• 1) US to Keep Note Auction Sizes Unchanged on Deficit Concern, Dealers Say

"The Treasury will sell $99 billion of two-, five- and seven-year notes next week for a third straight month amid prospects for a rising budget deficit, according to the Federal Reserve’s primary dealers.

The U.S. had scaled back auction sizes after earlier expanding debt sales to finance annual budget deficits exceeding $1 trillion. It sold $118 billion in two-, five- and seven-year debt at each of six monthly sales of the three maturities from November 2009 through April. The $858 billion bill President Barack Obama signed Dec. 17 extending tax cuts for two years spurred speculation federal borrowing will need to increase.

“The Treasury had been cutting issue sizes, but there is no room to cut further given that the budget will be higher than it would have been a few months ago before the tax legislation,” said Suvrat Prakash, an interest-rate strategist in New York at BNP Paribas SA, which as a primary dealer is required to bid at Treasury auctions. “It’s going to be very hard for them to cut amounts any time soon.” "

• 2) Alabama Town's Failed Pension Is a Warning

"PRICHARD, Ala. — This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.

Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.

Since then, Nettie Banks, 68, a retired Prichard police and fire dispatcher, has filed for bankruptcy. Alfred Arnold, a 66-year-old retired fire captain, has gone back to work as a shopping mall security guard to try to keep his house. Eddie Ragland, 59, a retired police captain, accepted help from colleagues, bake sales and collection jars after he was shot by a robber, leaving him badly wounded and unable to get to his new job as a police officer at the regional airport.

Far worse was the retired fire marshal who died in June. Like many of the others, he was too young to collect Social Security. “When they found him, he had no electricity and no running water in his house,” said David Anders, 58, a retired district fire chief. “He was a proud enough man that he wouldn’t accept help.”

The situation in Prichard is extremely unusual — the city has sought bankruptcy protection twice — but it proves that the unthinkable can, in fact, sometimes happen."

• 3) Schwarzenegger Leaves California's Brown Burdened With Bonds

"Dec. 16 (Bloomberg) -- Arnold Schwarzenegger swore after his first month as California governor that he'd rip up the state's credit cards. Instead, the Republican former action- movie hero pushed through at least $52 billion of borrowing.

Debt of the world's eighth-largest economy almost tripled in Schwarzenegger's seven years, to $91 billion on June 30 from $34 billion in 2003, state Treasury figures show. Californians owed $2,362 per person last year, up from $977 before he went to work. Under Schwarzenegger, the state's workforce grew 9.9 percent to 348,213, according to his finance office.

When Democrat Jerry Brown takes over the biggest U.S. municipal borrower on Jan. 3, he'll inherit interest and principal payments that consume 7.1 percent of general-fund spending, twice what greeted Schwarzenegger. That will rise to 10 percent in 2012, leaving less for services and to tackle a budget deficit that may reach $28 billion in 18 months."

• 4) City, county debate pension problems (Cincinnati)

"Even as Cincinnati City Council grappled with plans to erase a $54 million budget deficit, two meetings Wednesday at the opposite end of Downtown began shaping the next major financial challenge - one involving sums with considerably more zeroes - that will confront council in 2011.

Both meetings - one at the Hamilton County Courthouse, the other at City Hall - dealt with the financially troubled Cincinnati Retirement System, and the outcomes in each will have much to say about how, even whether, the city can dig out of a projected $1 billion-plus long-term pension hole."

"With retirees' basic pensions protected by law, City Hall views spiraling health costs as the one major existing expense that could be trimmed to help stabilize the $2 billion city pension fund, which experts warn could become insolvent within 20 years unless major changes are made."

• 5) Philadelphia Schools Facing Big Budget Shortfall

"Philadelphia School District officials are staring down a gap of $430 million or more in next year's budget, and the deficit could surpass the half-billion mark under worst-case scenarios, according to officials briefed on the district's finances. "

• Other news, headlines and opinion:

Text: Fitch Downgrades Hungary to BBB-; Outlook Negative

New Jersey to Issue $2 Billion of Debt to Terminate Interest-Rate Swaps

Debt Struggles Set to Deepen for Peripheral Europe: Euro Credit

Unemployment sets record in Washington and State's jobless benefit tallies set record in 2010

Senate Approves $725 Billion Defense Spending Bill

`Grotesque' Basel Rules May Kill Danish Bonds

Asia's baby shortage sets demographic timebomb ticking

Dubai May Sell More Assets as $20 Billion in Debt Comes Due in Next Year

Ireland Takes Control of Allied Irish, Fourth Bank in Two Years

Economists See Slower Housing Recovery

16 U.S. Cities That Could Face Bankruptcy in 2011

Fitch cuts Portugal rating one notch to A-plus‎

..............................Since there are no markets tomorrow I'll be back on Monday. Merry Christmas, Happy Holidays....

Mike,

The John Pilger doco I posted above has an interview with Julian Assange well worth watching it for. To give a line in on that, this offering from Amy Goodman at Democracy Now deserves to go viral on the net, in itself : -

~ VF ~

• 1) Fed Assets Rise to Record $2.43 Trillion on Bond Purchases

"The Federal Reserve’s total assets grew $42.2 billion to a record $2.43 trillion as the central bank increased its holdings of Treasury securities faster than its holdings of housing debt declined.

Treasuries held by the Fed increased by $39.7 billion to $1 trillion as of Dec. 22, according to a weekly release by the central bank today. The Fed’s holdings of mortgage-backed securities fell by $445 million to $1 trillion and federal agency debt securities fell by $424 million to $147.5 billion.

The Fed has bought $155.7 billion in Treasuries on its way to purchasing $600 billion in government debt through June 2011. The Fed is also reinvesting the proceeds of its maturing mortgage holdings. The second round of unconventional monetary easing is aimed at spurring economic growth and preventing inflation from falling too low. "

• 2) N.J.'s unfunded pension liability grew 18 percent in a year

"New Jersey's unfunded pension liability, or the gap between what public employees are owed and the assets available to pay them, grew from $45.8 billion to $53.9 billion over the last year, an increase of 18 percent.

Taken together, the seven pension funds that cover teachers, police officers, firefighters, judges, and other government employees had 62 percent of the funds required to pay promised benefits in the long run, down from 66 percent the year before. Pension experts recommend maintaining funding levels of at least 80 percent."

• 3) Ohio's budget shortfall could be as high as $10 billion, lawmaker says

"COLUMBUS, Ohio — Ohio's looming budget hole could be even larger than expected – possibly reaching $10 billion or more, a key lawmaker warned Thursday.

Incoming Senate Finance Chairman Sen. Chris Widener said in an interview that he was hesitant to put a hard number on the budget problem that the Republican-controlled legislature and GOP Governor-elect John Kasich will face next year. But Widener, a Springfield Republican, said it probably goes beyond the $8.4 billion that Senate Republicans had estimated.

That estimate represents the amount of one-time money -- such as federal stimulus dollars -- used to balance the current two-year state budget of $50.5 billion. Lawmakers can't count on that money being there next time around."

• 4) China MOF Fails To Sell All 3-Month Bills In Auction

"SHANGHAI (Dow Jones)--China's Ministry of Finance failed to attract enough bids to sell all of the three-month bills it planned to sell in an auction Friday, as a liquidity squeeze hurt investor demand for new debt offerings.

The lackluster demand for the bill sale comes as China's short-term money market rates have been rising recently after the central bank raised banks' reserve requirement ratio three times since November and amid a seasonal year-end increase in demand for cash from companies and individuals.

The weighted average interbank seven-day repurchase rate, a benchmark gauge of short-term liquidity, rose to 6.25% Friday from 5.71% Thursday, compared with a rate of about 3.60% a week earlier.

The ministry said in a statement it sold CNY16.76 billion ($2.53 billion) worth of three-month bills at 3.6769%, short of the CNY20 billion worth it planned to sell.

Friday's was the second uncovered government debt auction within a month to attract insufficient demand, after the ministry sold just 58% of the planned CNY20 billion worth of three-month bills on Nov. 26. "

• 5)  Muni Mutual Funds See $2.9B Outflows Latest Week - Lipper

"NEW YORK (Dow Jones)--Weekly reporting municipal bond mutual funds lost $2.9 billion in the week ended Wednesday, Thomson Reuters unit Lipper FMI said Thursday.

The loss comes on the heels of a $2.7 billion outflow in the week ended Dec. 15. It marks the sixth straight week of declines which total $12 billion.

Mutual fund numbers are looked at as a key gauge of demand, particularly for individual investors, in the muni bond market.

The four-week moving average -- a more meaningful number because of the longer time span it measures -- was an outflow of $1.7 billion atop a loss of $1.5 billion in the previous four-week period."

.................OK, now my computer gets shut off until Monday.

Speaking of health insurance premiums, my Medicare premium just jumped from $91.00 per month to $184.50.

So much for the idea of limiting to a 10% increase. 

On the other hand, while I don't like paying more for Medicare, we are all going to have to chip in if the program is to continue given the increasing cost of healthcare. If you make more than $428K annually, the rate jumps to $253/month, so the stage is set to charge those with higher incomes something closer to the real cost.

Looks like my wife and I are headed for those $1,000 + per month premiums again before too long -- and here I thought my "Golden Years" we looked after. Retirement seemed like a good idea, but I'd better keep earning as long as I can

Jim

Paul ... what debu said, X 10 Pilger has always been REAL

BTW, I hear that He's at it again