Daily Digest

Daily Digest 4/13 - Fed To Buy $97B Bonds This Month, Federal Budget Cuts To Hit Cash-Strapped Cities, Banks Are Gov't Backed

Wednesday, April 13, 2011, 10:46 AM
  • Dudley says would surprised if Fed didn't complete QE2
  • US Fed’s Dudley: Growth Could Disappoint in First Quarter
  • U.S. Fed To Buy $97B Bonds From April 13-May 11
  • Fear Of State Takeover Hangs Over Detroit Budget
  • U.S. Federal Budget Cuts to Hit Cash-Strapped Cities, Transit
  • Nassau County Needs $60 Million in Savings to Avoid New Cuts, Mangano Says
  • $2 Million Awarded To Los Angeles Officers Who Alleged Ticket Quota
  • Inflation Stokes Fears Over Shopper Resilience
  • U.S. runs $188 billion deficit in March
  • Pizza Chains Falling Like Dominoes
  • First-quarter home sales slump; prices drop to 2002-'03 levels
  • Twin Cities home prices down 15 percent; 4 in 10 sales are foreclosures
  • Number of New York City homeless reached record in 2010
  • Finnish Voters Get Bailout Blues
  • Portugal consumer prices jump, add to gloom
  • Greece, Ireland, Portugal Will Likely Restructure, Pimco's Kashkari Says
  • Big banks are government-backed: Fed's Hoenig
  • Vice Chair Janet L. Yellen Speech
  • EIA sees more demand, higher prices for gasoline
  • Biofuel Pushes Millions Of People Towards Poverty
  • In Iran, natural gas price increases stirring anger
  • Rising gas and food prices driving people to food banks
  • Increases may cost $950 more per year
  • Corn price increases price of dairy alternatives
  • Zoellick Sees Economic Risks From Food Prices, Debt, Inflation
  • Cotton Prices Heat Up This Summer

Follow our steps to prepare for a world after peak oil, such as how to store & filter water

Economy

Dudley says would surprised if Fed didn't complete QE2

It would be very surprising for the United States not to complete a second round of quantitative easing (QE2) given doubts about the health of job markets, a top Federal Reserve policymaker said on Tuesday. "On the subject of monetary policy, we would be very surprised if we didn't complete QE2. Therafter, the hurdle of QE3 is higher," New York Federal Reserve President William Dudley said at a business event in Hong Kong.

US Fed’s Dudley: Growth Could Disappoint in First Quarter

And he said it is premature at this point to talk about exiting from quantitative easing. “We can exit and will exit when time comes but that doesn’t mean that exit is close at hand.”

Dudley said inflation should peak at 2.5% to 3.0% and so far there are no signs of second-round inflationary effects.

U.S. Fed To Buy $97B Bonds From April 13-May 11

The Federal Reserve will purchase about $97 billion of Treasuries and Treasury Inflation-Protected Securities in 18 operations from April 13 through May 11, the New York Fed said on Tuesday.

Fear Of State Takeover Hangs Over Detroit Budget

Detroit must cut $200 million in spending or face a takeover by the state of Michigan, Mayor Dave Bing said on Tuesday.

With the city's population dropping to a 100-year low, while its budget deficit is projected to climb to $1.2 billion by fiscal 2015, Bing outlined a plan to the city council to balance Detroit's finances over five years.

U.S. Federal Budget Cuts to Hit Cash-Strapped Cities, Transit

The agreement struck between President Barack Obama and Congressional leaders will cut funding for the Department of Housing and Urban Development’s community development fund by $942 million to $3.5 billion, according to a list released today. It also eliminates $680 million from public transportation grants, more than $700 million from low-income housing, and $786 million from grants for local agencies that respond to emergencies.

Nassau County Needs $60 Million in Savings to Avoid New Cuts, Mangano Says (New York)

New York’s Nassau County, whose finances are under the control of a state oversight board, can avoid more job and service cuts next year if unions agree to $60 million in concessions, its manager said.

“If these concessions are not met, additional layoffs and service cuts will occur,” County Executive Edward Mangano said yesterday in his State of the County address. “Rather than place their membership on the unemployment line, our public- employee unions should do the right thing and agree to renegotiate their contracts,” he said.

$2 Million Awarded To Los Angeles Officers Who Alleged Ticket Quota

Two police officers who claimed they faced retaliation for complaining about an alleged quota system for traffic tickets have been awarded more than $2 million.

Both sued the Police Department in 2009 alleging that their captain at the city's Westside traffic division required each motorcycle officer to write 18 tickets per shift for speeding, running red lights and other offenses that could each generate several hundred dollars for the city.

Inflation Stokes Fears Over Shopper Resilience

As gasoline prices rose by a third in the past year to an average of $3.80 a gallon, with cotton costs more than doubling, and with other inflationary pressures also looming on the horizon, worries about the resilience of U.S. consumers have intensified. About 74% of American consumers believe higher prices could cut into their spending in the months ahead

U.S. runs $188 billion deficit in March

The United States ran a budget deficit of $188 billion in March, the Treasury Department reported Tuesday. For the first half of fiscal year 2011, the deficit is $829 billion, or about $112 billion more than the first six months of the prior fiscal year

Pizza Chains Falling Like Dominoes

Just last week, Sbarro Inc. filed for Chapter 11 bankruptcy protection. Round Table Pizza Inc. and Uno Chicago Grill also filed during the past 12 months. Together, that’s 1,700 locations nationwide with a combined $1.6 billion in sales. The factors driving their difficulties are the slow economic recovery and higher prices for ingredients like sauce, cheese and flour.

First-quarter home sales slump; prices drop to 2002-'03 levels (Milwaukee County)

Average home prices in Milwaukee County have retreated to about the same level they were at nine years ago, according to first-quarter sales figures released Monday. And in the other three metro-area counties - Ozaukee, Washington and Waukesha - average sale prices for existing homes are roughly back to where they were in 2003, according to the Metro MLS Inc. statistics.

The main reason for lower average sale prices: supply and demand in an economy still burdened by high unemployment.

Twin Cities home prices down 15 percent; 4 in 10 sales are foreclosures

The Twin Cities median home price fell more than 15 percent last month to $140,000 from a year earlier, according to data released today. The Minneapolis Area Association of Realtors reports that the price decline in the 13-county metro area came amid a 4 percent drop in the number of closed sales to 3,154 last month versus the year-ago period.

"Foreclosure sales accounted for roughly 40 percent of (pending sales) and 43 percent of closings," said Brad Fisher, president of the Minneapolis Area Association of Realtors, in a statement.

Number of New York City homeless reached record in 2010

The rise is fueled in part by the effects of the financial crisis and recession from 2007 to 2009. A record 113,553 different people slept in municipal homeless shelters in fiscal 2010, up 9 percent from the previous year and up 39 percent from fiscal 2002 when Bloomberg took office, the coalition said.

In 2004, Bloomberg pledged to cut homelessness by two-thirds within five years but the number of people spending the night in homeless shelters hit a record of nearly 40,000 people one night in February 2011, the report said.

Finnish Voters Get Bailout Blues

The euro zone's attempts to reassure bond investors that it can fix its debt problems may be derailed Sunday when Finns go to the polls to elect a new government. According to recent opinion polls, voter support for the nationalist True Finns Party has soared in recent months, partly in response to dissatisfaction with the fact that taxpayers in this most northern of the euro zone's 17 members have been asked to bail out Greece, Ireland and Portugal at the same time as welfare benefits are being cut at home.

Portugal consumer prices jump, add to gloom

Portugal's consumer price index rose a higher-than-expected 1.6 percent on the month in March, adding to the problems that drove Portugal to seek a bailout last week and worsening an already gloomy economic outlook.

"The sharp increase in inflation in March is certainly not good news for consumers, who are already being hit by rising unemployment, fiscal austerity and challenging credit conditions," said Diego Iscaro, an economist at IHS Global Insight consultants in London.

Greece, Ireland, Portugal Will Likely Restructure, Pimco's Kashkari Says

Europe’s most-indebted countries will probably need to restructure their borrowings as bailouts fail to solve their fundamental challenges, Pacific Investment Management Co.’s Neel Kashkari said.

“Greece, Ireland, Portugal, simply have too much debt, more debt than their economies can afford,” Kashkari, head of new investment initiatives at Pimco, said today in an interview on “InBusiness with Margaret Brennan.” “It’s likely they’ll need to restructure or default.

Big banks are government-backed: Fed's Hoenig

Big banks like Bank of America Corp (BAC.N) and Citigroup Inc (C.N) should be reclassified as government-sponsored entities and have their activities restricted, a senior Fed official said on Tuesday.

The 2008 bank bailouts at the height of the financial crisis and other implicit guarantees effectively make the largest U.S. banks government-guaranteed enterprises, like mortgage finance companies Fannie Mae and Freddie Mac, said Kansas City Fed President Thomas Hoenig. "That's what they are," Hoenig said at the National Association of Attorneys General 2011 conference.

Energy

Vice Chair Janet L. Yellen (Speech)

Since early last summer, the prices of oil, agricultural products, and other raw materials have risen significantly. For example, the price of Brent crude oil has risen more than 70 percent and the price of corn has more than doubled; more broadly, the Commodity Research Bureau's index of non-fuel commodity prices has risen roughly 40 percent.....An accommodative monetary policy continues to be appropriate because unemployment remains elevated, and, even now, measures of underlying inflation are somewhat below the levels that FOMC participants judge to be consistent, over the longer run, with our statutory mandate to promote maximum employment and price stability.

EIA sees more demand, higher prices for gasoline

U.S. drivers will consume more gasoline this summer, but they will also pay $1.10 a gallon more for the privilege, the Energy Information Administration said Tuesday in its short-term outlook report. Retail prices are forecast to peak at $3.91 a gallon in early summer, and average $3.86 a gallon during the driving season, which started April 1 and will end Sept. 30. Prices averaged $2.76 a gallon last summer.

Biofuel Pushes Millions Of People Towards Poverty (Pravda)

The growing production of bioethanol increases the shortage of food. Corn, sugar, other types of farm crops are required for the production of the biofuel. In addition, the growth of sowing for the green fuel reduces the square of lands designated for food cultures, which leads to smaller harvest and higher prices on food.

A report from the World Bank confirmed that prices on food products continued to grow. WB's index of food prices increased by 15 percent from October 2010 to January 2011.

In Iran, natural gas price increases stirring anger

Iran’s parliament has warned President Mahmoud Ahmadinejad that resentment is building over sharp increases in the price of natural gas, which has risen at least 10-fold on average in recent weeks, and that public protests could follow. Official media have reported on crowds complaining in the offices of the National Iranian Gas Co. since a two-week national holiday ended April 4. In Tehran, many people are refusing to pay their bills.

Rising gas and food prices driving people to food banks (Washington)

Rising food and gas prices are some of the the driving forces to why people are going to food banks for the first time.

Food Lifeline in Shoreline has seen a 24% increase in people using the food bank overall. The food bank is also seeing a new trend more working people and families, who don't qualify for food stamps, are needing their help.

Increases may cost $950 more per year (Canada)

The recent surge in gasoline prices, if sustained, will cost the average Canadian household an extra $950 this year, according to a report issued Monday. CIBC World Markets said the 25 per cent rise in pump prices since September would, at current levels, cost Canadian consumers an extra $12 billion over the course of 2011, equivalent to a tax hike of about seven per cent.

Environment

Corn price increases price of dairy alternatives

Increasing corn prices and lowering milk prices are causing dairy producers to think twice about what they feed their cows this spring.

"Dairy farmers can't afford to take cows off feed now because it takes too long to bring them back into full production," said Mike Hutjens, University of Illinois professor of animal sciences emeritus. "The good news is that dairy cattle have an advantage because they can utilize forages and byproduct feeds. The bad news is that the price of corn increases the price of alternatives as well."

Zoellick Sees Economic Risks From Food Prices, Debt, Inflation

World Bank President Robert Zoellick said the global economy faces risks from inflation, sovereign-debt woes and rising food and energy prices.

“The world is coming out of one crisis, the financial and economic crisis, but we are facing other risks and tumultuous changes,” Zoellick told reporters on a conference call in Washington today.

Cotton Prices Heat Up This Summer

If you can't wait to shed that scratchy wool sweater for a cool new cotton T-shirt this summer, prepare yourself. The price hikes on cotton goods that are coming your way will be decidedly uncool.

This summer, shoppers will be paying 10% to 15% more on all cotton products, according to a new industry survey. "I can't recall a time when we've seen this type of retail price [increase] on cotton products," said Andrew Tananbaum, CEO of Capital Business Credit, which provides financing to clothing and home furnishing suppliers.

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)
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Posts: 2690
rjs's picture
rjs
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Posts: 376
http://www.talkingpointsmemo.

http://www.talkingpointsmemo.com/documents/2011/04/final-spending-cuts-program-by-program.php?page=1
 
9 pages, includes cuts of the NOAA climate service, womens, infants and children program, AIDS, hepatitis, STD & TB prevention, et al...

Nate's picture
Nate
Status: Gold Member (Offline)
Joined: May 6 2009
Posts: 461
Saxplayer is really at it

Saxplayer is really at it today!

Thanks!

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1843
9 Things The Rich Don't Want You To Know About Taxes

I'm sure this article will be "controversial" ot even "socialist" to some of the people here. I certainly don't agree with all of the assertions made. However, as someone who tries to glean information from a variety of sources, I think it's important to read and consider. Just make sure to ignore the political namings and bashings, because that's not what is important here. What's important are the charts and figures that illustrate a growing income disparity exacerbated by tax law changes over the years.

9 Things The Rich Don't Want You To Know About Taxes
http://www.wweek.com/portland/article-17350-9_things_the_rich_dont_want_...

Poet

HarryFlashman's picture
HarryFlashman
Status: Bronze Member (Offline)
Joined: Aug 1 2008
Posts: 30
Re 9 Things The Rich Don't Want You To Know About Taxes

Thanks Poet,

Much food for thought in that article and pretty much what I've always said since I became economically aware.I understand why you mentioned the Dem (ish) bias of the author (I found it irritating myself),but I think that you Americans need to get over it anyway.Coming from my perspective(British,living in Japan),there's not a hairs breadth between the 2 parties in the U.S. and all the difference that you percieve between them is MSM propaganda(all owned by big corporations)to give you an illusion of choice.

No offense intended,just my 2 yens worth.

Hotrod's picture
Hotrod
Status: Bronze Member (Offline)
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Posts: 67
9 Things about taxes

Poet,

Seems pretty accurate.  Thanks for posting this article.

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1271
More "Evil Rich" distractions

Poer wrote:
I'm sure this article will be "controversial" ot even "socialist" to some of the people here.

I don't actually find it socialist (well maybe a bit), the better term is naive.

David Johnston wrote:

Luckily we don’t bleed the sick anymore, but we are bleeding our government to death.

Hmm, perhaps government is bleeding itself to death.  I love these articles that don't even remotely mention spending as part of the problem. I also found the comparing 2000 vs. 2008 a bit of cherry picking data if you look at the graph over the last 10 years. Let's just pick 2000 at the top of the dot.com bubble and compare it to the bottom of a recession.   However, no mention of the never ending increase in goverment spending as can be seen here.

While I do find the article presents some items that need to be considered, it is still a distraction of saying "ooh, look at those evil rich people, if we just taxed them more we could solve our problems".   It also points out how we just need government to take over more things like they do in Europe, that will fix it!  No sign of even grasping the magnitude of the problems we face. He talks about how the top 400 have low taxes, but the total wealth (not income) of the top 400 doesn't even add up to our deficit spending this year!

Don't get me wrong, our tax code is incredibly broken, 80000 or so pages can only be explained by a million special exceptions for those with political clout however this article was designed to invoke an emotional response, not discourse.  This article was more political rhetoric than article, he even managed to get in some good Bush bashing and Obama cheerleading.

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 2433
Peak soils.
Peak soils, anybody?
EWG, working with Iowa State University, has found that erosion in Iowa is much worse than previously reported. In some regions, soil loss was found to be 12 times greater than the stated average, as storms stripped up to 64 tons of soil per acre of land.
jackgoldman2's picture
jackgoldman2
Status: Member (Offline)
Joined: Apr 17 2011
Posts: 1
Foreclosures are very misleading

Minneapolis is being purged of fools who over financed 100 year old properties in bad neighborhoods to promote minorities acquiring housing as if the houses were brand new. These homes should never have been financed. The entire North Minneapolis area, my home town where I was born and raised, is obsolete and needs to be demolished. Same problem with many cities. Obsolete housing should never have been financed Mr. Greenspan. 

North Minneapolis high school will close because all the families have been ethnically cleansed by foreclosure. North Minneapolis had an old obsolete housing stock built before World War Two that flippers cashed out on and the foolish banks loaned on. My Uncle built houses and apartments in North Minneapolis and sold real estate. 

Investment grade houses are not in foreclosure. Try to find a three bedroom, two bath, double garage, bricked, single family home built after 1971 in foreclosure. There aren't any. These foreclosures are all pre world war two houses and need to be demolished. Immigrants and poor people will rent them, sadly creating bad neighborhoods like North Minneapolis, largely uneducated people of color now. 

We have an obsolete housing market that needs to be torn down and no one will do what needs to be done. We shall have to see how it all shakes out. It is sad these obsolete houses are thrown in with the statistics to drag down the good housing stock. The banks and Alan Greenspan are to blame for over financing the baby boom and housing that has been foreclosed on. Fifty million immigrants were let into the country by the evil Senator Chuck Schumer, (D) NY. It's been a disaster and we still suffer. The schools have been ruined. It cost me $40,000 to pull my daughter out of public school and send her to private. I am a former public school teacher. It's all so sad to watch foreigners and immigrants ruin America. Sorry. It's true. 

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