Small Business Bankruptcy Chapter 5 – The first year of the Trump administration dominated most of the political, business and financial news in 2017, both in the United States and abroad. Key administration-related developments in 2017 included the United States’ withdrawal from the Paris Climate Agreement; the desertification of the Iran nuclear deal; steps to renegotiate the North American Free Trade Agreement; ongoing investigations into Russian election interference; showdown with North Korea over nuclear weapons; The United States recognizes Jerusalem as the capital of Israel; and the biggest US tax reform in more than 30 years, which included massive corporate tax cuts and the lifting of the Affordable Care Act’s insurance protection mandate after Republican attempts to repeal the law failed miserably earlier this year.
These events sometimes overshadow other newsworthy global political and financial developments, such as an excellent year for the global economy; messy (and expensive) divorce proceedings between the UK and the EU; the #MeToo movement; records of destruction due to natural disasters; the abolition of the Islamic State and the ongoing refugee crisis; and the economic and humanitarian crises in Venezuela and Puerto Rico.
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Some of the most memorable business, economic, and financial voices of 2017 include “The Trump Administration,” “Hurricane Harvey,” “Hurricane Irma,” “Hurricane Maria,” “Equifax Violations,” “The Paradise Papers,” the Retail Apocalypse, “and the Bitcoin explosion/bubble”.
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February 8: Moody’s Investors Service reports that more than $1 trillion of junk-rated corporate debt is scheduled to mature over the next five years, the highest amount the rating agency has recorded in the past five years, including the highest individual loans as well. annual volume in 2021, when the $402 billion junk-rated corporate debt is scheduled to mature.
March 2: Bloomberg News reports that U.S. state and local governments are getting about $2 trillion less than they need to cover retirement benefits due to investment losses, inadequate contributions, and boom-time benefits.
March 29: In one of Britain’s most important diplomatic events since World War Two, British Prime Minister Theresa May sends a formal notification of the country’s intention to leave the European Union, initiating a two-year, tortuous and full-blown divorce.
3 May PROMESA III, the regulatory body created for Puerto Rico under the Puerto Rico Economic Stability, Management and Oversight Act (“PROMESA”). as the title suggests, is petitioning to restructure $74 billion in commonwealth government bonds, the biggest bankruptcy. cases that have been filed by United States government agencies.
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June 1: President Trump announces that the United States will withdraw from the Paris Climate Agreement, which deals with the mitigation, adaptation and financing of greenhouse gas emissions in the United Nations Framework Convention on Climate Change and was negotiated by representatives of 196 countries in December 2015. Withdrawals could take nearly four years, meaning the final decision will be made by American voters in the next presidential election.
August 25: Category 4 Hurricane Harvey makes landfall in Texas, triggering the most catastrophic and most expensive natural disaster in US history, ultimately affecting 13 million people in Texas, Louisiana, Mississippi, Tennessee, and Kentucky.
September 6: Category 5 hurricane Irma, one of the strongest Atlantic hurricanes, with winds of 185 miles per hour, makes landfall in the Caribbean before turning to Florida.
September 7: Equifax, one of the top three consumer credit reporting agencies, announces that hackers have accessed company data, potentially compromising sensitive information about 143 million Americans, including Social Security numbers and driver’s license numbers.
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September 8: For the first time in its history, the US federal government reaches (and exceeds) $20 trillion in debt.
November 2: President Trump nominates Jerome H. Powell to serve as chairman of the U.S. Federal Reserve, bypassing Janet L. Yellen for a second term, but choosing a successor who is expected to stay on the path of monetary policy if the economy continues to grow steadily.
November 5: Paradise Papers published. The Papers, the latest in a series of leaks released by the International Consortium of Investigative Journalists, shed light on the trillions of dollars that go through the offshore tax haven.
November 20: The Pension Benefit Guaranty Corporation reports that the deficit in its multi-employer pension plan is $65.1 billion, an increase of more than $6 billion from the previous fiscal year and a new all-time high, and that the plan continues. there is a possibility that more than 50 percent of the reserve funds will be exhausted by the end of the 2025 fiscal year.
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November 28: Cryptocurrency Bitcoin trades above $10,000 for the first time, sparking investment speculation that fueled the Bitcoin bubble/bubble.
December 14: The US Federal Communications Commission votes on the Obama administration’s net neutrality rule.
December 18: The Dow Jones Industrial Average rises 5,000 points for the first time in a year.
December 21: The US Congress gives final approval for a $1.5 trillion tax cut. The plan, which is expected to increase the deficit by more than $1 trillion over 10 years, lowers the corporate tax rate permanently, providing for individual tax rate cuts that will expire in 10 years if Congress does not act to renew it, revoking the individual mandate. in the Affordable Care Act and aims to simplify the tax code by eliminating and reducing some deductions.
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2017 was a good year for the United States, with better-than-expected economic growth (around 2.5 percent); inflation remains low (around 1.7 percent for the second year in a row); and the lowest unemployment rate (4.1 percent) since February 2001.
This development prompted the US Federal Reserve to raise its benchmark federal funds rate to 1.5 percent in December 2017, its third increase this year.
However, the federal budget deficit in fiscal year (“FY”) 2017 (the period from October 1 to September 30) grew to become the sixth-largest deficit on record ($668 billion, up 14 percent from the FY 2016 deficit of $586 billion). ), as the increase in government spending outweighed the increase in tax collection for the second year in a row. In fact, in September 2017, for the first time in its history, the federal government reached (and exceeded) the $20 trillion debt milestone.
The US dollar fell 10 percent against other major currencies in 2017, its biggest annual decline since 2003.
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North America (and the rest of the world) also experienced record natural disasters in 2017, with Hurricanes Harvey, Irma and Maria; California wildfires; great earthquake in Mexico; and widespread flooding in South Asia. In its annual natural disaster report, German reinsurer Munich Re reports that insurers will pay out about $135 billion for 2017, a record high. In addition, in 2017 total losses, including uninsured, were $330 billion, the second worst in history after 2011, when an earthquake and tsunami devastated Japan.
The United States covered about 50 percent of global insurance claims last year. Hurricane Harvey was the most expensive natural disaster of 2017, causing $85 billion in losses. Including Hurricanes Irma and Maria, the 2017 hurricane season caused the most damage, with losses totaling $215 billion. The National Oceanic and Atmospheric Administration estimated total losses (insured and uninsured) in the United States at $306 billion in 2017, making 2017 the most expensive year for natural disasters.
According to Thomson Reuters, M&A activity worldwide totaled $3.6 trillion in calendar year (CY) 2017, the same as CY’s 2016 rate and the fourth consecutive year to exceed $3 trillion. A total of 49,448 deals worldwide were announced in 2017 in 2017, a 3 percent increase from 2016 and the strongest year for M&A in terms of deal volume since listings began in 1980. The total is $4.66 trillion.
The total value of M&A deals for the European targets was $867.5 billion in 2017, an increase of 17 percent over 2016.
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With $1.4 trillion in deals announced in 2017, the total value of US deals is down 16 percent from CY 2016, despite a 14 percent increase in deals.
Globally, private equity-based M&A activity totaled $322.6 billion in 2017, a 27 percent increase over the previous year.
Among the largest acquisitions announced in the United States in 2017 was the acquisition of drugstore operator CVS Health Corp. $69 billion from health insurance company Aetna Inc. (the company’s biggest acquisition of the year) and a $52 billion film purchase from Walt Disney Co. . and Fox Inc.’s Twenty-First Century television business, and the acquisition of Rockwell Collins Inc. by United Technologies Corp. worth $30 billion.
In contrast to the previous two years, when the biggest sovereign debt stories were Greece and Argentina, in 2017 the focus of sovereign debt was the economic and humanitarian catastrophe in Venezuela, which is facing the worst economic crisis in history. The crisis between the tenure of the late President Hugo Chavez and the current administration of President Nicolás Maduro is characterized by hyperinflation, devaluation of the country’s currency, economic decline, severe unemployment and deprivation. Venezuela, which has one of the world’s largest proven crude reserves, was crippled when crude prices plunged in 2015. The country is widely expected to default on its $110 billion worth of sovereignty.