Daily Digest

Daily Digest 11/17 - California Defaults on Debt, Act Fast on Medicare, Rare Earth Supply Squeeze

Wednesday, November 17, 2010, 12:00 PM
  • California Will Default On Its Debt, Says Chris Whalen
  • Bush-era tax Deal Could Include Jobless Benefits
  • Scottsdale Sees 155% Increase in Pension Costs in 5 Years
  • Irish Crisis, Contagion Fears Loom over EU Meeting
  • Tax-Exempts Tumble as California Sells $10 Billion: Muni Credit
  • China Plans Price Controls to Tackle Food Inflation
  • Geithner says Confident Euro can Survive
  • Ireland Crisis Could Cause EU Collapse, Warns President
  • As Hunger Persists in America, Food Security Might be Harder to Achieve
  • Doctors: Congress should Act Fast on Medicare Pay
  • Medicaid Asking for More Money for this Year and Next
  • Ky. gov looks to Private Sector to Manage Medicaid
  • Mississippi Governor Spreads the Pain in Proposed Budget Cuts
  • Loss of Stimulus Cash to Hurt State
  • States left without Easy Answers on Medicaid
  • Auto Industry Fears Rare Earth Supply Squeeze
  • Rare-earth Crisis Sparks Quest for Alternative Motors

Help your finances weather a tumultuous economy by reading our 'What Should I Do?' guide.





Economy

California Will Default On Its Debt, Says Chris Whalen (Tech Ticker Video)


Municipal bonds have plummeted in recent days, as investors have suddenly focused on huge state and city budget deficits that there's no easy way to fix.
Nowhere has this collapse been more visible than California, which faces a massive $25 billion shortfall and red ink for as far as the eye can see.

Bush-era tax deal Could Include Jobless Benefits

A deal on a temporary extension of the Bush-era tax rates could emerge that would also renew unemployment benefits for 2 million Americans about to lose them, top lawmakers said on Tuesday.....Jobless benefits for 800,000 Americans will expire on Nov. 30 if Congress fails to act. Two million in total would lose benefits by the end of December.


Scottsdale Sees 155% Increase in Pension Costs in 5 Years


Scottsdale officials attributed the surge to rising contribution rates that the city has no control over.
In addition, public records obtained by the Republic show nine retired city employees are receiving annual pension benefits greater than $100,000.Topping the list is former Assistant City Manager Neal Shearer, whose annual benefit of $158,294 ranks 13th on the list of about 92,000 retirees receiving pension benefits from the Arizona State Retirement System.


Irish Crisis, Contagion Fears Loom over EU Meeting


European nations are worried that the tension over Ireland's stability is making borrowing more expensive for countries like Portugal and Spain, threatening to push them to the brink of default, as happened with Greece. Containing contagion -- a market panic that jumps from one weak country to the next -- is the priority. Behind Ireland stands Portugal, one of the eurozone's smaller member with 1.8 percent of its economy but one that is considered by some to have done less than the Irish to bring debt and deficits back under control. Next comes Spain, with a proportionally smaller debt burden but a dead-in-the-water economy that is so big -- 11.7 percent of eurozone output -- that it could present a much larger challenge if it needs help.

Tax-Exempts Tumble as California Sells $10 Billion: Muni Credit


States and local governments plan to offer about $26.3 billion in debt during the next 30 days, according to the Bloomberg visible supply index, the most since February 2005. "We're going to need a bigger boat," Tony Shields, a principal in the public-finance department at Williams Capital Group in New York, said in an e-mail. "New supply is close to unmanageable."


China Plans Price Controls to Tackle Food Inflation


China will unveil food price controls and crack down on speculation in agricultural commodities to contain inflationary pressure that its central bank governor highlighted as a risk on Tuesday.
With consumer prices rising at their fastest pace in more than two years, the National Development and Reform Commission, the country’s top planning agency, is preparing a “one-two punch” of actions to rein in food costs, official media reported.


Geithner says Confident Euro can Survive

Amid a crisis over Greece's debt problems the EU had agreed, along with the International Monetary Fund, a painful 110-billion-euro bailout -- a fate that could now befall Ireland or other indebted EU nations.
Ireland's public deficit this year is set to pass 30 percent of GDP, 10 times the permitted EU limit and double last year's Greek deficit.


Ireland Crisis Could Cause EU Collapse, Warns President

Herman Van Rompuy, president of the EU, has warned it faces a 'survival crisis', with the risk of contagion spreading from Ireland across the continent


About 15% of U.S. households, 17.4 million families, lacked enough money to feed themselves at one point last year; in California just over 14% of households suffered from “food insecurity” at one point during 2009....stimulus money went to prop up food stamps last year and that extra funding is petering out; and budget cuts, both at the federal and state levels, threaten all kinds of nutritional sustenance programs. Even as the economy gets a little better might more Americans be going hungry?


Doctors: Congress should Act Fast on Medicare Pay

If Congress fails to act before the Dec. 1 deadline, the Medicare reimbursement rate for physicians will be cut by 23%, with further cuts slated in later years. Timing on legislative action is unclear as members use the start of the session to sort out priorities. Senate aides on both sides of the aisle tell CNN they expect action on the issue, but are unsure how long any fix would last. 


Medicaid Asking for More Money for this Year and Next (Idaho)


Steady increased demand and a sharp decrease in federal funding are contributing to a more than $200 million shortfall in funding for Idaho’s Medicaid program during the next two years. Idaho could be looking at drastic cuts in health services to balance its Medicaid budget, according to the Department of Health and Welfare (DHW). Medicaid is facing a projected $42.3 million shortfall for the current budget year, which ends in June, and a $171.6 million shortfall for the next budget year.

Ky. gov looks to Private Sector to Manage Medicaid

Beshear told reporters at a Capitol news conference that contracting with private managed-care organizations could help plug a $100 million deficit in the Medicaid program and prevent cuts to medical services that other states have implemented.


Mississippi Governor Spreads the Pain in Proposed Budget Cuts


Entering his last year in office and mulling a run for president, Gov. Haley Barbour proposed to shore up a $700 million deficit with controversial budget-cutting initiatives, such as rolling back Medicaid reimbursement rates and freezing annual pay raises for K-12 teachers.


Loss of Stimulus Cash to Hurt State (New York)


Megna noted that when it ends, New York will be on track to spend an additional $4 billion in Medicaid and $1 billion in education expenses. Medicaid may be the hardest area in which to control spending because it's so closely tied to the ongoing economic slump. As more New Yorkers lost their jobs or became impoverished during the recession, the Medicaid rolls mushroomed: By the end of the year, analysts expect almost 5 million New Yorkers -- nearly a quarter of the state's population -- will be on Medicaid.

States left without Easy Answers on Medicaid(Watchdog)


Facing steep budget shortfalls and growing Medicaid rolls, some states probably must seek federal relief to lower eligibility thresholds, leaving millions without coverage.Medicaid is the means-tested health care program jointly funded by the federal and state governments. The program, which accounts for between 20 and 25 percent of most state budgets and serves more than 50 million people, saw enrollment hit record highs in 2010 while most government programs and services experienced reductions in the wake of the recession.The program is expected to increase 5.4 percent next year, marking a 20 percent increase the last three years, according to a recent study by the National Association of State Budget Officers.“Medicaid rolls are increasing because people have lost their jobs and become eligible for assistance,” said January Angeles, Senior Policy Analyst at the Center on Budget and Policy Priorities.

Energy

Auto Industry Fears Rare Earth Supply Squeeze

Car industry experts foresee problems if exports of rare earth metals from China needed for car production are threatened, they told the Reuters Global Autos Summit, as data showed 2010 Chinese imports could dry up.
Rare earth metals like neodymium are used in the powerful magnets in electric motors for cars. China produces 97 percent of the world's rare earth metals, which are also used in the production of other high-tech and defense products.
Rare earth mineral exports from China could dry up for the rest of the year, according to data cited by China's Ministry of Commerce on Tuesday.


Rare-earth Crisis Sparks Quest for Alternative Motors


Japanese motor manufacturers are scrambling for motor technologies that do not need rare earth metals, following a crisis in which China, which produces 95–97% of the world’s rare earths, cut off supplies to Japan and limited supplies to other countries. The materials (shown below)  – which include neodymium, dysprosium and yttrium – are needed for a wide range of applications, from electric vehicles and wind turbines, to computer hard drives and mobile phones.

Article suggestions for the Daily Digest can be sent to dd@PeakProsperity.com. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

10 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 2468
Re: Daily Digest 11/17 - California Defaults on Debt, Act ...

"NEW YORK (CNNMoney.com) -- Unemployed Americans have collected $319 billion in jobless benefits over the past three years due to the federal government's unprecedented response to the Great Recession, according to a CNNMoney analysis of federal records.

The cost of such benefits will be central to the heated debate in Congress in coming weeks over whether to extend this safety net for the fifth time this year. Lawmakers must act by Nov. 30 or two million people will start losing extended benefits next month."

chart_unvemployment_benefits_paid2.top.gif

"Nov. 17 (Bloomberg) -- Portugal’s borrowing costs increased at an auction of 750 million euros ($1.01 billion) of 12-month bills.

The securities due Nov. 18, 2011, were issued at an average yield of 4.813 percent, the country’s debt management agency said. That compares with an average yield of 3.26 percent at a previous auction of 12-month bills on Nov. 3. The auction attracted bids for 1.8 times the amount offered, compared with a bid-to-cover ratio of 2.2 in the Nov. 3 sale."

"Prices of wheat and other staples have risen "alarmingly" over the past year, a UN report said today, acknowledging fears of a repeat of the 2008 food crisis when a spike in the price of bread led to deadly riots in some countries.

Further increases were likely unless production of major food crops increases significantly in 2011, the Rome-based Food and Agriculture Organisation said, warning that international food import bills could pass the $1 trillion mark in 2010."

"With the pressure on world prices of most commodities not abating, the international community must remain vigilant against further supply shocks in 2011 and be prepared," the agency said in its Food Outlook.

Still, it said that supplies of staple food crops were more ample now, lessening the risk of a similar crisis. But it cautioned that "world prices have risen alarmingly and at a much faster pace than in 2007-2008".

"Global production of crude probably peaked in 2006, and increasing demand will have to be met from more-difficult-to-extract forms of oil such as tar sands, International Energy Agency Chief Economist Fatih Birol said.

“The age of cheap oil is over,” Birol said at a conference in Madrid today.

Global energy use is set to increase by 36 percent over the next 25 years as developing countries raise the standard of living of their citizens by boosting demand for transport, air- conditioning and electronic goods, the IEA estimates.

China, which is forecast to overtake the U.S. as the world’s biggest user of electricity in 2012, will see its energy use rise by 75 percent, the IEA says.

The depletion of crude reserves may benefit countries such as Canada and Venezuela, which have tar sands that yield oil. Those resources are more expensive to extract and only become economical when the price of oil rises.

The use of oil and coal probably will wane in rich countries as they invest in renewable energies and shift to electric vehicles, Birol said. Even so, China will be the world’s biggest market for clean power, nuclear power and electric cars by 2035. "

  • Other news, headlines and opinion:

Spain to Pay More for Bonds Amid Irish Contagion: Euro Credit

Polish Debt Costs May Climb to 5-Month High at Auction on Europe Debt Ills

Euro Trades Near 7-Week Low on Concern Irish Crisis May Spread

Ireland Leads Jump in Sovereign Debt Risk, Default Swaps Show

Ireland to work with EU/IMF mission on crisis steps

Gold Demand Worldwide Climbs 12% in Third Quarter Fueled by Indian Buying

China May Gradually Increase Gold Reserve Holdings, Paper Says

S Korea Won Down At 7-Week Low Late On Suspected BOK Intervention

Bernanke's 'Cheap Money' Spurs Corporate Investment Outside U.S.

Investor demand for new California debt weakens as muni bond sell-off continues

Fed Will Complete $600 Billion Bond Plan, Three District Bank Chiefs Say

Hamtramck seeks Michigan bankruptcy guidance

Downtown buildings' owner misses loan's $154M balloon payment (Seattle)

An American in Paris: Reflections on the Dollar (McAlvany audio....good info....at 27 minutes they mention that next week they will be talking with Ambrose Evans Pritchard)

Greek rescue frays as Irish crisis drags on (Ambrose Evans Pritchard)

US Voters Prefer Job Creation Over Deficit Cuts, Poll Shows

Maine GOP Bracing for a “Fiscal Tsunami”

Municipal Bonds headlines

Battle With Bondholders Looms After G-20 Agrees on Basel Rules

FHA's Year-End Report Shows Cash Reserves Remain Below Legal Limit

George Soros says conditions "pretty perfect" for gold

Politicians helped bring Chicago's public pension funds to the brink of insolvency

Despite new law, pension costs will still skyrocket

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest 11/17 - California Defaults on Debt, Act ...

rmurfster's picture
rmurfster
Status: Bronze Member (Offline)
Joined: Apr 17 2008
Posts: 82
Re: Daily Digest 11/17 - California Defaults on Debt, Act ...

Thanks for the videos!

My respect for Mr. Schiff just went up.  He was certainly in hostile territory and stood his ground very well.

idoctor wrote:

Peter schiff at Kilkenomics Kilkenny (Ireland) (Nov-2010)(1-4)(FINANCE & ECONOMICS series)

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 369
Re: Daily Digest 11/17 - California Defaults on Debt, Act ...
this might be the missing link from the digest: As hunger persists in America, food security might be harder to achieve
idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest 11/17 - California Defaults on Debt, Act ...

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 369
idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest 11/17 - California Defaults on Debt, Act ...

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 369
Re: Daily Digest 11/17 - California Defaults on Debt, Act ...
passing on at the request of a friend....
Food Tyranny Bill: Imminent Cloture Vote - The Senate’s Food Tyranny bill, S.510, which I wrote about recently in a two-part post (part 1 and part 2), and in several earlier posts, is slated to get a cloture vote this week. (Any remotely decent piece of legislation, these vile Democrats can’t do it. But for this, Reid will rouse himself to seek cloture.) While I don’t normally have any confidence in the sign a petition/ call your senator thing, the fact is that this isn’t the banks we’re dealing with, and public pressure could possibly make a difference. So here’s the Farm-to-Consumer petition page, and here’s the Congressional site. For the rest, I’ll excerpt from the Food Freedom alert...
Update 11/17/10: Cloture passed 75-25. Call Senators to VOTE "NO" on S.510
Denny Johnson's picture
Denny Johnson
Status: Gold Member (Offline)
Joined: Aug 13 2008
Posts: 322
Re: Daily Digest 11/17 - California Defaults on Debt, Act ...

Pierre Lassonde on King World News, Nov 17

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/11/17_...

crazyhorse's picture
crazyhorse
Status: Bronze Member (Offline)
Joined: Nov 16 2008
Posts: 56
Re: Daily Digest 11/17 - California Defaults on Debt, Act ...

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments