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Next COVID casualty: Cities hit hard by the pandemic face bankruptcy

Next COVID casualty: Cities hit hard by the pandemic face bankruptcy



The pandemic's longterm effects could include city bankruptcies across the U.S. Olivier Douliery / AFP via Getty Images

U.S. cities are fast running out of cash.

The pandemic will reduce local government revenues by an estimated US$11.6 billion in 2020. With COVID-19 requiring residents to stay home and stores to shutter, the bulk of this reduction comes from a slump in local sales taxes. Declines will continue into 2021.

State revenues are heading in the same direction, so many U.S. cities will need to rely on help from the federal government. Aid to cities may be part of the next pandemic aid package now being discussed by members of the House and Senate. But so far, the Republicans’ bill leaves out any new funding for state and local governments, while the Democrats’ bill includes $1 trillion for it.

And if federal assistance arrives, it will not fix every city’s budget.

The pandemic has hit budgets so hard that even cities in relatively good financial health – including those with rainy day funds to help them through an emergency – will face significant changes to staffing and services.

For cities in the poorest shape, the pandemic could mean bankruptcy.

Downtown in Vallejo, California
The Northern California city of Vallejo declared bankruptcy in 2008. Luis Sinco/Los Angeles Times via Getty Images

Size matters

Bankruptcy is a legal process where people, companies and governments who cannot pay their debts seek to reduce them.

Which debts get paid during a bankruptcy are important decisions. They involve how comfortable a city employee’s retirement might be, the level of health insurance for pensioners and workers, the extent of labor protections for employees and the future cost of borrowing for a city.

City bankruptcy was created by Congress after the Great Depression, in response to 4,770 different units of city government going belly up. Twenty-seven states now allow their cities to file for bankruptcy.

Those states that do not allow city bankruptcy – Georgia and Iowa explicitly prohibit filing, with the other 21 states having no specific allowance or prohibition – manage the problem of city indebtedness in various ways, ranging from strict budget oversight to the disbanding of heavily indebted cities. Since 1938, city bankruptcy has been used around 700 times.

A city’s bankruptcy differs from corporate bankruptcy in that it does not allow for the liquidation of assets. For cities, bankruptcy is used to reduce debts, not sell off things - such as public roads and buildings - to pay off debts. The bankruptcy judge’s role is to determine whether the proposed reduction is fair to all people the city owes money to, which may include workers, pensioners, bankers, suppliers and investors.

But bankruptcies can look different in different cities.

We are scholars who research changes in how cities go about budgeting. Our work has showed that the city bankruptcies that followed the Great Recession of 2007 and 2008 were not uniform.

If you were in a big city, your government owed money to lots of people. The converse was true in small cities. As the number of participants in a bankruptcy increases, the task of deciding how much different creditors should get repaid becomes more complicated.

Somebody doesn’t get paid

Westfall Township, Pennsylvania, home to about 2,000 people, declared bankruptcy in 2009 after losing a lawsuit to New Jersey real estate developers David and Barbara Katz. Courts ruled that the city owed the Katzes $20.8 million after improperly denying them permission to develop projects in the township.

With annual revenues of just $1 million, Westfall had few options but to file for bankruptcy.

Resolving Westfall’s bankruptcy meant reaching a new agreement with the Katzes. The bankruptcy court approved a $6 million settlement with the developers and gave Westfall 20 years to pay. The city would also raise property taxes and delay the repayment of other debts. By 2014, Westfall’s budget had recovered enough for Pennsylvania to remove it from its list of distressed cities.

Bankruptcy proceedings were more complicated in Vallejo, California, which is on the northern end of San Francisco Bay. Vallejo, population 120,000, had a 2008-2009 budget of $79.6 million. In 2008, the city lost around one-quarter of its revenues as local sales taxes and real estate development fees collapsed. Vallejo suddenly found itself unable to pay all of its bills.

The City Council voted unanimously to file for bankruptcy.

In its bankruptcy filing, the city estimated it had between 1,000 and 5,000 creditors. The most contentious part of the bankruptcy concerned the city’s obligations to its own unionized employees. Vallejo argued that its bankruptcy should include the option of reducing employee wages and benefits, and changing working conditions, if necessary, without union consent.

The judge agreed and, in doing so, expanded what types of debt could be reduced in bankruptcy. This was, and remains, controversial. Although unions have pushed back, later bankruptcies have confirmed the court’s decision.

Vallejo ultimately chose not to impose new employment contracts on most of its employees.

That decision helped Vallejo avoid costly legal battles – but the city’s main expenditures, wages and pensions, remained largely unaltered. The city emerged out of bankruptcy solvent but struggling. Filing for bankruptcy ended up costing Vallejo over $20 million in court and legal fees.

Art, philanthropy and pension debts in Detroit

Vallejo’s bankruptcy foreshadowed an even more complex one in Detroit, where revenue decline and failed Wall Street bets left the city unable to balance its budget.

Detroit listed 100,000 creditors in its 2013 bankruptcy filing, totaling $18.5 billion in debts. Like Vallejo, Detroit would have to decide which creditors to stiff, effectively asking them to pay for the city’s budget failures.

Detroit's biggest debt during bankruptcy was to its pension holders.
Detroit’s biggest debt during bankruptcy was to its pension holders. Bill Pugliano/Getty Images

The eventual settlement would reduce Detroit’s debts by $7 billion, mostly by slashing the amount of borrowed money the city would have to repay to banks and investors.

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But no creditor would walk away unscathed. Wages, pensions and health care for city employees were all cut. The city also entered into a complex “Grand Bargain” brokered by local philanthropists with the state of Michigan and pension holders that helped settle the city’s largest debt, which was to pensioners, while keeping in the city its one major asset, the Detroit Institute of Art’s collection.

The administrative and legal costs of the Detroit bankruptcy came in at around $100 million.

No single path

The bigger the city, the more complicated and expensive the bankruptcy. More creditors means more lawyers making competing claims on the city’s dwindling revenues.

It also makes the process of picking winners and losers more complex and something that can involve testing the limits of bankruptcy law. When these limits expand, just what going bust means can change dramatically. Things that once seemed untouchable, like pensions, can become vulnerable in bankruptcy courts.

With many budgets in tatters, the prospect of growing numbers of city bankruptcies looms. Distressed cities will have to figure out what the process means for them.

It is rarely possible to predict what any city will decide. With any part of a city’s operations - including salaries, pensions, road repairs, borrowing, park maintenance, policing, libraries - potentially fair game, everyone involved faces great uncertainty. There is no single, predictable path through city bankruptcy.

Les auteurs ne travaillent pas, ne conseillent pas, ne possèdent pas de parts, ne reçoivent pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'ont déclaré aucune autre affiliation que leur poste universitaire.

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Ancient technology turns plant-based cheese into ‘something we want to eat’

Credit: Photo: Department of Food Science To produce plant-based cheeses that feel and taste like dairy cheese, scientists have their sights set on fermentation….



Credit: Photo: Department of Food Science

To produce plant-based cheeses that feel and taste like dairy cheese, scientists have their sights set on fermentation. In a new research result, University of Copenhagen scientists demonstrate the potential of fermentation for producing climate-friendly cheeses that people want to eat. 

Nearly thirty kilos of cheese are eaten by the average dairy-loving Dane every year. But increasing pressure on Earth’s resources and climate change call for our food system to turn in a more plant-based direction. As a result, scientists are looking into how to transform protein-rich plants like peas and beans into a new generation of non-dairy cheeses that possess the similar sensory properties as the dairy-based ones that humans have enjoyed for thousands of years.

Several plant-based cheeses are already on the market. The challenge is that plant proteins behave differently than milk proteins when trying to make cheese from them. To meet this challenge, producers add starch or coconut oil to harden plant cheeses, as well as an array of flavourants to make them taste like cheese.

But it turns out that this can be done with the help of nature’s smallest creatures. In a new research result from the University of Copenhagen’s Department of Food Science, researcher Carmen Masiá has succeeded in developing plant-based cheeses made from yellow pea protein with a firm texture and improved aroma profile. She was able to do so by using the same natural fermentation process with bacteria that we have used with cheeses made from milk for thousands of years.

“Fermentation is an incredibly powerful tool to develop flavour and texture in plant-based cheeses. In this study, we show that bacteria can serve to develop firmness in non-dairy cheese in a very short period of time while reducing the bean-like aroma of yellow pea protein, which is used as the main and only protein source,” explains Carmen Masiá. 

Fresh cheese after eight hours

The result builds upon a research result from last year by the same researcher, who found that yellow pea protein constituted a good “protein base” for making fermented plant-based cheese. In the new result, the researcher examined twenty four bacterial combinations made from bacterial cultures supplied by the biotech company Chr. Hansen, where Carmen Masiá is completing her Industrial PhD.

“The whole point of this study has been to combine the commercially-available bacterial cultures that are suitable for the fermentation of a plant-based raw material, and test them in a pea protein matrix to develop both taste and texture that would be suitable for a cheese-like product. And, even if some bacterial combinations performed better than others, all of them actually provided firm gels and reduced beaniness in the samples” says the researcher.

To study the behavior of the bacterial combinations, the scientist inoculated them in a protein base made of yellow pea protein. After only eight hours of incubation, the result was a firm “cheese-like gel” reminiscent of a fresh soft white cheese.

“All bacterial blends produced firm gels, which means that one can get a fermentation-induced gel without necessarily adding starch or coconut oil to the base. From an aroma perspective, we had two goals: To reduce the compounds that characterize the beaniness of yellow peas, and to produce compounds that are normally found in dairy cheese. Here we saw that some bacteria were better at producing certain volatile compounds than others, but that they all worked great to reduce beaniness – which is a very positive outcome. Furthermore, all blends acquired dairy aroma notes to different degrees” explains Carmen Masiá.

Taste and feeling is everything

The researcher points out there is still a way to go to before achieving this plant-based cheese, but that research is on the right track. According to her, tailored bacterial compositions and cultures must be developed in order to achieve the optimal cheese-like characteristics. Furthermore, the plant-based cheese might need to mature over time so that it develops flavor and character, just as dairy-based cheeses do.

Finally, the new generation of fermented plant-based cheeses must be judged by consumers, so that the flavour is perfected. All in all, this is to make plant-based cheeses so delicious that people seek them out and purchase them.

“The most challenging thing for now is that, while there are a lot of people who would like to eat plant-based cheese, they aren’t satisfied with how it tastes and feels in the mouth. In the end, this means that no matter how sustainable, nutritious, etc. a food product is, people aren’t interested in buying it if it doesn’t provide a good experience when consumed,” says Carmen Masiá, who adds:

“One needs to remember that dairy cheese production has been studied over many years, so it’s not something that we can just mimic overnight with totally different raw materials. Nevertheless, there are many scientists and companies out there doing great progress in the field; I hope that we will get closer to making non-dairy cheeses that taste good over the next few years. We are getting there.”

The study was conducted in collaboration between the Department of Food Science and microbial ingredients supplier Chr. Hansen, a bioscience company that produces ingredients for the food and pharmaceutical industries, among other things. 

What is fermentation:

Fermentation is an ancient technique which originated in China. Today, it is used to make beer, wine, cheese, pharmaceuticals and much more. Fermented foods are preserved by initiating a fermentation process in which natural lactic acid bacteria and enzymes are formed. This is done as microorganisms convert sugars in the selected food into lactic acid, acetic acid and carbon dioxide. This makes food acidic and prevents the growth of putrefactive and pathogenic bacteria.

The first textual evidence of cabbage fermentation is found in China’s oldest collection of poems, Shi Jing (Book of the Odes), which dates back to approximately 600 BC.

About the study:

  • The researchers tested twenty four different bacterial compositions on a protein base made from yellow pea protein.
  • The study shows that all of the bacterial compositions produce a firm cheese-like gel, reduced the beaniness, and produced dairy-related volatile compounds.
  • The study was conducted in collaboration between the Department of Food Science and microbial ingredients supplier Chr. Hansen, a bioscience company that manufactures microbial ingredients for the food and pharmaceutical industries.
  • The study has been published in the scientific journal Future Foods
  • The research is funded by Innovation Fund Denmark (grant 0153-00058B)

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BGI Genomics breaks new ground in Saudi Arabian precision medicine

The Saudi Society of Medical Genetics Annual Conference 2023 was held in Riyadh, Saudi Arabia, on September 29-30, 2023. As the most authoritative academic…



The Saudi Society of Medical Genetics Annual Conference 2023 was held in Riyadh, Saudi Arabia, on September 29-30, 2023. As the most authoritative academic conference on precision medicine in the Kingdom, this conference attracted global experts worldwide.

Credit: BGI Genomics

The Saudi Society of Medical Genetics Annual Conference 2023 was held in Riyadh, Saudi Arabia, on September 29-30, 2023. As the most authoritative academic conference on precision medicine in the Kingdom, this conference attracted global experts worldwide.

One of the highlights of the conference was the presentation entitled “Spatial-temporal sequencing and some large-scale application of precision medicine technologies,” delivered by Dr. Louis (Renyuan) Luo, VP of BGI Genomics West Asia, at the invitation of the Saudi Society of Medical Genetics.

Dr. Luo’s presentation discussed the importance of spatiotemporal sequencing technology in the field of precision medicine and its potential large-scale applications, introduced the company’s case studies, such as the world’s first multi-center project of newborn genetic screening, large-scale regional noninvasive prenatal testing (NIPT) coverage and extensive early screening project of colorectal cancer at Wuhan, Hubei province, China.

Besides sharing BGI Genomics research achievements and innovative applications in enhancing medical outcomes, Dr. Luo highlighted Genalive, BGI Genomics joint venture laboratory in the Kingdom of Saudi Arabia. This is the result of a localized strategic partnership aiming to provide cutting-edge precision medicine services, promote development and contribute to improving the country’s healthcare system.

The success of Dr. Luo’s presentation paves the way for deepening future localized collaboration and innovation in Saudi Arabia. BGI Genomics will continue to support the realization of Saudi Vision 2030 through active participation in global cooperation and exchanges in the field of precision medicine to enhance patients’ health outcomes.

About BGI Genomics:

BGI Genomics, headquartered in Shenzhen, China, is the world’s leading integrated solutions provider of precision medicine. Our services cover more than 100 countries and regions, involving more than 2,300 medical institutions. In July 2017, as a subsidiary of BGI Group, BGI Genomics (300676.SZ) was officially listed on the Shenzhen Stock Exchange.

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Swiss Writer Sentenced To 60 Days In Jail For Calling Journalist A “Fat Lesbian”

Swiss Writer Sentenced To 60 Days In Jail For Calling Journalist A "Fat Lesbian"

Submitted by BlueApples,

With Switzerland being the home…



Swiss Writer Sentenced To 60 Days In Jail For Calling Journalist A "Fat Lesbian"

Submitted by BlueApples,

With Switzerland being the home of the technocratic vanguard tasked with ushering in new world order totalitarianism in the World Economic Forum, the recent sentencing of a Swiss-French writer for what could best be described as a thought crime should come as no surprise. Writer and social commentator Alain Soral was handed a 60-day jail sentence for chastising a critic of his after he took aim at their body image and sexual orientation. Soral lashed out at the journalist by calling them a "fat lesbian" among berating them with more vitriolic criticism. A Swiss court in Lausanne determined that Soral's scornful remarks constituted criminal acts of defamation, discrimination and incitement of hatred. The sentenced ultimately handed down to the Soral was a cruel irony even more surreal than any satirical polemic social commentary he could have written.

Soral's remarks occurred two years ago when he took aim at Catherine Macherel, a journalist who prided herself in using her platform to advance her advocacy for LGBT causes. The polemicist turned to Facebook to air his grievances in a video in which he described Macherel as "unhinged" for her activism. His remarks resulted in his arrest, conviction, and sentencing to 3 months in prison in April 2021. Soral's sentence was one of the first to follow sweeping legislation in 2020 which criminalized homophobic statements by broadening the scope of existing laws against discrimination to extend its protections to people on the basis of their sexual orientation. However, Soral was initially able to escape the prison time handed down to him following a successful appeal in December 2022, instead only receiving a fine as punishment.

While Soral was initially able to evade a conviction, prosecutors were relentless in their pursuit by instigating a further appeal which would ultimately lead to the maximum sentence the court could hand down. That six month prison sentence exceeded the original three month prison term he faced. The decision to penalize Soral under the full force of the law was applauded by LGBT groups across Switzerland as a testament to the success of the country's criminalization of free speech. “This court decision is an important moment for justice and rights of LGBTQI people in Switzerland,” said Murial Waeger, co-director of the lesbian activist group LOS. Waeger would go on to opine that “The conviction of Alain Soral is a strong signal that homophobic hatred cannot be tolerated in our society.”

While Soral's conviction serves as a blueprint for the weaponization of the Swiss justice system again critics of LGBT groups, the writer is somewhat of an easy target considering his controversial past and already checkered criminal record. Before moving to Switzerland, Soral was sentenced to one year in jail 2019 in his native France for an illustration he made in 2016, Soral was charged for a cartoon he published in the notoriously satirical newspaper Charlie Hebdo. His contribution to the polemic publication was featured on a page titled "Chutzpah Hebdo" which bore an illustration of Charlie Chaplin in front of the Star of David asking "Shoah, where are you?" in a play on words the court ruled was a criminal act of Holocaust denial. Although Soral was sentenced to a year in prison, he failed to show up to court for the sentencing, instead announcing his plans to appeal the conviction before seeking refuge in Switzerland.

The illustration which led to Alain Soral being convicted of Holocaust denial.

Ultimately, the controversies which led to Soral fleeing France would follow him to Switzerland. Amidst expanding legislation across the whole of Europe leading to thousands of arrests for remarks made on the internet deemed to be hate speech, it appears that there is nowhere on the continent that Soral or any dissident challenging  the narratives approved by the ruling elite can find safe haven in any longer.

Tyler Durden Wed, 10/04/2023 - 08:30

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