Daily Digest

Daily Digest 12/14 - Cash-Strapped Detroit Stops Paying Vendors, Schools Face $50M Debt, 1 In 45 Children Homeless

Wednesday, December 14, 2011, 10:43 AM
  • Cash-strapped Detroit stops paying some vendors in risky move
  • Deficit may fall below $1 trillion this year
  • Bad news for Arizona's unemployed just got worse
  • Ottawa’s pension liabilities understated by $80-billion: report
  • Illinois Prepaid College Program Problems
  • Portugal May Nationalize Banks in Historic Irony: Euro Credit
  • Canadian households getting poorer, taking on more debt
  • Schools face $50M in 'glass palace' debt
  • Italy's Bank Association to Oppose EBA Decision ‘At All Levels'
  • Fifth of Britons braced for inflation-induced debt
  • New Study: With Giant Pension Debts, California Is Screwed
  • Local food pantries struggling to keep up with demand
  • Report: 1 in 45 American Children Homeless
  • Report: College Illinois! could need $1.6 billion bailout
  • Food shortage at Salvation Armys across Bay Area
  • Beltway Speed Camera Issues 21K Tickets In 3 Months
  • Number Of Washington Uninsured Rising
  • IMF slashes growth forecast for Greece
  • Hopes fade for IMF funds boost
  • Europe's Banks Seek Fresh Lending Cover
  • Calif. schools, social services hit with $1B in new cuts

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Economy

Cash-strapped Detroit stops paying some vendors in risky move

Running short on cash to fund basic services and payroll, Detroit stopped paying some of its vendors in a move that experts say could increase the likelihood of the state appointing an emergency manager or contractors pushing the city into bankruptcy court. City Council President Pro Tem Gary Brown, the lone Detroit elected official calling for some state intervention, said the city must act more quickly to reduce a runaway deficit that could reach $340 million by June and force draconian reductions.

Deficit may fall below $1 trillion this year

And the government is on pace to end the year $973 billion in the red, according to the Congressional Budget Office (CBO). While that's lower than last year's $1.3 trillion imbalance, it would still be higher than any deficit before fiscal year 2009. The government ran a record deficit of $1.41 trillion in 2009, and a $1.29 trillion imbalance in 2010.

The CBO estimate does not include an extension of the Social Security tax cut and emergency unemployment benefits. Congress is likely to extend both before they expire at the end of the year. That could push the deficit back above $1 trillion if those programs aren't offset. The two programs are estimated to cost around $200 billion.

Bad news for Arizona's unemployed just got worse

The Arizona Department of Economic Security is sending out a letter anyone unemployed and benefiting from the Emergency Compensation Funding Program.

The letter states that the financial support from the government will run out sooner than later. James Jordan says he's been frantically searching for work after being laid off several months ago - instead of 53 weeks of unemployment benefits - he'll now get only 20.

Ottawa’s pension liabilities understated by $80-billion: report

The federal government is understating the liability for its employee pension plans by $80-billion because it does not use “real world” investment returns in its calculation, a new report says.

A C.D. Howe Institute study has concluded the federal liability for pension plans now totals $227-billion, which is $80-billion more than the government reports in its Public Accounts.

Illinois Prepaid College Program Problems

The State of Illinois is facing another big problem. College Illinois is not taking on any more clients. More than a billion dollars is invested in the prepaid college program but a study finds the program has a 30 percent shortfall. One reason parents are upset is because they've paid in, but now the money's not there.

Portugal May Nationalize Banks in Historic Irony: Euro Credit

Portugal's government may have to partly nationalize crisis-hit banks, even as it sells assets as part of the 78 billion-euro ($102.8 billion) bailout agreement

Canadian households getting poorer, taking on more debt

Canadians keep taking on more debt even as they get poorer, a new Statistics Canada report shows.

Average household debt in Canada hit a new record high of almost 153 per cent to disposable income in the third quarter, a sizable jump from 150.7 per cent the previous quarter, the agency reported Tuesday. As well, household net worth declined by 2.1 per cent to $180,100 from $184,700, the sharpest drop in almost three years as the value of pensions and stock investments declined.

Schools face $50M in 'glass palace' debt (Washington)

A decade after Seattle Public Schools administrators built a central headquarters with a promise it would pay for itself, the district acknowledged Monday it still owes nearly $50 million on the building and has no serious plan for how to pay for it. The district has until 2027 to pay off the debt. But the amount is so large that it will necessitate some hard choices for a school district already struggling with twin financial crises of state budget cuts and serious overcrowding at some schools.

Italy's Bank Association to Oppose EBA Decision ‘At All Levels'

Italy's Banking Association will oppose the European Banking Authority's demands for banks to increase capital “at all levels,” Chairman Giuseppe Mussari said. “The European Banking Authority measures are a great mistake that may cause a credit crunch and hurt the economy,” Mussari told reporters in Rome. “We will use all instruments available under the Italian and European law to oppose them,” he said. ABI, as the association is known, said in a Dec. 9 statement that it might consider legal actions against EBA over the capital-raising measures.

Fifth of Britons braced for inflation-induced debt

Ten million Britons are expecting to be pushed into the red this Christmas as high inflation and squeezed budgets force households to fund the festive season on credit. The latest official inflation figures released today show that the consumer price index (CPI) has fallen to 4.8pc in November from 5pc the previous month. Although this decrease will be welcome news for consumers, it is still more than double the Government's inflation target rate of 2pc.

Figures from Moneysupermarket show that 20pc of consumers expect to be pushed into debt or further into the red over the next couple of weeks.

New Study: With Giant Pension Debts, California Is Screwed

• The June funded ratio, which measures assets to liabilities. is only 74% for CalPERS even using a high-rate of return assumption for its investments. Assume a 6.2% return, and the funded ratio drops to 58%. On the same basis, the funded status is 60% for CalSTRS and 72% for UCRP.

• The report notes that private plans with a funded status below 80% “are required to freeze benefits and face other restrictions.”

• The total unfunded liability for all three systems is close to $300 billion at a 6.2% rate of return; assume a 7.75% return and the shortfall is still $142.6 billion, “or nearly $12,000 per California household.”

• Using a low-risk discount rate, and the total unfunded liability balloons to $498 billion.

• The reports contends it is “highly unlikely” the funds can invest their way out of the issue; to do that, CalPERS would have to average 12.5% a year for 16 years.

Local food pantries struggling to keep up with demand (St. Louis)

"When I started volunteering here about four years ago our need was maybe 45 families, it grew; 85 families, then 100, and now, last Friday, we gave food to 225 families," said Jane Wood, Director of the Hope Food Pantry.

Report: 1 in 45 American Children Homeless (Posted by Tall)

A new report indicates one in 45 American children are homeless - bringing the total to 1.6 million, according to calculations by The National Center on Family Homelessness. The count included children living on the streets, in shelters, hotels and with extended family.

The data reflected a 38% increase in homelessness over the past three years.

Report: College Illinois! could need $1.6 billion bailout

Illinois’ financially tanking prepaid college tuition program could require a $1.6 billion bailout from the state to remain solvent during the next 25 years, a new study shows.

If state lawmakers do nothing to prop up College Illinois!, the fund will be drained completely by 2022, assuming current enrollment levels, financial consultant Gabriel Roeder Smith & Company reported in its analysis for the Illinois Student Assistance Commission.

Food shortage at Salvation Armys across Bay Area (California)

Hundreds of Bay Area families may not have a holiday meal because of a critical food shortage. A desperate call for help is out today from Salvation Armys across the Bay Area. There are 1,600 families who have signed up for groceries for a holiday meal and toys for Christmas gifts from the Salvation Army serving Alameda County. At this point, Salvation Army has enough for 500 of those families. Not even meeting half of the need.

Beltway Speed Camera Issues 21K Tickets In 3 Months (Maryland)

Maryland's intensive effort to curb speeding in work zones appears to be paying off in more ways than one. A mobile speed camera along the Capital Beltway in Silver Spring has generated more than 21,000 tickets, which translates into $840,000 in fines, according to figures from AAA Mid-Atlantic. And that's just in its first three months of operation.

..."This year alone we had over 400,000 speeding citations in work zones in the state of Maryland. That's potentially over $16 million in revenue," Townsend says. The mobile work zone speed camera is the first of its kind to be used on the Beltway.

Number Of Washington Uninsured Rising

The number of Washington residents without health insurance is at an all–time high: 1 million people. That's according to a new report from the State Insurance Commissioner's Office. As KUOW's Ruby de Luna reports, the number of people without health coverage grew by 180,000 in the past two years

IMF slashes growth forecast for Greece

The International Monetary Fund slashed its growth forecasts for Greece and warned that ever-deepening recession was making it harder for the debt-ridden country to meet the tough deficit reduction targets under its austerity programme. In a report likely to fan financial market concerns about a possible debt default, the regular health check by staff at the Washington-based Fund said the situation in Greece had "taken a turn for the worse".

Hopes fade for IMF funds boost

Prospects for a rapid increase in International Monetary Fund firepower to cope with the eurozone crisis have receded after the Japanese government and the Bundesbank set tough conditions before making contributions.

Europe's Banks Seek Fresh Lending Cover

As the euro-zone's sovereign debt crisis has pressed banks to lean on short-term options to meet their funding needs, analysts have been assessing the risks for banks seeking to raise longer-term debt.

Euro-zone banks need to pay back €1 trillion ($1.32 trillion) of debt maturing next year, according to Moody's Investors Service. New debt to cover those obligations will come with a higher price tag.

Rising interest rates and investor uncertainty about the health of the region's lenders have kept banks almost completely out of the longer-term bond markets since the summer, leaving them more reliant on shorter-term funds.

Calif. schools, social services hit with $1B in new cuts

In a mid-year budget correction, California Gov. Jerry Brown has ordered an additional $1 billion in cuts to education, school busing, child care, health programs, public safety and libraries because of the sluggish economic recovery.

But K-12 schools escaped drastic reductions foreseen by the state budget analyst -- up to $1.5 billion -- because tax revenues are higher than projected, although they are $2.2 billion below the expected scenario when the budget passed this summer, the Sacramento Bee says. They instead will absorb about $80 million in cuts for classroom instruction and the elimination of $248 million for busing.

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."

15 Comments

saxplayer00o1's picture
saxplayer00o1
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Tall's picture
Tall
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Soaring Oil and Food Prices Threaten Affordable Food Supply

The current global food system is highly fuel- and transport-dependent. Fuels will almost certainly become less affordable in the near and medium term, making the current, highly fuel-dependent agricultural production system less secure and food less affordable. It is therefore necessary to promote food self-sufficiency and reduce the need for fuel inputs to the food system at all levels.

http://www.energybulletin.net/stories/2011-12-14/soaring-oil-and-food-prices-threaten-affordable-food-supply

 

Permaculture practices offer hope for sustainable local food and for environmental protection:

http://ourworld.unu.edu/en/permaculture-pioneers-stories-from-the-new-frontier/

 

Tall's picture
Tall
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Jefferson Co - Alabama poor cut off from water

Jefferson Co. AL bankrupt after corrupt sewer deal:

The facility, which has been under construction since 1996, was meant to cost about $300m.

But the bill soared to $3.1bn after construction problems and a series of bond and derivatives deals that went sour in the financial meltdown of 2008.

City of Hoover dodged a bullet:

When he was Republican mayor of Birmingham's neighbouring city of Hoover, Mr Petelos recalls attending a presentation by a Wall Street bank about the same kind of bonds that would later prove to be the downfall of Jefferson County.

He says: "I turned to my finance director and said, 'did you understand that?' He said, 'no I didn't'. So I said, 'we had better not buy it then'."

Perhaps if Jefferson County's previous commissioners had made the same decision, some of their poorest residents would not be facing daily life without basic sanitation and running water.

http://www.bbc.co.uk/news/magazine-16037798

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idoctor
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Kyle Bass on CNBS.......For

Kyle Bass on CNBS.......For Europe, Only Way Out Is to Break Up: Kyle Bass

http://www.cnbc.com/id/45669180

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RogerA
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KWN Special - Money is Fleeing the US Financial System

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/12/13_KWN_Special_-_Money_is_Fleeing_the_US_Financial_System.html

 

The question (at the conference) was, ‘Is money safe in the United States?’ The response was, ‘Unless you get some sort of written authority from whoever you are dealing with that they are not going to engage in this kind of activity, you are going to have to go to some other place where it’s not allowed.’ At least in London they have to have a signed agreement. They don’t in New York.

rjs's picture
rjs
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new highs for wheat stocks & liquids

Global Wheat Stocks are at their Highest Level in Twelve Years - All three categories have increased: global wheat production, global wheat consumption, and global wheat supply or stocks. graph: usda Global wheat production and consumption in 2011/12 are both projected at a record and stocks are forecast at the highest level in 12 years. In just 1 year, the market supply situation has completely reversed from one of extreme tightness to a surplus, particularly in exporting countries. Black Sea countries’ supplies have recovered from last year’s drought and Australia is expecting back-to-back bumper crops. The leap in global consumption is largely a function of abundant global wheat supplies, tight U.S. corn supplies, and the concurrent price inversion between the two grains.

IEA: 90mbd of Liquid Fuel in November - Both the IEA and OPEC reported big jumps in total liquid fuel supply in November: the IEA by 0.9mbd to a new high of 90mbd and OPEC by 1.35mbd to a new high for them of 89.15mb.  The graph above shows the short term changes since the beginning of 2008 - the average is up sharply and easily exceeding previous highs. This picture zooms out to the 2002-2011 timeframe and adds prices:Prices continue to drift downward overall as supply increases and uncertainty over Europe clouds the demand picture. Two new pictures this month.  Although I continue to think that total liquid fuel is the best overall indicator available at the moment (imperfect as it is), the EIA provides a helpful breakdown into individual components: "Crude plus condensate" which is hydrocarbons that come out of the ground in a liquid form, "Natural Gas Plant Liquids (NGPLS) which is hydrocarbons larger than methane removed from the natural gas stream, "Other Liquids" which includes biofuels, coal-to-liquids, gas-to-liquids, etc, and "Refinery Processing Gains" - volume gains which occur in the refinery as heavier oils are cracked to lighter fuel products.

 

Poet's picture
Poet
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Gold Down Below $1,580 Per Ounce

Gold down below $1,580 per ounce, as of time of this posting.

Poet

heffe's picture
heffe
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Posts: 95
Researchers develop material similar to insect cuticle

Shrilk is a material similar to aluminum in strength, but is cheaper to produce, biodegradable, and much lighter. Researchers at Harvard have found a way to mimic the insect cuticle, and soon enough this cost efficient method will replace plastics.

http://www.zeitnews.org/chemistry-physics-and-material-sciences-research/inspired-by-insect-cuticle-researchers-develop-low-cost-material-with-exceptional-strength-and-toughness.html

Damnthematrix's picture
Damnthematrix
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Another reason US drivers waste so much gas?

"A mobile speed camera along the Capital Beltway in Silver Spring has generated more than 21,000 tickets, which translates into $840,000 in fines, according to figures from AAA Mid-Atlantic."

I was blown away when I read this.....  a $40 speeding fine?  Last time I copped one of these here in Australia, and it was a few years ago, I was "caught" doing 11 km/h over the speed limit.  Result?  A $330 fine!

Driving "too fast" is one sure way of wasting gas.  And, I hasten to add, you're hearing this from someone who in the 70's had an average speed of 80MPH in his old British sports car!  About eight years ago, I discovered , literally by accident, that slowing down from 70MPH to 50MPH saves a staggering 20% in fuel.  Since then, I hardly ever go over 50/55MPH, and I regularly get 550/600 miles on a tankful of gas in my 2L Citroen...... and I would expect the difference may be even higher in an SUV with the aerodynamics of a cow!

I fully expect it's only a matter of time before the speed limit is reduced down to 55MPH, as it was way back in 1979 when I last visited the US.

Mike

Damnthematrix's picture
Damnthematrix
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Suspend habeas corpus and enact martial law?

Suspend habeas corpus and enact martial law?

By Chris Powell

Published: Monday, December 12, 2011 1:40 PM EST

Americans seem ready to forfeit their most basic civil liberty -- actually, all their civil liberties -- without a whimper.

By a vote of 93-7 the Senate this month approved a military appropriations bill empowering the government to designate any U.S. citizen within the country as a terrorist and to have the military hold him indefinitely without trial and without the right to habeas corpus, the right to be brought before a court for a judgment on the legality of one's imprisonment.

In effect the legislation is a declaration of martial law throughout the country.

The bill still has to be reconciled by a conference committee with a different version passed by the House of Representatives. But even Connecticut U.S. Rep. Joseph D. Courtney, a liberal Democrat and a member of the committee, plans to support the martial law provision and expects it to be enacted. Courtney, who used to be a lawyer, cites as consolation the money contained in the bill for Connecticut military contractors, tens of millions of dollars for jet fighter engines manufactured by the Pratt & Whitney division of United Technologies Corp. in East Hartford and for nuclear submarines made by the Electric Boat division of General Dynamics in Groton.

At least Connecticut’s junior senator, Richard Blumenthal, was one of 38 senators who voted to try to remove the martial law provision from the bill. Connecticut’s senior senator, Joseph I. Lieberman, who also used to be a lawyer but now is the Senate’s foremost advocate of perpetual imperial war, voted for martial law.

The Constitution prohibits suspension of the right of habeas corpus "unless when in cases of rebellion or invasion the public safety may require it." While habeas corpus was suspended in certain circumstances during the Civil War, there is no rebellion or invasion now and no impairment of the criminal-justice system, and the mere danger of terrorism does not constitute rebellion or invasion.

President Obama is threatening to veto the legislation but not so much for its suspension of habeas corpus. Rather, the bill is objectionable to the president because it would prevent the government from transferring terrorism suspects from the prison at Guantanamo Bay, Cuba, to installations in the United States, even for trial.

If the bill becomes law the president and his successors will gain dictatorial power, the power exercised by the worst tyrants in history -- Hitler, Stalin, and Mao -- the power to kidnap anyone off the street or out of his own home and lock him away incommunicado forever. The president will be able to do that even to members of Congress themselves, and while it would suit them right for enacting such an abomination, Americans better rise up and stop it if they don't want the country to slip into totalitarianism as Germany did in similar circumstances in 1933.

First the German people were demoralized and deprived of economic security by hyperinflation and depression. Then they were frightened into submission by the burning of the parliament building in Berlin, which was opportunistically depicted by the National Socialist-dominated coalition government as Communist Party terrorism and used as the pretext for a proclamation, issued the next day, suspending all civil liberties, including, specifically, habeas corpus. Three weeks later the Nazis persuaded parliament to surrender its power through the infamous Enabling Act, allowing the Nazi chancellor to rule by decree. He did so for 12 more years.

Eventually one of those decrees was the "Night and Fog" decree, under which people across Europe simply disappeared, never to be seen again.

Americans may have some vague awareness of the horror perpetrated by Germany back then. But do they have any idea of how closely they are following the Germans in what led to it? Our politicians don't seem to have any idea.

Republicans who scream about the supposed oppressiveness of a government that would require everyone to have medical insurance are rushing to give that government the power to make people disappear. And Democrats who chafe at the government's refusal to recognize same-sex marriage are ready to forfeit the longest-established and most substantial liberties because a free society can never eliminate the danger that someone can plant a bomb somewhere -- though a totalitarian society can't eliminate it either.

No amount of military contracting in Connecticut can be worth even a day without due process of law. The purpose of military contracting is to protect the country, and without due process of law the country will not be worth protecting.

Josey's picture
Josey
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Done!

Congress just passed the National Defense Authorization Act in a 283-to-136 vote. 190 Republicans and 93 Democrats voted for; 43 Republicans and 93 Democrats voted "against." Prepare to be arrested, without charge, if someone believes believe you engage in "terroristy" stuff. Good luck proving them wrong.

From Reuters:

 
 

The U.S. House of Representatives approved a defense bill on Wednesday requiring the military to handle suspected militants linked to al Qaeda, acting not long after President Barack Obama removed a veto threat from the controversial legislation.

 

The bill is expected to pass the Senate this week and then go to Obama's desk for his signature into law.

 

Shortly before the House vote, the White House announced the president's advisers would not recommend a veto, although they said they still had concerns about the measure.

 

The measure also imposes new sanctions against Iran's central bank and pre-emptively freezes some aid to Pakistan.

http://www.zerohedge.com/news/congress-passes-662-billion-defense-bill-aka-ndaa

Congratulations, Patriot Act. You are now complete. Ladies and gentlemen, load your guns.

rjs's picture
rjs
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Posts: 445
we're all terrorists now...
Josey wrote:

Congress just passed the National Defense Authorization Act in a 283-to-136 vote. 190 Republicans and 93 Democrats voted for; 43 Republicans and 93 Democrats voted "against." Prepare to be arrested, without charge, if someone believes believe you engage in "terroristy" stuff. Good luck proving them wrong.

Congratulations, Patriot Act. You are now complete. Ladies and gentlemen, load your guns.

yep, we're all terrorists now...

Woodman's picture
Woodman
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In depth look at Ron Paul on NPR

 

I liked during this program on On Point at NPR that one young caller voiced clear understanding and concern about our unstainable debt and spending.

onpoint.wbur.org/2011/12/13/an-in-depth-look-at-ron-paul

 

 

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britinbe
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saxplayer00o1's picture
saxplayer00o1
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''

 

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