Detroit qualifies for bankruptcy; Young workers' pay plummets since 2008; Yuan surpasses euro to be world's second trade currency; India stays high on corruption index

1 Detroit qualifies for bankruptcy (Ed White in San Francisco Chronicle) A federal judge has ruled that Detroit can use bankruptcy to cut employee pensions and relieve itself of other crushing debts, handing a defeat to the city's unions and retirees and shifting the case into a delicate new phase. Judge Steven Rhodes, who wondered aloud why the bankruptcy had not happened years ago, said pensions can be altered just like any contract because the Michigan Constitution does not offer bulletproof protection for employee benefits. But he signaled a desire for a measured approach and warned city officials that they must be prepared to defend any deep reductions.

"This once proud and prosperous city can't pay its debts. It's insolvent," Rhodes said in formally granting Detroit the largest public bankruptcy in US history. Rhodes agreed with unions and pension funds that the city's emergency manager, Kevyn Orr, had not negotiated in good faith in the weeks ahead of the July filing, a key condition under federal law. But he said the number of creditors — more than 100,000 — and a wide array of competing interests probably made that "impossible."

The decision set the stage for officials to confront $18 billion in debt with a plan that might pay creditors just pennies on the dollar and is sure to include touchy negotiations over the pensions of about 23,000 retirees and 9,000 workers. Orr says pension funds are short by $3.5 billion. The city has argued that bankruptcy protection will allow it to help beleaguered residents who for years have tolerated slow police responses, darkened streetlights and erratic garbage pickup. Before the July filing, nearly 40 cents of every dollar collected by Detroit was used to pay debt, a figure that could rise to 65 cents without relief through bankruptcy, according to the city.

Detroit, a manufacturing hub that offered well-paying blue-collar jobs, peaked at 1.8 million residents in 1950 but has lost more than a million people since then. With more square mileage than Manhattan, Boston and San Francisco combined, the city does not have enough tax revenue to reliably cover pensions, retiree health insurance and buckets of debt sold to keep the budget afloat.

http://www.sfgate.com/news/us/article/Judge-Detroit-can-use-bankruptcy-to-confront-debt-5029623.php

2 Young workers' pay plummets since 2008 (Phillip Inman in The Guardian) The pay of workers in their 20s has tumbled by almost 12% since the peak of the recession, according to a leading thinktank. The Resolution Foundation said younger workers faced an almost unprecedented squeeze on both the wages and employment chances four years after the financial crash. The thinktank said analysis of official data showed younger workers had been "pummelled" more than any other age group.

The warning follows concerns by the OECD that a lost generation of under-30s across Europe face long periods of unemployment or low wages that will prevent them from participating in society, creating a home and saving for retirement. A report by Tax Research this week found that self-employed worker incomes have tumbled over the last decade and more steeply since the 2008 crash. The Resolution Foundation report shows that the average hourly pay for workers aged between 22 and 29 fell 11.7% in the three years after 2008 to £9.83. 

Matthew Whittaker, senior economist at the thinktank, said: "The economic downturn has been tough for almost everyone but younger people have been hit harder, and from more than one direction. Wages have been falling steadily for almost everyone but, on top of this, younger people have not benefited from a partial recovery in the jobs market.

http://www.theguardian.com/business/2013/dec/04/young-workers-pay-financial-crash-resolution-foundation

3 Yuan passes Euro as world's second trade currency (Straits Times) China's yuan has overtaken the euro to become the second most-used currency in international trade finance, a global transaction services organisation has said. The market share of the yuan, also known as the renminbi (RMB), in traditional trade finance reached 8.66 per cent in October, surpassing the euro on 6.64 per cent, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) said in a statement.

Global trade remains utterly dominated by the US dollar, which it said had an 81.08 per cent share. "The RMB is clearly a top currency for trade finance globally and even more so in Asia," said Franck de Praetere, Asia Pacific head of payments and trade markets for SWIFT.

http://www.straitstimes.com/breaking-news/money/story/chinas-yuan-surpasses-euro-worlds-second-trade-currency-20131203

4 India stays high on corruption index (Vibhuti Agarwal in The Wall Street Journal) Despite a vocal anti-corruption movement and even a new party aimed at fighting graft, the level of corruption in India has not fallen in the last year, according to the latest survey by corruption watchdog Transparency International. The Corruption Perception Index grades countries on how corrupt their political parties, police, justice systems and other organizations are perceived to be. Transparency International’s rankings start with the countries that are least corrupt. India’s ranking of 94 out of 177 was unchanged from a year ago.

India’s neighbor Pakistan saw improvement in how it was perceived. Its ranking climbed to 127, up from 139 last year. Among the countries that topped the chart were Denmark and New Zealand and those at the bottom of the list included North Korea, Afghanistan and Sudan. On a scale of zero to 100 (where zero indicates a country’s public sector is highly tainted and 100 is considered very clean) India received a sad score of 36, unchanged from last year. More than two-thirds of the countries surveyed scored below 50.

Indian lawmakers are getting ready to vote on an anti-graft bill known as the “Lokpal” bill in the upcoming parliamentary session that begins Thursday. The bill proposes setting up an independent anti-corruption ombudsman at the national level to investigate charges of corruption in the bureaucracy, including in the prime minister’s office.

http://blogs.wsj.com/indiarealtime/2013/12/03/india-does-badly-again-on-corruption-index/?mod=WSJBlog&mod=irt