The Little State With a Big Mess - Business Day

On the night of September 8, Gina M. Raimondo, a financier by trade, rolled by with news that nobody wanted to hear: Rhode Island, she said, was bankrupt.

Maybe not today, maybe not tomorrow. But if current trends held, Ms. Raimondo warned, the Ocean State would soon look like the Narragansett Athens: too small and too broad. Its economy wither. Jobs would disappear. The state would be increased.

This is not the kind of message you might expect from Ms. Raimondo, a proud daughter of Providence, a venture capitalist success and, above all, the current treasurer of Rhode Island. But it's a message worth hearing. The smallest state in the Union, it turns out, has a debt problem is very important.

After decades of drift, denial and inaction, the system of Rhode Island Retirement $ 14.8 billion is in crisis. Ten cents of every tax dollar the state will now retired public workers. Before long, Ms. Raimondo was warning the whistle stops here and across the state, this figure will climb to 20 cents dangerously. But the scary thing is that nobody really knows. The Providence Journal recently tried to count all municipal pension plans outside the state system and stopped at 155, conceding he may have missed some. Even the Securities and Exchange Commission asked questions, including the general: These figures are for real?

"We are in the fight of our lives for the future of this state," said Ms. Raimondo in a recent interview. And if the battle is lost? "Either the pension fund cash-strapped cities or out of business."

All this may seem small in the scheme of national affairs. After all, this is Little Rhody (population: 1,052,567). But the nightmare scenario is that Ms. Raimondo saw the future of America and is Rhode Island. As Wall Street, a mounting financial disaster in Greece, a fiscal wreck is played here. And chances are it will not last. Before this is over, many Americans may be forced to rethink what government means, state and local level.

Economists have talked endlessly about a settlement of financial accounts for the United States, a point in the not-so-far-away when prodigality of the nation catch up. But Rhode Island, that time is now. The state has moved to protect its bondholders, to avoid being excluded from the credit market. Last week, the General Assembly went into session and proposed reducing benefits for public employees, including those who have already retired. That the plan will succeed is anyone's guess.

Central Falls, a city north of Providence small, did not wait for news from the Statehouse. In August, the city went bankrupt rather than keep its pension promises to retired firefighters and police officers.

Illinois, California, Connecticut, Oklahoma, Michigan - the list of states stretched runs. In Pennsylvania, the capital, Harrisburg, went bankrupt earlier this month to avoid having to use valuable assets to repay creditors Wall Street. In New Jersey, Governor Chris Christie wants to reduce benefits, too.

In most places, as in Rhode Island, the big issue is pensions. By conventional measures, the state and local pensions nationwide now face a combined deficit of 3 billion dollars. Officials argue that, by their accounting, the total is much less. But with pensions, hope triumphs often experience. Until this year, Rhode Island has calculated its figures retirement, assuming that its various funds would show an average annual return on investments of 8.25 percent, the actual number of the last decade is about 2, 4 percent. A phrase that is thrown around here in the Rick Perry, describing the social security is "Ponzi scheme".

That night in September, Ms. Raimondo joined the Cranston Portuguese Club to deal with yet another angry public. People like Paul L. Valletta Jr., the head of Local 1363 of the firefighters union.

"I want to get the biggest farce of the road here," Mr. Valette exploded at the back of the room. "You're going after retirement! In economic times, how could you possibly retire later?"

Someone else in the audience said Rhode Island has a moral obligation to return.

Ms. Raimondo, 40, stood his ground. Rhode Island, said she had a choice: he could pay for school books, road work, care for the elderly and so on, or it could keep every promise to retirees.

"I would ask you, is it morally right to do nothing and not to provide services to vulnerable citizens of the state?" She asked the crowd. "Yes, sir, I think what is moral. "

For many Americans, the state of the ocean conjures up images of mansions of Newport and Narragansett chic. The global reality is more prosaic. Rhode Island, is now a place where roads and bridges are among the worst in the nation and where jobs are particularly difficult to find. Unemployment has risen faster during the 2008-9 recession than in any other state. The official unemployment rate is now 10.6 percent, compared to the national average of 9.1 percent.

Textile mills and manufacturers of jewelry that once used by thousands fell apart. Large employers are now in health care and education, both of which rely heavily on government spending that has been drying up.

Many states and cities can credibly say that their pension plans are viable, even when these plans are not fully funded. This is because the pension funds of state, such as social security, pay the benefits gradually over several years.

But unlike, say, California, with its large diversified economy, Rhode Island is so small that there is little margin for error. Leaving the state to escape taxes, is almost as easy as moving across the city. Efforts to balance the state budget by reducing the strength of public works have left Rhode Island with a problem like that has plagued General Motors: the state has more retirees in the public sector as public sector workers.

European Finance Ministers Shaping Greek Rescue and Effort to Aid Banks - Global Business

BRUSSELS - The European finance ministers said on Saturday they were close to an agreement to strengthen their capital reserves for troubled banks - the first part of a package of measures to stem the debt crisis s 'European worse.

On the second day of talks here, ministers also said that the Greek bondholders would suffer losses far larger than the original 21 percent agreed to in July, but a bank official said that despite the consensus of Ministers, no agreement was close on radiation that could reach up to 60 percent.

Ministers also noted that France and Germany had made progress on a third question, how to increase the firepower of a rescue fund for the euro area. German Chancellor Angela Merkel and French President Nicolas Sarkozy with other European leaders continued to negotiate later Saturday.

"I think now we have reached a point of more realistic view of the situation in Greece and we will provide the means necessary to be able to protect the euro," Merkel said on arrival at a gathering center -right European leaders outside Brussels. Sunday's meeting would not be the final decision, she said, adding that leaders do not take final action at another meeting scheduled for Wednesday.

Despite resistance from Spain and Italy, an agreement seemed near on a plan worth about 100 billion euros, or $ 138 billion to recapitalize banks in Europe. The measure is intended to help banks better withstand market turbulence.

"We have laid the groundwork for an agreement on the banking sector," said Anders Borg, Minister of Finance of Sweden.

Negotiations on Saturday set a tone improved during the last week, when the differences between Merkel and Sarkozy broke into the open.

But the challenge remains for leaders to build a comprehensive and credible actions of Wednesday's meeting.

Ministers were on track to ask the bankers to write off almost half of the value of their holdings of Greek bonds after a report by international lenders suggested that the Greek economy had deteriorated so significant so that the cut of 60 percent was required.

"We agreed yesterday that we need a significant increase in the contribution of banks", "Jean-Claude Juncker of Luxembourg, who is the head of the Eurogroup of finance ministers said Saturday. He did not offer a precise figure.

But Charles Dallara, managing director of the Institute of International Finance, which negotiated on behalf of banks, said the two sides were "far from an agreement," The Associated Press reported.

One concern that remains is that Greece shows few signs of a return to economic growth and, if he refused to say how many losses the banks would be willing to accept, Mr. Dallara added, "We would be open to an approach that requires extra effort from everyone. "

Greece deteriorating economic outlook has been the subject of intense discussions between ministers with Germany and the Netherlands by pressing their case that private investors need to make bigger losses.

According to the report of the international lenders, "a loss of 60 percent for bond holders would be required to reduce the debt of Greece below 110 percent of gross domestic product in 2020. This represents a huge increase of 21 per percent of losses of private investors have agreed to accept only three months ago.

Without action, the funding needs of Greece could amount to about € 252 000 000 000 2020, says the document, while in a worse outlook, needs, including rollover of existing debt, could approaching € 450 000 000 000. The complete package is emerging very complex and involves difficult negotiations on issues that are often linked. For example, the agreement to strengthen the European banks is considered vital to protect banks against the impact of impairments on Greek bonds.

The ministers agreed Friday to release the majority of loans worth 8 billion euros to prevent Greece from defaulting. The International Monetary Fund could contribute to about 2 billion euros to the fund.

The biggest area of ​​difference between France and Germany seems to be reduced after France appeared to give ground on how to strengthen the euro rescue fund.

Merkel has strongly opposed the suggestion that the French funds, the European Financial Stability Fund, must obtain a banking license, allowing it to borrow from the European Central Bank.

France's finance minister, Baroin, said Friday that the issue was not "a final point of discussion for us," adding that "what matters is what works."

Saturday, the Dutch Minister of Finance, Jan Kees de Jager said that the use of the central bank was "no longer an option," but that two options were being considered.

Both options involve plans to guard against some of the losses on bonds Italian or Spanish. A version of this insurance is offered by the bailout fund.

The other would form an agency to buy bonds, may attract new investors such as sovereign wealth funds. It would buy bonds on the primary and secondary markets using the insurance offered by the rescue fund, said an official informed discussions but not authorized to speak publicly.

One advantage of this plan could force it could be clearer conditions for the reform of the countries whose bonds are purchased.

Wireless Users Will Get Alerts on Excess Use - Business Day

WASHINGTON - Users of cell phones and other wireless devices that are close to their monthly limit for voice, data, text or receive alerts when they are in danger of being charged extra, according to an agreement between carriers and the Federal Communications Commission.

The agreement, to be announced Monday, brings together industry and a regulator who fought hard this year on attempts by the FCC providers to police the Internet and the board of review mergers of wireless carriers . The agreement will begin in a year.

Wireless companies are generally opposed recent efforts by the Commission to dictate the way they communicate with customers. But carriers have also lost the goodwill of people bitter about the sometimes exorbitant costs resulting from the exploitation of what has become a staple of consumers - the mobile phone.

Tens of millions of users of wireless phones are hit with overage charges each year, the FCC estimates, based on its own studies and work by the Government Accountability Office and private research firms. The new agreement is binding on all members of the industry's largest trade, and thus covers almost all over the country 300 million wireless accounts, according to the FCC chairman, Julius Genachowski.

President Obama, Mr. Genachowski and Steve Largent, president of CTIA - The Wireless Association, the trade group that negotiated for carriers, welcomed the agreement. Mr. Largent, a former congressman and NFL player, said that the agreement fulfills a commitment the government, without imposing burdensome regulations.

President Obama said in a statement, said: "I appreciate the willingness of mobile phone companies" to work with my administration and join us in our global efforts and continuing to protect American consumers by ensuring that financial transactions are fair, honest and transparent. "

For 18 months, the F.C.C. investigated the shock of what he calls the bill, what consumers experience when they receive their monthly bills to find wireless unforeseen costs hundreds or thousands of dollars for roaming or overuse of voice and data. In October, he proposed a settlement that will now be delayed while the committee monitors compliance with voluntary industry.

Most contracts call for a client without paying a monthly fee for a fixed number of minutes of talk time. Some plans include a number of text messages, and other, mostly for smartphones, tablets like the iPad, or laptop cards in the air, including a certain amount of data on the Use of each month.

A customer exceeding these limits will begin to pay fees that are often much more expensive on a unit basis than under the monthly allowances. While many carriers offer several ways for consumers to check their use, these hit by large bills were usually not regularly.

Educate consumers to limit data is particularly relevant with the explosive growth of tablets iPad and others, which can consume huge amounts of data downloading music and books and movies streaming. The F.C.C. said that the popularity of tablets and growth guidance in the use of data is to contribute to the overcrowding of the airwaves, with companies without finding that they can not possibly be able to meet the demand for download .

A 2010 study by the F. C.C. found that one in six mobile users have experienced the shock of the bill, with 23 percent of these users face unexpected charges of $ 100 or more. A F.C.C. separate report noted that 20 percent of complaints shock of the bill he received during the first half of 2010 were $ 1,000 or more in excess cost. Expensive costs can also be hired for roaming, when a user moves out of the defined area of ​​a roofing company or, as often happens, when traveling abroad.

Even so-called unlimited data plans often have a cap limit downloads per month for a number of megabytes - a technological measure that, unlike a number of calls or minutes, can not easily be followed by the uninitiated. Last October, the F.C.C. highlighted the case of a pensioner of 66, in Dover, Massachusetts, which received a $ 18 000 bill after a promotion unlimited data plan expired without warning.

Alexander Cullison discovered the hard way what can happen when a family member is not aware of the limitations of the use and accounting. Mr. Cullison, retired resident of Fairfax, Virginia, received a $ 400 bill one month recently after his son, whose plan had a monthly limit of 250 text messages sent and received about 2000 in a billing period. It was then that Mr. Cullison learned that his company counted every wireless message sent and received as separate items, forcing them to build at least two times faster than expected.

"It's a good resolution," Mr. Cullison said, "so long as they inform you that you exceed your limit before it actually happens." Under the agreement, carriers must provide alerts when consumers approach and exceed their limits on voice, data or send SMS. In addition, users will receive an alert when their ties to a cell phone in a foreign country. Some carriers are already offering similar alerts.

Companies have the ability to send alerts via SMS or voice, but they must be free and automatic. Consumers can remove from service if they wish. At least two of the four types of alerts must be started by the carriers within 12 months, and all alerts should begin within 18 months.

The companies also agreed to publicize tools for consumers to monitor their own use. The F.C.C. partnered with the Consumers Union, non-profit to monitor corporate compliance.

"Consumers have told us about" surprises "for a long time, and we pushed for reforms to take action against the problem," said Parul P. Desai, political adviser to Consumers Union. " Finally, we want to help people protect their portfolio, so we applaud the FCC and industry to this effort to do right by consumers. "

Amazon Signs Up Authors, Writing Publishers Out of Deal - Business Day

SEATTLE - Amazon.com has taught readers they do not need libraries. Now it is encouraging writers to put aside their publishers.

Amazon will publish 122 books this fall in an array of genres, as well as physical and e-book. This is a striking acceleration program that will edit retailer soaring Amazon squarely in competition with homes in New York who are its most important suppliers.

It has set up a flagship line led by a veteran of publishing, Laurence Kirshbaum, to release branded fiction and documentary. He signed his first contract with the self-help author Tim Ferriss. Last week he announced a memoir by the actress and director Penny Marshall, for which she paid $ 800 000, a person with direct knowledge of the agreement said.

The publishers say Amazon is aggressively courting some of the authors above. And society is eating away the services that publishers, critics and agents used to provide.

Several major publishers have refused to comment on the matter on the efforts of Amazon. "Publishers are terrified and do not know what to do," said Dennis Loy Johnson of Melville House, which is known for speaking his mind.

"Everyone is afraid of the Amazon," said Richard Curtis, a longtime agent who is also a publisher of electronic books. "If you're a bookstore, Amazon has been competing with you for a while. If you are a publisher one day you wake up and Amazon is competing with you. And if you are an agent, Amazon can steal your lunch because it offers authors the ability to publish directly and you cut.

"It's an old strategy: divide and conquer," said Mr. Curtis.

Amazon executives, interviewed at company headquarters here, declined to say how many publishers, the company employed or how many books he had under contract. But they minimized the power of Amazon and the publishers said in love with their own demise.

"It's always the end of the world," said Russell Grandinetti, one executive of Amazon. "You can set your watch it happen."

He stressed, however, that the landscape was in some respects, change for the first time since Gutenberg invented the modern book almost 600 years. "The only people really need in the publishing process is now the writer and the reader," he said. "All that stands between these two has both risk and opportunity."

Amazon started giving all authors, if published or not, direct access to the coveted Nielsen BookScan sales data, which records the number of physical books, they sell individual markets such as Milwaukee and New Orleans. It is the introduction of the kind of one-on-one communication between authors and their fans was happening only on book tours. It was an obscure German historical novel a best seller, without a single runaway examiner professional weighing in.

Publishers caught a glimpse of a future they fear no role for them late last month, when Amazon introduced the Kindle fire, a shelf for books and other media sold by Amazon. Jeffrey P. Bezos, CEO of the company, Kindle mentioned several times as "a service from beginning to end," evoking a world in which Amazon develops, promotes and delivers the product.

To get an idea of ​​how publishers are shaken by the breakthrough of Amazon in their business, consider the case of Kiana Davenport, a writer whose career abruptly derailed Hawaiian last month.

In 2010, Ms. Davenport signed with Riverhead Books, a division of Penguin, for "The Daughter of the Chinese soldier," a love story of civil war. She received an advance of $ 20 000 for the book, which was supposed to come out next summer.

If the writers have a message drilled into them these days, it is this: you shake. So Mrs. Davenport took on the shelf of several award-winning short stories she had written 20 years ago and packed in the e-book, "Cannibal Nights," available on Amazon.

Penguin discovered when he went "ballistic," Mrs. Davenport wrote on his blog, accusing him of breaking its contractual promise to avoid competition with it. He wanted to "Cannibal Nights" withdrawn from sale and all references to it removed from the Internet.

Ms. Davenport refused, then Penguin canceled his novel and continuing to get ahead.