Daily Digest 3/14 - DOT Looking To Borrow, More Austerity Needed In Greece, Spain Looks To Cut Health, Education Costs
- Georgia Labor Commissioner: Unemployment Insurance Trust Fund In Peril
- ECB margin call deposits hit new record high
- EU Joins U.S., Japan in Challenging China’s Rare-Earth Export Restrictions
- Tokyo says approval won for purchase of Chinese gov't bonds
- Facing $285 million shortfall, DOT looking to borrow
- Rehn rules out Irish delay in €3.1bn bank debt repayment
- Soaring Target2 Imbalances Stoke German Risk Angst: Euro Credit
- Greek Students Fight Stray Dogs and Despair Amid College Cuts
- Spanish Underlying Inflation Slows as Economy Contracts
- More austerity needed in Greece: EU/IMF
- Economic malaise forces Belgium to extend austerity
- Spain looks to cut health, education costs next
- L.A. school board to consider millions of dollars in budget cuts
- Major Budget Cuts Projected For Long Beach City College
- Budget Cuts Could Cost Arlington, Falls Church Half Their Circuit Court Judges
- National Weather Service facing possible budget cuts
- Westerville Proposes Increased Pay-To-Play Fees
- Fees to drive in Ontario about to rise
- Cutting roads repair budget will cost taxpayer more, MPs warn
- Illinois Offers Attractive Yields In $500 Mln Muni Deal
- Spain Deficit Decision Sparks Austria Appeal
- AAA: More People Changing Driving Habits In Response To Gas Prices
- More than 800,000 Oregonians received food stamp benefits in January
- CalPERS cuts assumed returns, but not by much
- Fed holds rates, says inflation rise is temporary
- Retirement scare: 60 percent of workers have less than $25,000
- Toilet paper crisis in New Jersey's capital city
- Mayor's speed cameras would help political ally
- CBO: Deficit estimate for 2012 hiked to $1.2T after payroll tax cut, jobless benefits
The math is simple. Unemployment spiked and we paid out the trust fund’s remaining $700 million on unemployment benefits. Then, we had to borrow $721 million as more people filed for unemployment benefits. We’re still borrowing. Had we been fiscally conservative, we would have sustained our $2 billion in reserves, rather than using it as a political kitty to buy votes. Georgia would never have borrowed federal dollars and would be “in the black” today.
Now we have a three-tiered problem: a large loan hanging over our heads, interest payments on that loan, and a trust fund that’s broke.
Deposits related to margin calls - money that banks place at the ECB after the market value of their collateral value declines - ticked up to 17.3 billion euros at the end of last week from 17.1 billion the week before, the previous record high. High cash deposits to cover margin calls could be a sign that some banks were running out of eligible collateral to cover the shortfall last week after the securities they had posted fell in value.
The U.S., the European Union and Japan complained at the World Trade Organization today about Chinese limits on exports of rare-earths minerals that are critical to the world’s high-tech and so-called green industries.
China produces at least 90 percent of the world’s rare earths, 17 chemically similar metallic elements used in Boeing Co. (BA) helicopter blades, Nokia Oyj (NOKIA) cell phones, Toyota Motor Corp. hybrid cars and wind turbines. China says it curbed output and exports to conserve resources and protect the environment.
(on page 2) China has already been investing in Japanese government debt in an apparent bid to diversify some of its currency reserves — the world's biggest — into yen amid concerns about Europe's debt crisis and prospects for the U.S. dollar.
The December deal, following talks between the Japanese and Chinese premiers in Beijing, aimed to include “supporting sound development of the yen-denominated and the yuan-denominated bond markets.”
The Massachusetts Department of Transportation’s budget is about $1 billion per year, but state officials say they expect to collect only about $715 million in operating budget revenues from tolls, rents, fees and state appropriations this year.
Davey aides confirmed to the News Service that the department will have to borrow money to close the gap, which totals about $285 million, although they hope revenue from advertising and real estate deals and other efficiency-minded savings will enable them to borrow some amount less than $285 million.
The budget gap at the state transportation department, which oversees state highway, motor vehicles and aeronautics operations, is in addition to the $160 million budget gap at the MBTA that’s likely to force near-term fare hikes and service reductions.
EU economics commissioner Olli Rehn has dismissed the notion that the Government might postpone a €3.1 billion bank debt repayment which falls due this month. With no breakthrough imminent in the Government’s long campaign to restructure Ireland’s banking debt, Irish officials have privately raised the possibility of delaying a payment expected at the end of this month.
German angst is growing as an entry on the Bundesbank’s balance sheet swells to a sum worth about 20 percent of economic output, a sign of the extent to which Europe’s largest economy is funding the region’s laggards.
The European Central Bank’s Target2 system, which calculates debts between the euro region’s central banks, shows the Bundesbank is owed 489 billion euros ($656 billion), up almost 65 percent from a year earlier. German central bank President Jens Weidmann wrote to ECB President Mario Draghi last month to warn about growing systemic risks, Frankfurter Allgemeine Zeitung newspaper reported Feb. 29.
In the universities of Athens, the city where Plato taught and Cicero studied, campuses are covered in anarchist graffiti, stray dogs run through buildings and students take lessons in Swedish with the aim of emigrating.
Higher education in Greece, as in much of Europe, has been battered by the recession and austerity measures. Budget cuts of 23 percent since 2009 mean buildings aren’t heated in the winter, schools have slashed faculty salaries and newly hired professors can wait more than a year to be appointed. Students say it’s hard to be hopeful with youth unemployment surpassing 50 percent and protesters seizing university buildings.
Spain’s underlying inflation slowed in February as the economy suffered its second recession in as many years and the government tried to rein in the euro area’s fourth-largest budget deficit.
Spain’s People’s Party government is set to announce more budget cuts on March 30 after a 15-billion euro ($19.8 billion) package in December, even as it forecasts the economy will shrink this year.
Greece will have to slash a further 5.5 percent of GDP in government spending in 2013 and 2014 to meet agreed fiscal targets underpinning the second international bailout for Athens, a European Commission report said.
Belgium will extend austerity measures by 1.82 billion euros ($2.39 billion) because of a possible contraction of its economy this year, to keep its 2012 budget deficit within EU limits. After a full week of talks, ministers from the six-party coalition agreed a series of measures on Sunday as well as the freezing of a further 650 million euros of spending, in case further economic weakness meant more savings were required.
Spain's new center-right government will embark on its most sensitive austerity measures to date -- health and education spending cuts in the country's autonomous regions -- as soon as it clears a local election hurdle at the end of March. Cuts in social services are likely to set off street protests as Spain struggles to save at least 30 billion euros this year to meet tough European deficit reduction goals while the economy shrinks and almost one in four are out of work.
The Los Angeles Board of Education is expected to vote Tuesday on a worst-case $6-billion budget that would eliminate thousands of jobs, close all of the district's adult schools and eliminate some after-school and arts programs, among a slew of other reductions.
The budget plan could change, and even if it is approved by the school board, a final version of the budget most likely is months away. But the nation's second-largest school system is under pressure to pare more than $390 million from the budget for next year.
“Long Beach City College is facing devastating budget cuts that have been imposed on all of California’s community colleges by the state,” said LBCC President Eloy Ortiz Oakley. “Unfortunately, the news going forward is worse, with millions more being cut, increased student demand, and no new revenues or support projected for several years.” LBCC will need to absorb $3.5 million in unanticipated mid-year cuts this fiscal year. These mid-year cuts are being imposed in addition to the $7.2 million in revenue reductions over the last three years – a 7.4% reduction in overall allocation from the state.
The 17th Judicial Circuit, which includes Arlington County and the city of Falls Church, is likely to lose half of its Circuit Court judges as the state General Assembly attempts to hash out a budget agreement.
Such a move would reduce the traditional four Circuit Court judges here to two, increasing the case load for the remaining judges, likely slowing down the case flow and putting the brakes on a plan to implement drug court here.
The National Weather Service is facing a different kind of storm. It's not a hurricane or tornado, but instead a proposed budget cut of $39 million dollars. The government agency that issues daily forecasts, in addition to severe weather warnings, could have their budget cut by as much as four percent.
Monday night, Westerville City Schools' administrators gave the school board a proposal to raise pay-to-play fees even though voters recently passed a levy. High-school fees would increase to $240 per sport -- that's up from $100. Middle-school fees would increase to $120 per sport -- up from $50.....Administrators want to cut the district's athletic budget of $1.8 million in half.
Mired in a $16-billion deficit and facing an uncertain financial future, Ontario is turning to consumers to help it dig out of trouble.
The province announced Tuesday it will raise a range of driver fees, including licence validation, renewals, replacement, driver exam fees, trailer permits as well as a range of other fees for commercial vehicles. Licence plate renewals will rise to $98 within the next three years, a 33-per-cent increase over the current $74 charged in southern Ontario.
Motorists will have to spend more repairing their cars because cuts to road maintenance budgets will lead to more potholes, a committee of MPs has said .... Councils, who are responsible for 90 per cent of the country’s road network, have been told to find £223 million from their roads maintenance budget.
But it is unclear how these savings – equivalent to 40 per cent of the total – will be found, the Public Accounts Committee has warned in a report on the Department for Transport’s spending published today.
Illinois' latest debt offering comes a day after Standard & Poor's warned it could downgrade the state's rating if it doesn't get its fiscal house in order this year. S&P put a negative Illinois' bonds Monday, noting the state's "large accumulated deficit" and "ongoing weakness" in its pension fund. S&P estimates Illinois' accumulated deficit, which includes its backlog of unpaid bills, is almost $9 billion. Meanwhile, its unfunded liability for its pensions stood at $82.9 billion at the end of fiscal 2011, or 43.4% funded.
The decision by finance ministers of the 17-country eurozone to give Spain some leeway on cutting this year's deficit has already triggered demands from other European countries for more fiscal leniency. The move also signals the difficulty Europe faces in enforcing the strict spending rules it has worked out over the past two years amid renewed recession.
A national survey conducted by AAA shows that 84 percent of the respondents have changed their driving habits or lifestyle in some way to deal with the recent spike in gas prices. Combining trips and errands was the most commonly reported cost-cutting measure with 60 percent of respondents reporting have already made this adjustment, according to an AAA news release.
The U.S. and Idaho average prices today are 25 and 23 cents higher than a year ago, respectively.
More than 800,000 Oregonians relied on food stamps to put meals on the family table in January, the highest number ever. <>A report released Monday by the Oregon Department of Human Services shows 800,785 people --or 22 percent of Oregonians --received help in January from the state-federal Supplemental Nutrition Assistance Program. That reflected a 5.9 percent increase from January 2011.
School districts would be tapped for an additional $137 million to cover the retirement costs of non-teaching personnel.
The Federal Reserve on Tuesday kept its interest rate target between 0% and 0.25% -- as it has since Dec. 2008 -- as the central bank said a rise in oil and gasoline prices will only "temporarily" push up inflation. Inflation will then run at or below the rate most consistent with its dual mandate, the central bank said. The Fed also maintained its Operation Twist program of shifting short-term bonds into longer-dated securities and reiterated the need to keep rates exceptionally low through at least 2014
Meanwhile, a whopping 62 percent -- nearly two-thirds -- of workers said their debt is a problem.
As a result, many workers barely have any savings, with about 60 percent of workers reporting total savings and investments of under $25,000 (excluding the value of their home and benefit plans). About 30 percent of these respondents said they have less than $1,000 in savings.
Supplies have been dwindling down to almost nothing in the months since a spending fight broke out among the City Council in November over a $42,000 spending request for a year's supply of paper products, including toilet paper.
Detective George Dzurkoc painted a desperate picture of conditions at police headquarters, where he said the men's rooms are completely bare and just a few rolls are left in the women's rooms.
Longtime Emanuel backer consults for firm that stands to make millions from city's push for traffic devices.
When Rahm Emanuel was a first-time candidate for Congress, Greg Goldner was behind him, quietly marshaling the patronage troops that helped get him elected. When Emanuel ran for mayor, Goldner was there again, doling out campaign cash to elect Emanuel-friendly aldermen to City Council.....As consultant to the firm that already supplies Chicago its red-light cameras, Goldner is the architect of a nationwide campaign to promote his client's expansion prospects.
A new estimate from congressional economists says the government will run a $1.2 trillion deficit for the budget year ending just a few weeks before Election Day.Last year, the deficit was $1.3 trillion. The almost $100 billion spike from earlier deficit projections comes almost exclusively because Congress passed legislation recommended by President Barack Obama to renew a 2 percentage point cut in payroll taxes and jobless benefits for people languishing on unemployment rolls for more than six months.
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