Daily Digest

Daily Digest 10/20 - Bernanke On Inflation, Foreclosures And Banks, Jobless Benefits About To Crash

Wednesday, October 20, 2010, 9:43 AM
  • Fed Presidents Reinforce Case for Additional Asset Purchases
  • Fed's Evans-inflation target is communication tool
  • Fed's Bernanke Says Financial Education Is Essential
  • Fed's Kocherlakota: Hard To Assess Whether More QE Is The Right Move
  • One on One with Richard Berner, Chief U.S. Economist , Morgan Stanley
  • Fed may have to let inflation climb
  • Fed's Lockhart Eyes Easing of $100 Billion a Month
  • Peter Schiff: It's Scary How Clueless Bernanke Is!
  • Mervyn King hints at fresh round of quantitative easing (UK)
  • B of A pressured to buy back bad mortgages: report
  • Dart To Suspend Foreclosure Evictions Filed By Leading Banks
  • Harrisburg PA Receives Proposals From 5 Bankruptcy Advisers
  • Harrisburg City Officials Face Payroll Crisis
  • PBGC To Take On Interstate Bakeries Underfunded Pension Plan
  • Boeing Increases Employee Health-Insurance Fees, Cites Cost Pressures
  • Jobless Benefits About To Crash
  • Pittsburgh council scraps parking-lease plan
  • Corn Hikes To Jolt Grocery Shelves

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Economy

Fed Presidents Reinforce Case for Additional Asset Purchases

The U.S. unemployment rate is “unacceptably high” and inflation is “too low,” Dudley, 57, said to reporters today, affirming the points of the prior speech. “I feel very comfortable with what I said on Oct. 1,” he said during a press briefing on the regional economy at the New York Fed.

Dudley said in prepared remarks to the media that slowing growth, “weak” job creation and declining inflation add up to a “wholly unsatisfactory” U.S. economy

Fed's Evans-inflation target is communication tool

Targeting higher inflation is one way the U.S. Federal Reserve can communicate to markets that interest rates will stay low for a long time, a top Fed official said on Tuesday. Evans said the Fed could buy assets to push inflation up temporarily, and doing so should help boost the economy.

Fed's Bernanke Says Financial Education Is Essential

Financial education is essential in any economy because it helps people cultivate a sense of financial responsibility from a young age, Federal Reserve Chairman Ben Bernanke said Tuesday....Last week, Bernanke made a case for the U.S. central bank to take new steps to spur a weak economy, saying unemployment remains too high and inflation too low. His remarks were widely seen as confirmation the central bank is likely to announce a new program to purchase U.S. Treasury bonds after its Nov. 2-3 meeting.

Fed's Kocherlakota: Hard To Assess Whether More QE Is The Right Move

On inflation, Kocherlakota expects inflation will remain at about 1% through 2010. That level is often considered to be too low relative to the Fed's understood 2% comfort level. He sees inflation rising back into the more desirable 1.5% to 2% range by the second half of 2011. The new about inflation and GDP is in the "'OK, but certainly could be better'" category," Kocherlakota said.

One on One with Richard Berner, Chief U.S. Economist , Morgan Stanley

GHARIB: But going back to the Fed, are you saying that this strategy then will accomplish little and if so, what are the alternatives, to get the economy, U.S. economy growing again?

BERNER: Well, let's look at what the Fed is facing. The Fed as you know has a dual mandate. They're missing on both sides of that dual mandate. The unemployment rate is too high and inflation is a little too low.

Fed may have to let inflation climb (Economic Times..India)

A situation the Fed has long feared has come to pass: The central bank, after spending two decades taming inflation, now needs more of it. And so the Fed is having to shift substantially from the approach that has come to define it and from which it has long derived its institutional self-esteem.

“In the 1980s and 1990s, few ever questioned the desired direction for inflation – lower was always better,” Ben S Bernanke, the Fed chairman, said at a conference here this weekend, acknowledging the sea change in the Fed’s orientation. Since the summer, Fed officials have grown increasingly worried that the US could slip into deflation

Fed's Lockhart Eyes Easing of $100 Billion a Month

A top Federal Reserve official said on Tuesday further monetary easing by the central bank must be hefty enough to spur recovery and securities purchases of $100 billion a month could be in order to achieve the necessary impact.

Three Fed officials on Tuesday made the case for further easing and bolstered perceptions a consensus has grown at the central bank to launch a fresh round of large-scale asset purchases at a meeting on November 2-3.

Peter Schiff : It's Scary How Clueless Bernanke Is!(Video)

Mervyn King hints at fresh round of quantitative easing (UK)

Bank of England governor Mervyn King signalled tonight that he was closer to embarking on a second round of quantitative easing after he said there was a strong case for pumping funds into the economy to spur growth and prevent inflation falling below its 2% target.

B of A pressured to buy back bad mortgages: report

A bondholders' group is seeking to force Bank of America Corp. to buy back some $47 billion in bad mortgages packaged by Countrywide Financial Corp., according to a published report Tuesday. Bloomberg News, citing unnamed people familiar with the matter, reported that Pacific Investment Management Co., BlackRock Inc, and the Federal Reserve Bank of New York wrote to Bank of America and Bank of New York Mellon Corp., the debt's trustee, faulting Countrywide for not servicing the loans properly.

Dart To Suspend Foreclosure Evictions Filed By Leading Banks (Cook County)

With three of the nation’s leading mortgage lenders admitting to questionable and perhaps illegal practices in their mortgage foreclosure actions, Cook County Sheriff Thomas J. Dart announced Tuesday he will not carry out any evictions involving those lenders until they can provide complete assurance that the foreclosure was done properly and legally.



The moratorium is set to take effect Monday – giving the affected banks 5 business days to respond to a letter Dart sent to them last week. It impacts foreclosure eviction orders filed with Dart’s office by Bank of America, J.P. Morgan Chase and GMAC/Ally Financial – which, along with their subsidiaries, make up about 1/3 of the approximately 3,700 eviction orders filed with Dart’s office annually.

Harrisburg PA Receives Proposals From 5 Bankruptcy Advisers

Harrisburg, Pa., has received proposals from five firms who would advise the capital city on bankruptcy, according to the city council clerk Tuesday. Firms have until 4 p.m. EDT to submit their proposals. City Council had authorized the search for firms to advise on bankruptcy, as well as the state's oversight program for distressed municipalities, late last month.

Harrisburg City Officials Face Payroll Crisis

Harrisburg officials are once again trying to figure out how to meet the city's $1.2 million payroll next week.

The last payroll was met when the city received early payments from the Harrisburg School District, the Harrisburg Authority and the Harrisburg Parking Authority.

PBGC To Take On Interstate Bakeries Underfunded Pension Plan

The Pension Benefit Guaranty Corp. said it would take on the underfunded pension plan covering almost 1,500 current and former employees of Interstate Bakeries Corp., which filed for bankruptcy protection in 2004.

The Interstate Bakeries portion of the plan will terminate as of Oct. 20, and the PBGC will become responsible for the portion's entire $82.5 million unfunded benefit liability

Boeing Increases Employee Health-Insurance Fees, Cites Cost Pressures

Responding to what it says are rapidly rising costs, including some as a result of the new health-care bill, Boeing Co. plans to increase the price of employee health insurance for its non-union workforce over the next few years.

In a letter sent to the roughly 90,000 affected employees on Oct. 14 by Rick Stephens, Boeing's senior vice president for human resources, the company lays out a plan that will phase in higher employee costs for deductibles, co-payments and co-insurance during 2011. In 2012, the letter says, employees under a certain type of plan will see their coinsurance payments go from 10% to 20% up to the out-of-pocket maximum.

Jobless Benefits About To Crash

Democratic and Republican leaders alike say that helping the unemployed is a top priority. But critics say neither side has done enough to avert the looming insolvency of the outmoded unemployment system, which reaches less than half of the jobless and yet is shuddering under $40 billion in debt.

Pittsburgh council scraps parking-lease plan

The vote may mean that the Commonwealth of Pennsylvania will take over the Pittsburgh pension fund because it is only 27 percent funded, well below the 50 percent level that it is legally required to meet by December 31. Doven said that a state takeover would mean the city has to pay $72 million into its pension fund in 2011, $27 million more than at present, and representing 20 percent of its entire budget.

That would mean sharp cuts in city services, which Ravenstahl is now preparing, she said.

Corn Hikes To Jolt Grocery Shelves

Now's the time to grab a Thanksgiving turkey and a holiday ham and pop them in the freezer, as the cost of meat is on the rise. It's all about corn, experts say, which is a primary feedstock for beef and also is used to feed poultry and pork. And corn futures have soared close to a two-year high, experts say. "Stock the freezer," said Bill Sirakos, senior economist for Frost Bank. Higher- priced corn "is going to raise the price of food " no question, and raise the price of cows, of beef "absolutely."

The price of corn had been trending up before taking a leap on Oct. 8, when the U.S. Agriculture Department slashed its estimate of U.S. corn production. Less than a week later, the Environmental Protection Agency said it would allow the amount of ethanol blended into fuel to rise to 15 percent from 10 percent. Ethanol is derived from corn.

Article suggestions for the Daily Digest can be sent to [email protected]. 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."

6 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4061
Re: Daily Digest 10/20 - Bernanke On Inflation, ...

""We are seeing the question of currencies and exchange is central and one of the potential risks of moving towards protectionism," Merkel added, speaking at a summit with French President Nicolas Sarkozy and Russian President Dmitry Medvedev.

Medvedev also pledged support for France's monetary reform plans and said the G20 should make "decisive steps."

"We will talk about reserve currencies and perhaps the creation of a global reserve currency," the Russian President said. "

"The European Central Bank should remain poised to extend non-conventional policies if the euro region’s economic recovery stutters, the International Monetary Fund said.

“The ECB should remain ready to adjust the time horizon of its low-interest rate policy and re-deploy extraordinary monetary measures if the recovery should stall unexpectedly,” the Washington-based lender said today in its latest regional economic outlook for Europe."

"Commercial real estate prices slipped 3.3 percent in August to the lowest level since October 2009, according to a report issued Tuesday by Moody's Investors Services.

Nationwide, commercial real estate prices remain about 45 percent below their peak in October 2007. That puts them at about where they were in 2002, the firm said."

.......................3A) Commercial Property Prices in US Decline to Eight-Year Low, Moody's Says

"ANCHORAGE, Alaska — Alaska's Medicaid cost is up $300 million this year and it's not going down anytime soon.

It's projected that the cost will hit $1.5 billion during the state's 2012 fiscal year.

Bradner's Alaska Economic Report says the increase is due to price escalation, increased enrollment under Denali KidCare and more patients utilizing Medicaid services."

"And Now, 11 State Pension Funds That May Run Out of Money

#1 Illinois

Year pension fund runs out: 2018

Bill in the following year: $13.6 billion

Share of state revenue: 32%

#2 Connecticut

Year pension fund runs out: 2019

Bill in the following year: $4.9 billion

Share of state revenue: 27%

#3 Indiana

Year pension fund runs out: 2019

Bill in the following year: $3.6 billion

Share of state revenue: 17%

#4 New Jersey

Year pension fund runs out: 2019

Bill in the following year: $14.4 billion

Share of state revenue: 34%

#5 Hawaii

Year pension fund runs out: 2020

Bill in the following year: $1.7 billion

Share of state revenue: 24%"

"A new report says the burden on California families to support the state workers' pension system could triple within a few years and drag the state down further into the financial hole.

The Milken Institute, an independent think tank, said California's pension obligations to retired state workers already cost each Californian $3,000 every year. By 2014, that cost could go up to $10,000 a year, the group's report said."

"Reuters) - California will face continued credit pressure as it will likely face another large mid-year budget gap and a significant deficit next year, a Moody's Investors Service analyst said in a report released on Tuesday.

Vice President-Senior Analyst Emily Raimes in her report applauded California at last enacting a state budget earlier this month for its current fiscal year -- which began in July -- but said that "The bad news is that the budget relies heavily on one-time measures, optimistic revenue assumptions, and the receipt of funds, some of which may not materialize.

"As a result, it is likely that the state will face a large mid-year budgetary shortfall later this year and that the budget gap for next year will be significant, both of which will place continued credit pressure on the state," Raimes said.

She noted there is no guarantee the U.S. government will provide the $5.4 billion to California that is included in the state budget, which closed a $19.1 billion shortfall. She also said the spending plan's revenue assumptions may be too optimistic."

"New York collected $529 million less in taxes during the past six months than the state budget office projected in August, according to a monthly report from Comptroller Thomas DiNapoli.

New York’s tax revenue grew 5 percent from a year earlier, mostly from personal-income taxes, though the increase wasn’t as great as forecast, the report said. To meet the targets set in the budget approved in August, tax collections in all accounts must grow 9 percent for the remainder of the year, according to the report.

“The economy is getting better, but the state’s fiscal condition isn’t,” DiNapoli said in a statement. “It is troubling that the updated financial plan was constructed only six weeks ago and tax revenues are already off target.” "

"Chief Executive Officer William Fujioka said the county has an unfunded pension liability of $28 billion -- $23 billion for retiree health care alone, an amount roughly equivalent to the county's entire annual budget."

"Britain said on Wednesday it would cut half a million public sector jobs, raise the retirement age and slash the welfare state as part of the biggest spending cuts in a generation."

.....................10A) UK slashes 490000 jobs amid deep budget cuts

"Silver exports from China, the world’s largest, may drop about 40 percent this year as domestic demand from industry and investors climbs, according to Beijing Antaike Information Development Co.

Shipments may decline from about 3,500 metric tons in 2009, said Feng Juncong, chief analyst at the state-owned Antaike, without providing a specific forecast. Customs data show exports plunged almost 60 percent to 970 tons in the first eight months. Cancellation of an export rebate in 2008 is also hurting shipments, she said.

Reduced exports may bolster prices that are trading near a 30-year high on speculation that governments worldwide will take further steps to stimulate their economies, weakening currencies and increasing demand for assets that are a store of value. China, the third-largest producer after Peru and Mexico, revoked export rebates in August 2008 to curb use of natural resources."

"ANNAPOLIS - Budget analysts warned Maryland officials Tuesday that the state's $33 billion in unfunded pension liabilities will continue to balloon out of control unless the state enacts immediate and drastic pension reform.

"We really can't expect to invest our way out of this," Maryland state policy analyst Michael Rubenstein told a state-appointed commission studying pension reform. "The problem is getting worse and it's too late to address the funding gap of fiscal 2012."

Maryland's pension liabilities -- $18 billion the state owes to current and future retirees in retirement benefits, and $15 billion in health benefits -- are currently funded at 64 percent. "

"The officials said the U.S. would push the G20 nations for a stronger framework for cooperative action" in setting economic policies. The talks will focus on the "competitive non-appreciation" of currencies by some countries, the official said. The U.S. has been turning up the heat on China to allow its currency to strengthen. An agreement to reform the International Monetary Fund and give emerging markets more voting power "is within reach," the official said. "

 

  • Other news, headlines and opinion:

U.S. debt called 'best horse in glue factory'

Fed to Buy 'Plenty' of Debt, If Needed, O'Neill Says: Tom Keene (Goldman Sachs)

Average American's retirement savings falls short by $47700

U.K. September Public Borrowing Exceeds Forecasts

FDIC Sued by Bank of America Over $1.75 Billion Taylor Bean Mortgage Loss

Pimco Says US Will Disappoint With 1.75% Growth

'Golf course view' deteriorating in Garland community (Video)

Goldman Sachs cuts bankers' payouts in response to public outcry (Notice how much)

Moscow May Sell Assets When Putin's Man Takes Charge

French strikes: Riot police launch dawn raids on blockaded petrol depots

Fuel dries up amid French protests (Video)

European Union Can't Confirm China Is Blocking Some Exports of Rare-Earth

China Pledges Rare Earth Supplies, Signals Exports May Rebound

Fewer Economists See Housing Recovery in 2011

Fraud Task Force Pursues Criminal Investigation of Mortgage Servicers

Bank of America mortgage woes (Video...notice: "has been generating profits by cutting reserves for bad loans")

Bank of America Accused of Racketeering in Foreclosure Lawsuit in Indiana

Oklahoma lawmakers study loophole in teacher's retirement system for non-public educators ("Officials say the state's seven pension plans have an estimated $15 billion in unfunded liability. The Oklahoma Teacher's Retirement System has unfunded liability of about $9.5 billion")

Medley says Fed to buy $500 bln in US debt -source

Fed buys $660 mln in TIPS; Treasurys stay up

SingleSpeak's picture
SingleSpeak
Status: Gold Member (Offline)
Joined: Nov 30 2008
Posts: 496
Re: Daily Digest 10/20 - Bernanke On Inflation, ...

Fed's Bernanke Says Financial Education Is Essential

Financial education is essential in any economy because it helps people cultivate a sense of financial responsibility from a young age, Federal Reserve Chairman Ben Bernanke said Tuesday....Last week, Bernanke made a case for the U.S. central bank to take new steps to spur a weak economy, saying unemployment remains too high and inflation too low. His remarks were widely seen as confirmation the central bank is likely to announce a new program to purchase U.S. Treasury bonds after its Nov. 2-3 meeting.

            OMG, can you imagine Ben Bernanke teaching kids how to be financially responsible?

        Ben to students - "Okay kids, remember no matter what happens... just keep spending. When you run out of money, just borrow. When you can't borrow because you have no way to pay it back and everyone knows it, then it's time to counterfeit. Tomorrow's lesson will be how to counterfeit and get away with it. See you then. Class dismissed."

 

Tommygun's picture
Tommygun
Status: Bronze Member (Offline)
Joined: Apr 21 2009
Posts: 65
Re: Daily Digest 10/20 - Bernanke On Inflation, ...

SaxPlayer....

Way to go with the Daily Digest. Lots of good reading. Keep up the good work. I always appreciate your work. Keep it up.

Tommy

alcatwize's picture
alcatwize
Status: Bronze Member (Offline)
Joined: Dec 24 2008
Posts: 78
Re: Daily Digest 10/20 - Bernanke On Inflation, ...

SingleSpeak,

Well put!!!!!!  Ridiculous isn't it?!?!?

 

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Saxplayer00o1 Appreciation?

Saxplayer, is there a way we can show you appreciation for all the work that you do on a daily basis? For example, send a small donation to your favorite charity, etc?

Poet

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4061
Re: Daily Digest 10/20 - Bernanke On Inflation, ...

Thanks Poet!

Glad to see that these are being read. That alone is more than enough appreciation.

I think all of us know how difficult it is to convince family/friends that change is on the way and that they need to prepare for it. What makes it even more difficult is that we have all of the cheerleaders screaming "green shoots", "the recession is over", and other nonsense. Unfortunately that's what everyone seems to want to believe, so this is a difficult message to get through people's heads. That's the purpose of my posting here, since seeing all of these daily headlines and news stories together on almost any given day seems to paint a much more realistic economic picture.

Again, what makes this site different is all of the ideas and suggestions that are made here as to what preparations we can make.

Thanks again.

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