Daily Digest

Daily Digest 1/26 - Potholes Gape as Funds Fade, Rising Food Prices Around World, Record Teen Jobless Rate

Wednesday, January 26, 2011, 11:00 AM
  • IMF Chides Us For Fiscal Folly
  • Potholes Gape From Detroit to New York as Funds Fade
  • Christie Says He’ll Go to Illinois to Lure Jobs to New Jersey
  • Christie Says Medicaid to Be Biggest Budget Challenge
  • McDonald's Will Raise Prices In 2011
  • Evenflo To Raise Prices For Baby Products
  • Rising Costs Threaten Corporate Profits
  • Food Price Rise May Be Lasting-Nestle Chairman
  • Food Prices Rise Around The World
  • Vailas: Idaho State Budget Fat Trimmed To The Bone
  • 27.6% Teen Jobless Rate For 2010 An Illinois Record
  • Sandoval Speech Focuses on Budget Crisis, Education (Nevada)

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Economy

IMF Chides Us For Fiscal Folly

The IMF said the deficit would remain stuck at 10.75pc of GDP in 2011, with public debt exceeding 110pc of GDP in 2016. "The absence of a credible, medium-term fiscal strategy would eventually drive up US interest rates, which could prove disruptive for global financial markets and for the world economy," it said. The report called for an assault on America's entitlements behemoth, and caps on discretionary spending.... While the US has been the most complacent about fiscal slippage, the Fund called for "urgent" action to rein in spending across the industrial world. "Problems in Greece, and now Ireland, have reignited questions about sovereign debt sustainability and banking sector health in a broader set of euro area countries and possibly beyond. Market pressures could result in serious funding pressures for major banks and sovereigns, increasing the likelihood that problems spill over to core countries."

Potholes Gape From Detroit to New York as Funds Fade

Hamtramck, a city of 20,000 largely ringed by Detroit that has asked the state to let it file for bankruptcy protection, doesn’t have enough spare cash to repave a single street, according to Mayor Karen Majewski. Money for payrolls will run out in March in the Michigan municipality where General Motors Co. builds Chevrolet’s Volt, the mayor said this month in a telephone interview. “There is no money for fixing anything,” Majewski said. “Finding money to fix roads, it’s just impossibility.”

Christie Says He’ll Go to Illinois to Lure Jobs to New Jersey

The first-term New Jersey governor said he sees opportunity in Illinois Governor Pat Quinn’s decision to increase the income tax by two-thirds and corporate taxes to 7 percent from 4.8 percent to help reduce a deficit of at least $13 billion. “If he wants to tank his economy, that’s just fine,” Christie, a 48-year-old Republican, said in an interview at Bloomberg News headquarters in New York today. “I’ll go and try to collect as many businesses as I can, and every job that I create, that I take from Illinois, which comes to New Jersey, will be a net plus for us.”

Christie Says Medicaid to Be Biggest Budget Challenge

The state's Medicaid program, which provides health care for the poor, faces a $1.4 billion deficit because of the loss of assistance from the federal government and the requirement to maintain services at levels mandated by the U.S., Christie said. "The biggest problem in the budget is Medicaid," said Christie. "We're in a situation this year where we lose $900 million in federal funding for Medicaid but are being told that we can't reduce benefits. In times of flat or declining revenue you run out of options quickly."

McDonald's Will Raise Prices In 2011

The company has blamed the price hike on the rising prices of some of the ingredients it uses. Extreme weather around the world has created problems for farmers and contributed to shortages. There has been heavy rain in Canada, floods in Australia and drought in Russia. These conditions sharply raised prices for corn and wheat in 2010. The prices of cattle, hog and chicken also went up. Rising prices are also being seen at grocery stores and are hurting restaurants everywhere, meaning that other eateries could soon follow McDonald's lead.

Evenflo To Raise Prices For Baby Products

Prices for such popular baby products as strollers and car seats are about to increase. That’s because infant and juvenile products manufacturer Evenflo Company Inc. plans a 7 percent to 10 percent price hike in its baby and child products. Higher commodity prices are driving the increases — the first in three years for the Miamisburg-based company — and will take effect Feb. 15.

Rising Costs Threaten Corporate Profits

The rising cost of commodities ranging from oil to food is emerging as the main threat to an earnings recovery that has helped push U.S. stocks to their highest levels since the 2008 financial crisis. Major U.S. companies across a spectrum of industries, from blue-chip manufacturing companies 3M Co (MMM.N) and DuPont Co (DD.N), to tissues and diapers maker Kimberly-Clark Corp (KMB.N) and fashion accessories house Coach (COH.N) cited rising costs as a risk to growth this year.

Food Price Rise May Be Lasting-Nestle Chairman

A "worrisome" rise in world food prices may be long-lived, the chairman of Nestle (NESN.VX), the world's biggest food group, told a German newspaper. "The financial and economic crisis in 2008 put an abrupt end to price rises. I am afraid that this time the rise could be lasting," Peter Brabeck told the Frankfurter Allgemeine Zeitung in an interview released on the paper's Internet site ahead of publication on Wednesday. Brabeck said it was "madness" to turn agricultural areas over to the production of biodiesel, even if targets for production of the fuel had been trimmed.

Food Prices Rise Around The World

The United Nations' food agency warns the world is nearing a food crisis. Prices are going up, and the U.N. is calling for rules to curb speculation in grain and other commodity markets.

Vailas: Idaho State Budget Fat Trimmed To The Bone

Idaho State University president Arthur Vailas says there's few areas of spending left to cut at his school after three years of declines in higher education funding....The schools want $260 million in state general funds for the next fiscal year, up from $217.5 million this year. But the state's portion would drop to $214.6 million and the universities would have to bring in more dedicated funds, which include tuition and fees, under the governor's budget recommendation.

27.6% Teen Jobless Rate For 2010 An Illinois Record

More than a quarter of Illinois teenagers looking for jobs last year could not find one, according to preliminary data by the Employment Policies Institute, a think-tank that focuses on entry-level employment issues. Illinois’ rate climbed to a record high of 27.6 percent, up from 25.8 percent in 2009 and well above the national average of 25.9 percent. “Unfortunately, in Illinois as in other states, teens still have it really rough,” said Michael Saltsman, a research fellow at the institute. Illinois was among 15 states with the highest unemployment rate for teens age 16 to 19. Georgia had the highest rate at 36.3 percent, up 7.3 percent from 2009.

Sandoval Speech Focuses on Budget Crisis, Education (Nevada)

Governor Brian Sandoval says Nevadans are being confronted on all sides by bad news. The governor gave his State of the State Address in Carson City Monday night, and the outlook was grim....The governor focused on the $1.2 billion budget hole he inherited. Sandoval has submitted a budget to the legislature with 8 percent in spending cuts. He has also proposed the consolidation, elimination or centralization of 20 agencies and departments.


 

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."

9 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4239
Deficit to hit new record this year: CBO..($1.48 Trillion)

"The U.S. will suffer a “train wreck” at the hands of bond investors if it fails to solve its budget problems, said Nouriel Roubini, the economist who predicted the financial crisis. "

"San Jose's employee pension bill, $63 million a decade ago, is now projected to be $248 million in the upcoming budget year, up from the $194 million that had been anticipated a year ago, even though the city's staff has shrunk from more than 7,000 to fewer than 6,000.

The city is facing its 10th consecutive budget shortfall in July, which has shot up from $70 million last fall to nearly $110 million as the pension bill continues to mount. The city is about $3 billion to $3.5 billion short of covering the projected cost of pension and retiree health care benefits for current and former workers.

Even so, only one council member, Pierluigi Oliverio, said the city should offer future workers the same retirement available to most privately employed taxpayers: Social Security and a defined-contribution 401(k) plan."

"The U.S. budget deficit will hit a record $1.48 trillion in fiscal 2011, the Congressional Budget Office said Wednesday, in a fresh estimate of the country’s fiscal situation that’s likely to spark more calls to stanch the flow of government red ink."

"Buyers purchased the fewest number of new homes last year on records going back 47 years.

Sales for all of 2010 totaled 321,000, a drop of 14.4 percent from the 375,000 homes sold in 2009, the Commerce Department said Wednesday. It was the fifth consecutive year that sales have declined after hitting record highs for the five previous years when the housing market was booming."

 

  • Other news, headlines and opinion:

Japan new govt debt to rise 22 pct in FY '14 - MOF

Greece default with Ireland breaks euro by 2016: poll

Texas nursing home operators fear Medicaid cuts three times deeper than expected

Failure to end "too big to fail" could trigger next financial crisis: SIGTARP

Moody's says keeping Fannie, Freddie intact is lose-lose

Rich but troubled NY county fights fiscal takeover

Santa Rosa grapples with $100 million pension shortage

Detroit's deepening education deficit

Dallas ISD now preparing for $260 million funding cut 

Think $113 Million AISD Deficit Is Bad? Consider This Armageddon Scenario

Universities Concerned About Budget Cuts (Michigan)

"Newswatch In-Depth" to focus on Ohio budget crisis

Obama Deficit Cuts Dismissed at Davos as Not Deep Enough

 Pension costs to hurt Dearborn Schools next year

MarkM's picture
MarkM
Status: Platinum Member (Offline)
Joined: Jul 22 2008
Posts: 856
Re: Deficit to hit new record this year: CBO..($1.48 ...

It appears the storm will finally hit Texas. It seems as though we have been somewhat insulated here. However, those of us who have been paying attention knew that we were on our way to the party, we would just be arriving a little late.

http://www.texasobserver.org/contrarian/the-budget-deficit-from-hell

"The Comptroller’s office released its official revenue estimate, and the news must have made jaws hit the floor (at least mine did): $27 billion.

And with that, Texas became one of those states—the kind of place that makes national news for its budget woes, the place that closes state parks, that doesn’t just cut public programs, but wipes them out entirely, that combines school districts and lays off thousands of public employees. "

Tall's picture
Tall
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Posts: 564
Re: Daily Digest 1/26 - Potholes Gape as Funds Fade, Rising ...

Financial Crisis Was Avoidable, Inquiry Finds

The 2008 financial crisis was an “avoidable” disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street, according to the conclusions of a federal inquiry.

The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

“The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done,” the panel wrote in the report’s conclusions, which were read by The New York Times. “If we accept this notion, it will happen again.”

http://www.nytimes.com/2011/01/26/business/economy/26inquiry.html?adxnnl=1&ref=business&src=me&adxnnlx=1296058624-yk7xtvvOMmiHXLkls9yDrA

dcm's picture
dcm
Status: Silver Member (Offline)
Joined: Apr 14 2009
Posts: 219
Re: Daily Digest 1/26 - Potholes Gape as Funds Fade, Rising ...

anyone else getting a little, oh, concerned about everything to do with food? 

Nate's picture
Nate
Status: Platinum Member (Offline)
Joined: May 5 2009
Posts: 605
Re: Daily Digest 1/26 - Potholes Gape as Funds Fade, Rising ...

dcm

Many levels to view the food issue. 

It's sad to see so many suffering because they haven't put any thought into where their food comes from.  It will only get worse.

It's a non-event regarding my own caloric intake.

It's fantastic when you own Iowa farmland.

But let's be honest.  Hungry people are not happy people.  Let's hope we have outstanding farming weather around the globe this year.

MarkM's picture
MarkM
Status: Platinum Member (Offline)
Joined: Jul 22 2008
Posts: 856
Re: Daily Digest 1/26 - Potholes Gape as Funds Fade, Rising ...
Nate wrote:

Hungry people are not happy people. 

...and liberty does not fill empty stomachs.  Truly hungry people are likely to make choices regarding their leadership based on promises of food...possibly very poor choices.

idoctor's picture
idoctor
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Posts: 1731
Re: Daily Digest 1/26 - Potholes Gape as Funds Fade, Rising ...

burhan49's picture
burhan49
Status: Member (Offline)
Joined: Jan 26 2011
Posts: 3
Re: Daily Digest 1/26 - Potholes Gape as Funds Fade, Rising ...

thanks

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