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- 1) Portugal Faces Rating Cut, Spanish Debt Costs Rise (See also the link above in the DD News)
"LISBON/MADRID (Reuters) - Portugal was put on notice on Tuesday that its credit rating could be cut and fellow euro zone debtor Spain had to pay more to issue new debt, suggesting the currency bloc's crisis will rage unabated in 2011.
China, the world's new economic powerhouse, urged European policymakers to demonstrate as a matter of urgency that they can contain the euro zone's debt problems and pull the bloc around.
Ratings agency Moody's said it may cut Portugal's credit rating by one or two notches within three months, citing weak growth prospects as the government seeks to cut its debt, and climbing borrowing costs, although it said its solvency was not in question.
"The likely deterioration in debt affordability over the medium term and ongoing concerns about the economy's ability to withstand fiscal consolidation ... mean its outlook may no longer be consistent with an A1 rating," said Anthony Thomas, Moody's lead analyst for Portugal.
The cost of insuring Portuguese sovereign debt against default rose in response and the euro slipped."
- 2) Pimco says 'untenable' policies will lead to eurozone break-up (Ambrose Evans-Pritchard)
"Andrew Bosomworth, head of Pimco's portfolio management in Europe, said current policies are untenable in the absence of fiscal union and will lead to a break-up of the euro.
"Greece, Ireland and Portugal cannot get back on their feet without either their own currency or large transfer payments," he told German newspaper Die Welt.
He said these countries could rejoin EMU "after an appropriate debt restructuring", adding that devaluation would let them export their way back to health.
Mr Bosomworth said EU leaders were too quick to congratulate themselves on saving the euro last week with a deal for a permanent bail-out fund from 2013.
"The euro crisis is not over by a long shot. Market tensions will continue into 2011. The mechanism comes far too late," he said. "
"Spain sold 3.88 billion euros ($5.1 billion) of three- and six-month Treasury bills, near the maximum target, even as borrowing costs rose amid lingering concern the nation will struggle to fund its deficit.
The Treasury auctioned 3 billion euros of 84-day bills at an average yield of 1.804 percent, the Bank of Spain said today in Madrid. That compares with 1.743 percent the last time the securities were issued on Nov. 23. The government also sold 876.7 million euros of 175-day debt at 2.597 percent, up from 2.111 percent last month. It aimed to sell a maximum of 4 billion euros from the two sales. "
"NEW YORK (AP) — New York's incoming governor, Democrat Andrew Cuomo, says he won't raise taxes even though he will inherit a budget deficit of at least $9 billion when he takes office in January. Ohio Republican Gov.-elect John Kasich is promising to cut taxes, despite a shortfall of about $8 billion.
And in California, incoming Democratic Gov. Jerry Brown — who ardently pursued innovative clean energy and environmental protection programs during his first stint in office, in the revenue-rich 1970s and '80s — will have to figure out this time how to close a budget gap projected at more than $25 billion.
Twenty-six states elected new governors last month — 17 Republicans, eight Democrats and one independent — and now they are going to have to reconcile their principles and campaign promises with some harsh fiscal realities: This is the worst budget climate for the states in at least a generation.
Cumulatively, the states face budget shortfalls of nearly $140 billion next year, according to the Center on Budget and Policy Priorities, a Washington think tank. To make matters worse, billions in aid to states from the federal government's $800 billion stimulus plan is set to dry up early next year."
"Dec. 21 (Bloomberg) -- Corporate bond sales froze yesterday after investors withdrew the largest dollar amount on record from investment-grade U.S. bond mutual funds last week.
The outflows were $2.5 billion in the week ending Dec. 15 amid rising Treasury yields, according to a Bank of America Merrill Lynch report citing data from research firm EPFR Global. High-yield mutual funds had $222 million of inflows, following $533 million in the earlier period, according to the report."
"Dec. 21 (Bloomberg) -- The pound fell versus the euro and dollar after the nation’s November budget deficit swelled to a record, exceeding economists’ forecasts.
Sterling weakened against 15 of its 16 most-actively traded peers as a survey showed British consumer confidence stayed at a four-month low. Net government borrowing rose to 22.8 billion pounds ($35.4 billion), up from 16.7 billion pounds a year earlier, the Office for National Statistics said. The median of 12 forecasts in a Bloomberg survey was 16.8 billion pounds.
The fact that borrowing costs have surged does highlight the tough task that the coalition government actually has,” said Simon Derrick, chief currency strategist at Bank of New York Mellon Corp. in London."
- 7) 'Painful' Cuts Needed to Balance State Budget (Maryland)
"As federal stimulus funds dry up and Maryland faces another $1.6 billion structural deficit, tough cuts to the state budget are on the horizon, Gov. Martin O'Malley told Patch.
O'Malley said the budget he will propose next month will be painful and many services will likely be impacted. While the projected gap between expected revenue and fiscal responsibilities mirrors that of the previous three years, there are no federal funds expected to arrive to bail out the state."
"FLINT, Mich. -- The Flint Police Department is closed on the weekends following the latest round of officer layoffs.
The Flint Journal reported new office hours took effect Saturday, the day after 20 police officers were laid off.
For the first time in decades, the department's doors will remain closed to the public on Saturdays and Sundays.
A sign on the door posts a phone number for the public to call if they must speak to a desk officer.
The department that historically has been open 24 hours a day already reduced daily office hours to 8 a.m. to 6 p.m.
Flint Mayor Dayne Walling laid off a total of 66 police officers this year to cope with a multi-million-dollar deficit. The city also made other cuts.
The layoffs bring Flint’s road patrol down to a total of 67 officers, with a total of 122 officers left on the department's payroll. In 1987, Flint had more than 300 officers.
TV5 was told the pink slipped officers were chosen based on seniority.
In March of this year, the city cut 46 officers in an effort to curb the city’s multimillion-dollar deficit.
Many residents fear the layoffs couldn't have been handed out at a worst time, as Flint recently record its record-setting 63rd homicide in 2010. The previous record was set in 1986, with 61 deaths. "
- 9) Police Union Files Complaint & Grievance (Cincinnati)
"Budget Committee Chair Roxanne Qualls says she hopes a budget will be passed tomorrow ... one that reduces, but cannot avoid layoffs, because of the size of the deficit ... 56-million dollars. About one hundred cops, one hundred firefighters, and one hundred other city workers are slated for layoffs unless things change. And police layoff notices are going out already.
The Sheriff's Department plan, from Council Members Qualls and Berding, would have the city layoff all 800 police patrol officers. The Sheriff's Department, which pays less, would hire them back, and the savings would be used to prevent fire layoffs."
"The use of food stamps has increased dramatically in the U.S., as the federal government ramps up basic assistance to meet the demands of an increasingly desperate population.
The number of food stamp recipients increased 16% over last year. This means that 14% of the population is now living on food stamps. That's about 43 million people, or about one out of every seven Americans.
In some states, like Tennessee, Mississippi, New Mexico and Oregon, one in five people are receiving food stamps. Washington, D.C. leads the nation, with 21.5% of the population on food stamps."
- Other news, headlines and opinion:
Treasuries Fail to Recoup Loss as Commodities Signal Inflation
China's Gas Imports More Than Double on Rising Demand for Winter Heating
India's 10-Year Bonds Rise on Central Bank's Debt-Purchase Plan
Ukraine gross foreign debt rose $6.9 billion in Q3, according to NBU
Detroit Water and Sewer Revenue Bonds Are Downgraded by Moody's
Alberta premier backs off on goal of balanced budget
Costa Rican fiscal deficit 5.3% of GDP in 2010
Homeowners use 'show me the note' to fight foreclosure
Banks Use Swaps to Exploit Woes of US States, Cities, WSJ Says
Credit default risk of Germany reaches new high
S&P Cuts $5.46B In CDOs Backed by Subprime Mortgages
Gov. Jan Brewer asks for Congress' help on Medicaid (Arizona)
Abercrombie plans to ask for emergency funds to cover $71.6 million shortfall (Hawaii)
Allied Irish Banks moves £7.9bn property loans to country's 'bad bank'
Moody's warns it could downgrade Spain banks
$2tn debt crisis threatens to bring down 100 US cities (Refers to the 60 Minutes video)
Lansing Projects $15 million Deficit
Fed extends dollar swap arrangements
Scottish Investors Say No to Spanish Bonds Even at 5.5% Yield: Euro Credit
China Car Market to Extend Gains Over U.S., Automakers Say
Rein in deficits or risk EU-style crisis, Jim Flaherty warns provinces (Canada)
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