Business Stories of the Week: May 19

by May 19, 2017
In an effort to get out from under its crippling $123 billion debt, Puerto Rico filed for bankruptcy this week, making it the largest government bankruptcy proceeding since Detroit's case in 2013. (Photo by Güldem Üstün, Creative Commons Flickr user under 2.0 Generic (CC BY 2.0) license)

In an effort to get out from under its crippling $123 billion debt, Puerto Rico filed for bankruptcy this week, the largest government bankruptcy proceeding since Detroit in 2013. (Photo by Flickr user Güldem Üstün, CCBY2.0)

Puerto Rico goes belly up

Puerto Rico’s debt has doubled over the last decade, with billions sunk into grand projects, expenses and bureaucracy, Bloomberg reported on Monday. With the help of Wall Street, Puerto Rico borrowed $74 billion in bonds, only to squander it on things like a fancy commuter train that operates at a loss of $50 million a year and new baseball parks in every town. Finally, in 2016, the Commonwealth effectively ran out of cash and stopped paying on its $123 billion debt. Typically, states and territories are not allowed to file for bankruptcy, but in 2016 Congress passed Title III, a new law that allows Puerto Rico to seek protection from its creditors—and the island did just that.

U.S. and China shake on it

Carnivores, rejoice! As part of an effort to reduce the trade deficit with Beijing, the U.S. and China have agreed to expand trade in beef and chicken and increase access for financial firms, according to CNBC. The deals are the first tangible results of the trade talks that began in April after President Donald Trump met with President Xi Jinping in Florida. So who comes out on top? American beef producers and American poultry companies with production in China could see a big boost; American companies that make biotech seeds may now be able to sell to China; and credit card companies like Visa, MasterCard and American Express will now have full-market access to China.

Trump turmoil roils Wall Street

The Dow dropped 370 points on Wednesday, making it the worst day for both the Dow and the S&P since September 2016. CNBC reports that Wall Street is reacting to the volatility in Washington after news that ousted FBI Director James Comey had written a memo describing a conversation in which President Trump allegedly asked him to stop an investigation into Michael Flynn, the former national security adviser. While politics gave cause for concern, the market rebounded quickly, according to Bloomberg, thanks to data that reinforced optimism in the economy.

Nuclear industry asks for help

Up against a slowing demand for electricity and competition from cheaper renewables, the nuclear industry is struggling to succeed. And now, it’s looking for help from state legislatures—and Amazon CEO Jeff Bezos, according to NPR‘s Tuesday reporting. New York and Illinois both recently agreed to give billions in subsidies to the nuclear industry by essentially expanding the definition of clean power to include nuclear. But around the country, five nuclear plants have closed in the last five years and another five are scheduled to retire within a decade. The still-functioning plants are having trouble competing with other energy sources, such as natural gas. In response, the nuclear industry is ramping up its lobbying efforts in several states, like Ohio, where an industry group is asking Amazon to support the subsidies.

Whistleblower fingers UnitedHealth

In allegations that have prompted the Justice Department to say it will sue UnitedHealth Group, a former employee of the insurance company described how his company and others like it gamed the Medicare Advantage system. According to Monday’s story in the New York Times, whistleblower Benjamin Poehling of Bloomington, Minn., says that UnitedHealth’s finance directors (like him) monitored projects that were designed to make patients look sicker than they were by scouring their records and then goosing the diagnosis codes, all in an effort to score a bigger payout from the Medicare Advantage program—and bigger bonuses for the employees.

Fox News founder Roger Ailes dies

Roger Ailes, the former presidential adviser and creator of Fox News, which he ran for two decades before resigning amid claims of sexual harassment, died Thursday morning at the age of 77, Bloomberg reports. Ailes launched Fox News in 1996 along with Rupert Murdoch in response to what they viewed as an overly liberal mainstream media. Despite criticism from those on the left about its right-leaning coverage, Fox News grew to become the most-watched and most-profitable news network, and is often credited with helping to create the Tea Party movement and subsequent Republican takeover of 2014.