2011 - 16:33 | Link to Comment msamour
msamour's picture

Trust me, you will be gone by the middle of your first winter there. Besides our plan for the US invasion has been ongoing for a long time now. First we sent Canada geese some years ago to crap on your lawns and destroy your city parks, (mission accomplished on that one), then we sent our Canadian beavers to dam your rivers (also mission accomplished by the looks of last Spring) By the time you guys can read where Ottawa is on the map we'll come down again and repaint the white house, we'll even move it back to Phliy for you. What colour do you want it?

Mon, 08/01/2011 - 17:12 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

We'll give you money to take Detroit.

If we have to accept your commies into our MFM it is only fair you take Detroit.

Mon, 08/01/2011 - 14:52 | Link to Comment bozzy
bozzy's picture

Doesn't any city manager ever go to prison in the USA? OR GET SOME SERIOUS PERSONAL LIABILITY? Made in America. The wire : Best. The administration : worst.

USA - the land that brought you "BLACK is the NEW WHITE!"  

Mon, 08/01/2011 - 14:53 | Link to Comment JW n FL
JW n FL's picture

http://www.bloomberg.com/news/2011-01-12/jpmorgan-s-dimon-says-he-expects-more-municipal-bankruptcies.html

JPMorgan's CEO Dimon Says More U.S. Municipalities May File for Bankruptcy

Q

By Christopher Palmeri and Andrew Frye - Jan 12, 2011 12:00 AM ET

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said he expects more U.S. municipalities to declare bankruptcy and urged caution when investing in the $2.9 trillion public-debt market.

“There have been six or seven municipal bankruptcies already,” Dimon, 54, said yesterday at his company’s annual health-care conference in San Francisco. “I think unfortunately you will see more.”

Mon, 08/01/2011 - 15:29 | Link to Comment Uncle Remus
Uncle Remus's picture

"JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said he expects more U.S. municipalities to declare bankruptcy"

 

No shit Sherlock.

Mon, 08/01/2011 - 16:12 | Link to Comment Use of Weapons
Use of Weapons's picture

You missed the end of that quotation: "...and JP Morgan is looking forward to aiding those communities refinance through selling their natural resources, assets and labour to interested parties".

Not even joking.

Mon, 08/01/2011 - 18:05 | Link to Comment Uncle Remus
Uncle Remus's picture

I missed nothing. Dimon stating the obvious and vultures circling.

Wake me when necks are snapping.

Mon, 08/01/2011 - 14:56 | Link to Comment dwdollar
dwdollar's picture

Our city (Norman, OK) has a $5M deficit planned for next year and that's if their optimistic revenues are generated.  I imagine this is the general theme across America.  All these communities are hoping like hell that their sales tax revenue will rebound within a year or two.  Keep dreaming...

Mon, 08/01/2011 - 21:16 | Link to Comment Iam_Silverman
Iam_Silverman's picture

"All these communities are hoping like hell that their sales tax revenue will rebound within a year or two"

Is there any hay for sale there in Norman?  If so, when I come up there to haul it home I promise to buy a Coke and a burger - and boost sales tax reciepts- every trip!

P.S. I'm serious.  I just found out that my last hope outside of Speegleville has sold the last of his corn/maize stubble bales.

Mon, 08/01/2011 - 14:55 | Link to Comment Sudden Debt
Sudden Debt's picture

Tyler,

What typically happens when a state defaults?

Do all the remaining funds go to downpay bills? Do buildings and all other assets get sold off? ...

 

Mon, 08/01/2011 - 15:24 | Link to Comment Yen Cross
Yen Cross's picture

  What funds S/D?  Everything of 'Tangible' value has been refinanced into oblivion!  I thought cross collateralization was against the law?  

 

    That is, unless your last name is Bernanke, Blankfein, Geithner, and last but not least  POTUS....

 

   At the rate we are going the Swiss are going to start growing  Chocolate Pods, in Florida and Central Cali!!!

Mon, 08/01/2011 - 14:56 | Link to Comment Cone of Uncertainty
Cone of Uncertainty's picture

Merideth Whitney is back bitches!!!

Mon, 08/01/2011 - 15:03 | Link to Comment MachoMan
MachoMan's picture

We should crack open the bubbly and hopefully she'll put on the dominatrix outfit.

Mon, 08/01/2011 - 15:27 | Link to Comment Yen Cross
Yen Cross's picture

 Effin Hilarious!!!  (:

Mon, 08/01/2011 - 15:31 | Link to Comment Uncle Remus
Uncle Remus's picture

Beat me, hurt me, make me write bad checks. Oh wait...

Mon, 08/01/2011 - 15:08 | Link to Comment treemagnet
treemagnet's picture

Theres never just one cockroach.

Mon, 08/01/2011 - 15:32 | Link to Comment Uncle Remus
Uncle Remus's picture

Orbit. Nuke. Sure.

Mon, 08/01/2011 - 15:11 | Link to Comment anynonmous
anynonmous's picture

for those who never saw it here's the 60 minits interview with Meredith that has been completely misrported by the banksters and their servants at CNBS, Bloomberg etc

 

http://www.cbsnews.com/video/watch/?id=7166293n

she talks a bit at the beginning about the potential size e.g. hundreds of billions and  if you fast forward to the the 12:30 mark she comments on timing

she was and is exactly right on the timing - time will tell if it totals hundreds of billions

Mon, 08/01/2011 - 15:26 | Link to Comment PulauHantu29
PulauHantu29's picture

"...Mark A. Pfeiffer, also cited a "culture of government" that allowed the fiscal crisis to grow."

 

"Flanders said Monday that the city had irresponsibly entered into unaffordable agreements with retirees. Officials have said it was also hard hit by a loss of state aid and expected revenue from the Wyatt Detention Facility that never materialized."

http://finance.yahoo.com/news/Cashstrapped-RI-city-files-apf-1809896377....

Bill Bonner from The Daily Reckoning calls this action and reaction is like an accordion....once the accordion overexpands too far, it then must collpase down again and let out all the hot air. Interesting analogy. I hope those folks can work it out in the least painful way. GL!to them!

Mon, 08/01/2011 - 15:34 | Link to Comment Uncle Remus
Uncle Remus's picture

Turn on the bubble machine! It's The Bankrupt Polka time.

Mon, 08/01/2011 - 15:58 | Link to Comment snowball777
snowball777's picture

Quitters. They can hire half of the union workers to imprison the other half, Jay Gould style...that'll fix their balance sheet. /sarc

Mon, 08/01/2011 - 15:58 | Link to Comment Yen Cross
Yen Cross's picture

  A  < red headed> step child , looks better than this trade.     Divergence~   like the Gulf Oil spil...

 

 Even the fx trade is spinning like a Back room Lobbyist...   eur/aud, aud/usd, eur/usd...  gbp/jpy, gbp/usd, usd/jpy...

Mon, 08/01/2011 - 16:25 | Link to Comment agrotera
agrotera's picture

HEY WASHINGTON, PROVE YOU ARE NOT BOUGHT AND PAID FOR BY THE OWNERS OF THE PRIVATLY HELD FEDERAL RESERVE, AND PASS A RESOLUTION THAT THE RECIPIENTS OF TARP MUST LEND TO STATES BY REFINANCING ALL THEIR LOANS,  WITH NEW TERMS, REWRITTEN TO LOWER RATES TO 1% OVER THE 0.0% THAT THEY CAN GET FREE MONEY FROM OUR TREASURY.,...ANY HONEST ACTION LIKE THIS WOULD SURELY BOOST THE HEART OF AMERICA, AND REAL GROWTH MIGHT COME BACK.  OTHERWISE, YOU IN WASHINGTON ARE (EXCEPT FOR A POSSIBLE FEW) ARE A BUNCH OF FEDERAL RESERVE SHILL CROOKS, NOT PATRIOTS, NOT PUBLIC SERVANTS.

IF WE ARE TO RECOVER OUR GOVENRMENT OF BY AND FOR THE PEOPLE, WE NEED TO ACT AS IF IT IS SO.  TOOBIGTOFAIL BANKS NEED TO BE RETROACTIVLY AUDITED AND SHUT DOWN AND NATIONALIZED TO UNWIND, OR THEY NEED TO LEND AT 1% OVER THEIR FREE MONEY COST, PERIOD.

RATES OVER 5% ABOVE PRIME, ON ANY LOAN, INCLUDING CREDIT CARDS FROM BANKS THAT BORROW FROM THE FED, NEED TO BE OUTLAWED.

Mon, 08/01/2011 - 16:44 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

 

 

i didn't watch the video.  did it say how long it took mr flanders, the "receiver" to get this burgh ready to present to the court?  all the notes say is that it was over 1.5 years.

many of our favorite local goobermints may be, unfortunately, subjected to this kind of unexpected scrutiny which may included never-before-asked questions like wtf did you shitheads do, here? 

so, now, we will have some kind of idea how many bulldozers and backhoes it will take to get, say, a booming city of 19,000 presentable. $80 million down in that one account for the civil servants, eh?  that comes to $4210.53/person or, figuring 3.0 persons per household, roughly about $12,631.58 per "family."  for one account in one town, after everything they could come up with.  but, they won't hafta pay it, b/c they are bankrupt and can re-schedule things according to say a "super" town council or a courthouse with "super" ideas about what is "just" here.  after all, your honor,...

so, now that we're bankrupt, the receivers, lawyers and courts go to town.  who gets what's left, i wonder? 

yes, your honor...i understand what the fuk a moot point is, judge, and i really don't give a fuk if throw me in jail, again, or not, as you already, of course, know.

don't tell moody's, whatever you do!

Mon, 08/01/2011 - 16:55 | Link to Comment Yen Cross
Yen Cross's picture

  Moody's, S&P, Fitch payed for the Town { Holiday } Party... SARC/ off (.)

Mon, 08/01/2011 - 16:50 | Link to Comment Johnny Lawrence
Johnny Lawrence's picture

This really isn't a case that supports Meredith Whitney's thesis.  Lots of you are ejaculating all over your screen for no reason.  Central Falls, RI has been plagued with financial issues well before the global credit collapse.  This is really a legacy problem, not proof of an upcoming default bonanza.

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