Detroit

SOTU Post Mortem:

The best news possible: "Nothing will get done this year, or next year, or maybe even the year after that." Barack Hussein Obama
The worst news: Everything else.

Here is the text of President Barack Obama’s State of the Union Address as prepared for delivery at 9 p.m. ET. "Jobs" 33 vs. "Fat Cats" 0, Rich 3 vs Poor 1, Hope 2 vs Unicorns 0, Change 9 vs Tooth-Fairy 0, Mortgages 5 vs Apple 0, Main Street 1 vs Wall Street 3, China 4 vs Europe 1; DEBT CEILING 0

To what banana-republic levels will real wages still have to sink?

Corporations are not people...

The economic superstar, with unemployment at a 20-year low and exports at an all-time high, produces 34% of the Eurozone’s GDP—and it smacked into a wall.

• Italy Is Biggest Risk to Euro, Says Fitch (WSJ)
• Greek Bailout in Peril (WSJ)
• Swiss Currency Test Looms for SNB’s Jordan in Race to Replace Hildebrand (Bloomberg)
• Daley to Depart as Obama Shifts Strategy From Compromise to Confrontation (Bloomberg)
• BOE Stimulus Expansion May Not Be Enough to Revive U.K. Recovery, BCC Says (Bloomberg)
• Geithner in China to Discuss Yuan, Iran (Bloomberg)
• China Won’t See Hard Landing in 2012, Former PBOC Adviser Yu Yongding Says (Bloomberg)
• Measures to boost China financial markets (China Daily)
• Obama Panel to Watch Beijing (WSJ)

All you need to know.

All you need to know.

The city of Hamtramck, desperate for cash, has asked the state for permission to take an unprecedented step: filing for bankruptcy. City Manager Bill Cooper said the city of roughly 20,000 people is staring at a $3 million deficit, fueled by a dispute with Detroit. Unless Hamtramck files for bankruptcy, it won't be able to pay its nearly 100 employees or 153 retirees, he said

The city sent a letter to the state Department of Treasury last week asking for approval to seek bankruptcy protection. It has not received a reply, Cooper said. "I'm going to run out of money Jan. 31," Cooper said. Bankruptcy would allow the city wants to stave off creditors and force its unions to consider concessions.

Here comes the first municipal Hail Mary: Detroit is attempting to sell $250 million in debt, while disclosing in the associated prospectus of the possibility of filing for Chapter 9 bankruptcy protection. The kicker as Bloomberg News reports - no recent financial statements are available. In fact, Detroit is providing investors with a a financial statement from June 30, 2008, with a fiscal 2009 report "expected" to be complete by May 31. To say that a lot has changed in the past two years for the city whose unemployment some say is in the double digits with a 3 handle,would be an understatment. Yet we are confident that having no access to actual financials will not stop investors who in their feverish quest of Return On Capital are completely forgetting about the Return Of Capital concept.

First, it was the GM Term Loan B which benefited from hedge fund exuberance, taxpayer generosity, and the administration's soon to be nationalization, and hit 95 earlier today after trading in the 80s on Friday, and much cheaper over the past month, as the consensus has emerged that the administration will pay off the loan at par (a bit of a change from the fulcrum security treatment at Chrysler).

Not sure if this fall angel downgrade of Fiat SpA is due to the "Chrysler connection" (which alone would be worthy of a C- rating), or just because S&P realized there are other auto companies out there that deserve a careful scrutiny, but either way, here it is.

Carmaker Fiat SpA Becomes A Fallen Angel On Downgrade To 'BB+/B' Re Weak Liquidity; Long-Term Rating Still On Watch Neg

Among other parts of the S&P report: