Divided They Fall at United; Puerto Rico’s Fiscal Plans Fall Short; Barnes & Noble is Singing the Fiscal Blues

Who me?

Image courtesy of  jesadaphorn/FreeDigitalPhotos.net

Image courtesy of jesadaphorn/FreeDigitalPhotos.net

The airline United is anything but these days as honcho Jeff Smisek ducked out of the company he had been helming, along with two other executives. Apparently, it’s because of a Port Authority investigation that’s in full swing stemming from some events in 2011 that resulted in the “chairman’s flight.” The “chairman” refers to former Port Authority chairman David Samson, who managed to finagle United to offer twice weekly flights from Newark airport to Columbia, South Carolina. While I’m sure Columbia, South Caroline is a fabulous place, that particular flight route was initially deemed unprofitable. So what made the route become profitable all of a sudden? Coincidentally, David Samson’s weekend home is located there and that flight makes for an awfully convenient commute. See where I’m going with this? But the burning question is if those flights were a sort ahem bribe from the airline or a shakedown by Mr. Samson in exchange for some investment cash and other dispensations from the P.A. That all remains to be determined. David Samson already resigned in 2014 after a probe began over intentional lane closings on New York’s George Washington Bridge. Did I mention Samson was a close confidant of Chris Christie. Just saying. Days after stepping down, the Newark-Columbia route was shut down. I guess it wasn’t profitable anymore. As for Smisek, well he still walked away with $5 million and another $3.5 million in stock.

You debt-or believe it…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Puerto Rico thinks they finally have a plan to fix all that fiscally ails them. To address the territory’s $72 billion debt, a panel put out a five year plan to restructure $47 billion of it. With bondholders left to pick up the remainder, Puerto Rico will still be left with a $14 billion financing gap between 2016 – 2020. Lucky bondholders. Debt from the power, water and sewer companies is not included. The plan includes many reforms including a lot of cuts to education and teachers’ pensions. Why education is always the first to get spending cuts is weird since kids aren’t the ones responsible for creating debt. Know what I mean? Also, the plan calls for exploring public/private partnerships for hospitals, highway, building and transit authorities. The plan also wants to explore changes to the tax laws because, after all, why should the United States be the only place that needs to overhaul its tax code? As with any iffy fiscal plan, no timeline has been set which, in my most humble opinion, doesn’t bode well. Even then, the plan still needs approval from legislature and the governor.

What’s in store…

Image courtesy of adamr/FreeDigitalPhotos.net

Image courtesy of adamr/FreeDigitalPhotos.net

Barnes & Noble, though it may be the largest book store chain on the planet, still took a big old $35 million hit on $939 million in sales – worse than the year before when it saw a loss of $28.4 million Hey, the bigger they are the harder their sales fall. But who knows? Maybe with new CEO Ron Boire taking the reigns – as of yesterday – maybe there’s still hope for the embattled bookseller. These new earnings reflect B&N’s spin-off of its college-division, 600 stores and the Nook, B&N’s shaky attempt at putting its electronic stamp on the e-reader industry. The bookseller just can’t seem to make strides against Amazon. Well, to be fair, most companies find Amazon to pose quite the challenge. In any case, B&N lost 68 cents a share when last year at this time it only lost 56 cents a share.  $17 million of B&N’s loss was from the Nook and this was B&N’s fifth straight quarter of losses, sending shares down today over 16% at one point today.  But B&N has a plan, so they say for a new store prototype. Those stores will be considerably smaller and carry a larger assortment of merchandise, including toys and games, which incidentally saw a 17.5% increase for the chain.

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Greece’s Finances are Messing Everybody Up; Puerto Rico’s in a Debt “Death Spiral”; Housing Up and About

It’s all Greek to me…

Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

They gave us philosophy and high-protein yogurt. But now Greece is giving us nothing but global fiscal chaos as its banks are on the verge of collapse while the country prepares to maybe give a big fat default on its loans tomorrow. That is assuming it doesn’t pony up a $1.8 billion re-payment. Greek Prime Minister Alexis Tsipras gave a very unwelcome surprise to Greece’s creditors on Friday when he called for a referendum to take place on July 5 on whether or not Greece should follow the plan that the creditors have in store – which is, basically, good old-fashioned austerity and some deep deep spending cuts. Greeks will have plenty of time to ponder all this as they wait on endless lines just to withdraw about $60 bucks. That is, if the ATM’s still even have cash in them, since hundreds are already empty. Too bad the banks will be closed for the next six days. As for the question surrounding the “Grexit,” as in, Greece’s potential ugly exit from the European Union…well that remains to be determined. But, I’m guessing those creditors really want Alexis Tsipras to think long and hard about that 240 billion in euros the country has been getting since 2010 and how much they would really appreciate getting it back. Actually, I’m guessing everyone wants Alexis Tsipras to do something, as the situation in Greece is messing with financial markets all over the world.

Speaking of debt-laden countries…

Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Puerto Rico seems to be inadvertently channeling Greece’s debt problem as its Governor, Alejandro Garcia Padilla, said the island’s debt is “not payable” and even asked for help to be pulled from its fiscal “death spiral.” His words. Not mine. Puerto Rico’s debt is a lot less than Greece’s but no less daunting with its $72 billion price tag. One of the problems facing Puerto Rico is that because it’s not a state, it doesn’t even get to file for bankruptcy. This puts the territory in quite the pickle. So like any other borrower, Puerto Rico is going to attempt to restructure some of those loans and see about getting some deferments. Otherwise, fiscal disaster looms and it could be years before it climbs its way out of that menacing “death spiral.”

And not in Greece or Puerto Rico…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Housing recovery is…recovering. At least based on the number of pending sales from previously owned homes. But hey, we’ll take it. That figure, brought to us courtesy of the National Association of Realtors, is up .9% for May and up to 112.6. And bonus: that was the fifth straight gain. And more bonus: it’s at its highest point in nine years. And who doesn’t like straight gains and high points? Better employment, (slightly) increasing salaries and lower borrowing costs are all helping in this arduous recovery process. Interestingly enough, those higher sales came from the markets located in the Northeast and West part of our country. Not so much from points in the Midwest and South which actually took a bit of a hit. A teensy one. Well, teensy enough that it was over-shadowed by those impressive gains in other parts of the land. In case you were wondering, the median price for a home these day is $228,700, almost 8% higher than last year.