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Cathleen Allison/Nevada Appeal
Economic Forum Chairman John Restrepo listens to gloomy forecasts for the Nevada economy during a January 2010 hearing at the Legislature.
Friday, May 20, 2011 | 6:20 p.m.
Sun Archives
- State budget windfall could prevent School District layoffs
- $274 million in new revenue softens state budget cuts
- Economists predict static housing market this year
- Economic Forum has spoken; tough choices come next
- Business panel sets state spending at $5.3 billion
- John Restrepo: Economic recovery hinges on job growth
- How did so many experts get their forecasts so wrong?
Sun coverage
The economist who helps predict how much money state government can expect to fund its budget has declared personal bankruptcy, telling the Sun he didn't foresee his own financial meltdown.
John M. Restrepo, chairman of the five-member State Economic Forum, filed for bankruptcy protection in November, citing $905,000 in debt and $360,000 in assets.
In the wake of his filing, Restrepo had to complete an Internet course on personal financial management offered by a nonprofit consumer credit counseling agency.
Restrepo's bankruptcy, triggered by the collapse of his Las Vegas consulting business, symbolizes the depth of the recession in Southern Nevada, which has hit blue-collar and white-collar workers alike and has also struck the state's government and corporate elite.
"I guess like all of us, who could have predicted the depth of this recession?" Restrepo said Friday. "We knew there was (an economic) correction coming. I saved some money for a recession but not for the depth of this depression in Southern Nevada and the impact it had on our clients and our company. I tried to do the best I can to continue to pay off all of the smaller local vendors I can."
Despite his personal bankruptcy, Restrepo's company, Restrepo Consulting Group LLC, remains in operation and continues to produce economic forecasts and market studies for state and local governments as well as developers and casino operators. He said demand for consultants declined with the recession as his two main clients during his 22 years in Southern Nevada -- government and the development industry -- no longer needed his services.
"Our revenues were dramatically impacted because those firms haven't used us anymore because nothing's being developed, and the budget cuts of state and local governments have cut back dramatically on the use of consultants," Restrepo said.
He reported average monthly income of $3,505.88, according to the November court filing. His spouse, Elvira Gaensslen, lists her occupation for the past three years as a real estate agent. She reported average monthly income of $4,468.95 for a combined monthly total of $7,974.83 for the couple. They reported average monthly expenses of $8,007.57.
The couple walked away from their 2,522-square-foot home on Via Delores Avenue in Las Vegas, which they purchased for $399,900 in 2007, according to the Clark County Assessor's office. The current value of the couple's interest in the house was listed at $225,000 against a secured claim of $379,500 held by Bank of America, according to the bankruptcy filing.
Restrepo listed debts of $36,972.52 for an American Express business credit card; $27,864.21 for a Chase Visa business credit card; $24,277.55 to Chicago Title Agency, NV Inc. for office rent; $7,163.52 to Office Equipment Finance Services for a copier lease; $121,427.76 on a business loan from SMS Financial; and $225,000 on a note held by his ex-wife and business partner, Nancy Schult, who owned 49 percent of Restrepo Consulting. He is in the process of buying out her share of the company and continues to make spousal support payments.
Restrepo first realized about a year ago that he might have to file for bankruptcy. He tapped into his personal savings and retirement funds to pay employees, depleting both as he hoped the economy would rebound before he was forced to lay off employees. At the height of the economy he had as many as eight employees. Now he has one half-time employee in addition to paying multiple freelance consultants.
Individuals and businesses can file for Chapter 7 bankruptcy protection, as Restrepo did, which provides a fresh financial start for individuals, although not all debt is wiped off the books. Debt for certain taxes, fraudulently incurred credit card debt, child support and alimony and most student loans must still be repaid. The bankruptcy law that took effect in October 2005 limits Chapter 7 as an option for many Americans: those deemed by a "means test" to have at least $100 a month left over after paying certain debts and expenses will have to file a 5-year repayment plan under the more restrictive Chapter 13.
Nevada led the nation in personal bankruptcy filings with 10.8 per 1,000 people during the 12 months ended March 31, according to U.S. Bankruptcy Court figures. Georgia was second with 8.9 filings per every 1,000. Most business and nonbusiness bankruptcies in the 12 months ended March 31 were Chapter 7 liquidations, according to the court.
Terms of the bankruptcy resolution required Restrepo to undergo debt counseling, which he received from Consumer Credit Counseling Services of Southern Nevada, according to the court filing. In December, he received a certificate of debtor education for completing a Internet course on personal financial management offered by Consumer Credit Counseling Service of Nevada and Utah.
"In a really weird way (bankruptcy has) given me a deep appreciation of what many small businesses have gone through considering the depth and breadth of this recession," said Restrepo, noting that his company has not missed any payments to local vendors and subcontractors. "Understanding the struggles of these small businesses has helped me understand what it's going to take for these small businesses to recover. It's really related to small business job growth. That's all folded into my forecasting."
Sun researcher Rebecca Clifford-Cruz contributed to this report.
Priceless.
He likes to read the crystal ball for the state's economic conditions and not realize his own economic standing? I may be too conservative to say: plan for the worst ... you just never know!
Seems he's good at counting other peoples $$$,
but if he and expert R.E. wife didn't understand that in 2007, he was buying a $400,000 Pad that was
at the TOP of a free falling Market...
Wonder how many folks, he led down the PATH???
Wonder if in the future he'll represent himself as an EXPERT???
I recommend "Restrepo" the movie when this stuff gets old.
The plot is "A year with one platoon in the deadliest valley in Afghanistan". The movie was directed by Tim Hetherington and Sebastian Junger. Hetherington was recently killed in Libya fighting with the rebels (one hell of a Brit) and Junger wrote "The Perfect Storm". Both of these Directors lived the life of what they wrote and filmed - they are REAL STUFF.
And we are to trust his projections for the state, really?
He should have been a fireman, he would have made double his total income and had huge benefits-no recession in government.
Just another reason why it is good that the state legislature is NOT entirely made up of people from Clark County
Pretty funny, not surprising though.
Could it be that Restrepo's clients no longer want his services because he's a lousy economist who wrote uniformly bullish analyses, telling those clients what they wanted to hear, instead of the truth that they needed to hear?
A lot of those companies were probably caught flat-footed when the crisis hit, likely because Restrepo's invariably sunny predictions led them to that stance.
Most of these local "crystal ball" happy-talk types have yet to be correct about any prediction or trend. But that doesn't stop the local media from continuing to quote them, regardless of how discredited or compromised they are. Maybe this Restrepo episide will make the Sun look elsewhere for "expert" economic analysis, though I doubt it will.
Restrepo is just another pumper who thinks that if you keep lying and telling people the economy is in recovery, it might trigger an actual recovery. Because his livelihood depends on it, his default position is to be rah-rah about the local economy. He's no different from Sunshine and Lollipops Reza, only with a fancy title.
Of course, they're too dumb to figure out that the loss of easy real estate equity withdrawals and massive consumer credit contraction (12-percent unemployment, too) have made anything resembling "recovery" impossible. That's the easiest prediction to make, and these clowns can't even get that right.
Why is it that we can't understand that this is a capitalist - darwinian economy where only a few survive? More over why do we continue to believe in it?
@Judgesmales hit the nail on the head. How many times did Bernancke tell us at the beginning of this collapse that hiring would come back strong towards the end of 2009!!!
These guys are all the same, throw enough predictions out there and eventually one will be right. I said it from the beginning, companies that have survived and are now posting record profits thru massive layoffs and restructuring (getting employees to give up benefits and work more hours in the hope of "saving their jobs") will look for other means to grow revenue and profits. It is NOT going to be done thru massive hiring of laid off workers.
Restrepo most likely saw the writing on the wall with his own finances and was doing loans, balance transfers, credit card loans, etc. to stave off what he knew was going to happen eventually. Bankruptcy. If his wife was a realtor during the heyday of sales she probably could have been making 200k/year even if she was incompetent. Where did all that money go?
People don't know how to save, don't know the meaning of a piggy bank and see income as something to be spent, not saved.
drlee almost gets it right. However, more than a few survive. It's the indolent parasite that has to go, hat-in-hand, to some government bureaucrat for his/her survival. Most Americans are not part of the "parasitic class" that believe they are "owed a living" and they not only "survive, they flourish under the worst economic system ever devised by man. That is, until you consider all the rest!
golden
ive often felt that folks who cant balance their own budget shouldnt be entrusted to balance someone elses and that goes all the way down the line even to say a restaurant or drug store manager.
As a natural resource analyst professional, I learned long ago not to predict anything that might occur within my lifetime. This guy and his colleagues screwed up by agreeing to participate in a thankless exercise that is fraught with assumptions and lack of real data. What a stupid way to run a State!
Finance is just numbers on a piece of paper, like a birth certificate, think about it.
*Dunks a Teabag in hot water*
It's stunning to see the judgemental comments about this man from people who really have no data on his political party, past economic evaluations, etc. And our economic issues in the state and the country can certainly not be attributed to any advice that Restrepo might have given his clients. There are many astute businesspeople who never saw the depth of this downturn coming and are in the same financial situation. However, they have not been splashed into a feature in the Sun, so you don't know that. If you're going to judge an individual on a public forum, please know the facts.
In 1999, he was appointed by Gov. Kenny Guinn to chair the task force on long-term financial analysis & planning.
Guinn and longterm financial planning - Oxymoron!
Good reporting Sun. Time to outlaw credit cards, require 30% down for home purchases and stop bailing out banks and Wall Street crooks.
Why in the world does the main stream media hold up guys like Restrepo and Jeremy Aguero as some kind of economic genius? They shake down local governments for outrageous fees to make biased and faulty economic claims.
These consultants should be required to disclose their fees associated with each of the reports they produce.
Consultants are usually the guys who are unemployable. They call themselves experts and sell their unbised opinions. Waste, Fraud, Abuse!
@just facts
We DO know some facts. He ran up $50,000 in credit card bills is #1. Bad move.
#2 it looks like he bought a home with little money down. Bad move.
#3 it looks like after his divorce he did not dissolve his partnership with his ex-wife. Bad move.
Just the fact that his debt is 3 times his net worth shows poor planning, execution and an inability to see he was heading for a fall. Even if the economy rebounded it was doubtful he could overcome the debt ratio.
So, while every nuance of his situation is not known there are some basic facts which indicate this individual is just as bad as people who know little about the do's and dont's of financial management. Mr. Restrepo should have known better with his background to get himself in such a huge hole.
I may be reading the value of the home wrong. It sounds like Bank of America has a loan out for 379k but the Restrepos interest is 225k? Either they put down a larger downpayment and then used the house as an ATM or something doesn't sound right. If they did use the home equity as a piggy bank, then mistake #4 on his part. A home is not an ATM. If you need cash, sell the home, buy something cheaper and use the REALIZED cash to do what you wish. It sounds like Mr. Restrepo was breaking sound financial guidelines left and right. He should have known better. The look on his face in the picture is priceless
@TomD1228 - yes, those are the facts mentioned in the piece. However, you'll note that I was referring to smarky commnts about his political affilitions, and off the wall comments about his misleading "rosy" predictions leading to a loss of clients, as well as the income of his wife. I was not commenting on his personal financial challenges. I am commenting on the snide references that are armchair speculation without substance. However, I will maintain that this has been a prolonged economic downturn in Las Vegas that was nearly impossible to predict, and is unprecedented, and there are many astute people in the same situation within Restrepo's primary industry. It's unfortunate that as a culture, we revel in someone's failures.
I understand your point about snarky comments and I agree. No place for it. I agree there were certain things that occurred that were beyond anyones foresight. But, his piling up huge debt in credit cards and what looks like using his home as an ATM machine goes beyond "impossible to predict" downturn. That was just flat out poor fiscal management. He knows better.
@ TomD1228 Fair enough. I appreciate your logical argument. Thank you for bringing some civility to the comment thread.
Gee his current wife has a real income from real estate sales in this economy. PLAY THE CARDS YOU'RE DEALT. And many of us aren't dealt much to hold right now. So sour an economy that bright people with degrees (to be an economist) can't make a comfortable living and maintain a reasonable life style. Government CANNOT EXPECT TAX REVENUE TO REBOUND QUICKLY--it's gonna take a lot of time and may never come back to historical levels. SO CUT SPENDING, CUT GOVERNMENT SPENDING.
As an alternative to the Economic Forum, the State should plan a budget based on flat revenue? That would mean more extensive cuts.