Daily Digest

Daily Digest 12/7 - Ireland Cuts Growth Forecast, Homeless Students Increase In Numbers, Soup Kitchens Overflow

Wednesday, December 7, 2011, 10:45 AM
  • Ireland Cuts Economic Growth Forecast as Debt Crisis Escalates
  • Downgrade threat could prove final blow to euro rescue fund
  • Russia Faces Capital Flight
  • Hungary banks take FX hit, brace for more pain
  • Poland Cuts Growth Forecast For 2012 Budget Bill
  • Bernanke calls bombshell loan articles flawed
  • Latvia’s Forecast for 2012 GDP ‘Too Optimistic,’ Rimsevics Says
  • Copper thefts create many traffic, street light outages in Vallejo and elsewhere
  • Sovereign-Debt Test U-Turn Too Late to Save EBA Credibility
  • Philly controller: 8 empty schools threaten safety
  • More and more students in local schools are homeless
  • Regents approve 8 percent tuition increase
  • Michigan: More hungry people at local soup kitchens
  • Nomura Cuts Euro Forecast to $1.20 Saying Italy May Default
  • Irish Finance Minister: Seeks EU Agreement To Cut Debt Load

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Economy

Ireland Cuts Economic Growth Forecast as Debt Crisis Escalates

Ireland’s government lowered its economic growth forecast for 2012 for the second time in five weeks as the euro region’s debt crisis escalates.

Delivering the second part of the budget in Dublin, Finance Minister Michael Noonan said gross domestic product will rise 1.3 percent, down from 1.6 percent he forecast on Nov. 4....Noonan said today he’ll raise the country’s sales tax, levies on deposit interests and taxes on tobacco, as part of austerity measures aimed at winning a return to international credit markets.

Downgrade threat could prove final blow to euro rescue fund

The threat of a credit downgrade to the euro zone's top economies leaves the bloc's EFSF bailout fund dangerously exposed, piling yet more pressure on the European Central Bank to step in as lender of last resort.

The fund has struggled to attract investors even with the backing of six AAA-rated governments, and on Tuesday S&P followed up a warning of possible downgrades for 15 euro economies by saying it is also reviewing the EFSF.

Russia Faces Capital Flight

Capital flight from Russia, already at $64 billion this year, is likely to intensify in coming months as a weak showing by Prime Minister Vladimir Putin's United Russia party in parliamentary elections heightens political uncertainty, economists said.

The net capital outflow, blamed on European banks and wealthy Russians concerned about a government shake-up, is now expected to exceed $85 billion in 2011, acting Finance Minister Anton Siluanov said late Monday.

Hungary banks take FX hit, brace for more pain

Banks in Hungary will incur losses of over 200 billion forints ($900 million) under the government's foreign currency mortgage relief plan and charges to lenders could exceed double that sum in coming years under a proposal by the sector, a top banker said.

Hungarian households are struggling with FX mortgage debt totalling about 5 trillion forints, most of it denominated in Swiss francs, a currency which is about a third stronger versus the forint than the average level when most mortgage loans were made. The resulting income erosion has prompted the government to tackle what it has called "debt slavery".

Poland Cuts Growth Forecast For 2012 Budget Bill

The Polish government Tuesday approved a revision of the budget bill for 2012, officially cutting its economic growth forecast for next year to 2.5% from 4% in the original draft, Prime Minister Donald Tusk told a press conference.

Bernanke calls bombshell loan articles flawed

Recent press reports misrepresented Fed lending during the 2007-2009 financial crisis, the Fed chairman said.

Bloomberg Markets Magazine last month published an article called "Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress." Banks reaped an estimated $13 billion of income as a result of taking emergency loans from the central bank, Bloomberg said.

Latvia’s Forecast for 2012 GDP ‘Too Optimistic,’ Rimsevics Says

Latvia’s estimate for 2.5 percent economic growth next year is “too optimistic” because conditions in the euro area are deteriorating, said central bank Governor Ilmars Rimsevics said.

“This estimate is too optimistic and means that at the time when the budget estimate was accepted, Europe was in one situation and three months later the situation has worsened,” Rimsevics said today on Latvian Television program 900 Seconds. “We have to be ready no later than at the beginning of next year to look at what else we can do.”

Copper thefts create many traffic, street light outages in Vallejo and elsewhere

Some 77 city lighting fixtures have had their copper wiring stolen since May, and the city has wracked up about a $220,000 bill to replace stolen copper city-wide since January, Schreiner estimated.

For the first time, the Public Works Department will need to approach the Vallejo City Council mid-budget year, seeking to supplement its supply-purchasing account because of all the replacement copper needed, Kleinschmidt said.

Sovereign-Debt Test U-Turn Too Late to Save EBA Credibility

Less than five months after conducting stress tests that found banks needed to raise 2.5 billion euros ($3.4 billion), the European Banking Authority may tell lenders that they need 40 times that amount to defend against losses on sovereign debt.

The regulator may release updated figures on how much capital lenders should raise to absorb losses from euro-area bonds as early as this week, three people familiar with the matter said. The London-based watchdog's stress tests in July were criticized for failing to include writedowns on sovereign debt held to maturity.

Philly controller: 8 empty schools threaten safety

The city controller in Philadelphia says eight vacant schools pose a threat to public safety, and that at least one should be demolished immediately. Controller Alan Butkovitz said Tuesday that his office found drug paraphernalia, vandalism, litter and structural problems at the sites. He says the former Roberto Clemente Middle School is so dilapidated it should be taken down now.

Schools spokesman Fernando Gallard (guy-YARD') says officials strive to keep shuttered buildings safe and secure while looking for buyers or new uses. But he says cost is a challenge. The cash-strapped district faced a $629 million budget gap this year.

More and more students in local schools are homeless (Boise)

Social workers with the Boise School District say the increase in homeless students this year is "astronomical." And it's not just Boise schools. All the major school districts in the Treasure Valley are seeing an increase in homeless students, which is creating a new set of challenges for educators. There are 345 children who attend Taft Elementary School in Boise, and 30 of them are homeless.

Nine-year-old Dakota makes a home out of building blocks. It is something he and his little brother Ethan don't have right now. "We lost our own home back in September," said Michelle Whiteley

Regents approve 8 percent tuition increase (Nevada)

Tuition has increased by 33 percent since 2009, with a 13 percent increase taking effect this year.

Michigan: More hungry people at local soup kitchens (Video)

Food pantries in numerous cities in Michigan are struggling to keep up with demand for food from the jobless and homeless in what was once one of the most prosperous states in the U.S. Flint MI, the hometown of General Motors and once part of what was termed The Arsenal of Democracy during World War 2, is struggling with outmigration, unemployment, and mortgage foreclosures. While the automobile industry once employed approximately 70,000 people in the area, this number has dropped dramatically over the last twenty years and resulted in decay and despair.

Nomura Cuts Euro Forecast to $1.20 Saying Italy May Default

Nomura International Plc cut its forecast for the euro to $1.20, citing the risk that Italy will default next year if the European Central Bank fails to step up support for the country.

Foreign investors will keep selling their euro assets if the ECB doesn’t step in as a lender of last resort, Nomura strategists including Jens Nordvig in New York, wrote in a note to clients dated yesterday. Nomura previously predicted the euro would trade at $1.32 by the middle of next year.

“The ECB will be forced to either commit to full-blown quantitative easing to save the euro by ring-fencing Italy; or face an Italian default in 2012,” the analysts wrote. “This scenario would involve a high risk of euro-zone break-up.”

Irish Finance Minister: Seeks EU Agreement To Cut Debt Load

Ireland is still seeking with European Union authorities to get a reduction in the country's overall debt burden, but the negotiations may take some time, Irish Finance Minister Michael Noonan said Tuesday.

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4 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4066
ECB Says Demand for Dollar Loans Surges After Cost Lowered

 

"The European Central Bank said demand for three-month dollar loans surged after it almost halved the cost of the funds in a concerted action with five other central banks including the U.S. Federal Reserve.
The Frankfurt-based ECB said it will lend $50.7 billion to 34 euro-area banks tomorrow for 84 days at a fixed rate of 0.59 percent. That compares with the $395 million lent in the last three-month offering on Nov. 9 at a rate of 1.09 percent. The ECB also lent five banks $1.6 billion in its regular weekly dollar operation, up from $352 million last week. The ECB doesn’t disclose the identity of the banks it lends to.
On Nov. 30, six central banks including the Fed, the ECB and the Bank of Japan cut the cost of emergency dollar loans by 50 basis points in a global effort to ease a credit shortage worsened by Europe’s sovereign debt crisis. Yesterday, demand for seven-day dollar loans from the Bank of Japan surged to $25 million from $1 million. "
 

 

"The German government has all but given up hope of persuading all 27 nations in the European Union to rally behind a French-German proposal for limited treaty changes to safeguard the euro currency and help stem the euro- zone debt crisis, a senior government official said Wednesday.
"I am more pessimistic than I was last week on the chances of total agreement, " the official said on condition of anonymity"

Other headlines:

  1. Economists see France losing AAA in 3 months: Reuters poll
  2. Citigroup cuts 4,500 jobs amid worsening eurozone sovereign debt crisis
  3. Anxious Greeks Emptying Their Bank Accounts

..............Massive Emergency Bailout Temporarily Saves European Implosion (McAlvany audio...click where it says Audio MP3 and listen.)

 

Tall's picture
Tall
Status: Platinum Member (Offline)
Joined: Feb 18 2010
Posts: 564
NZSailor's picture
NZSailor
Status: Bronze Member (Offline)
Joined: Oct 4 2008
Posts: 60
Interesting "On-Point" interview with Niall Ferguson (audio)

Here's a link to an interview with Niall Ferguson... some of the issues discussed include

  • That societal collapse may happen very quickly vs slowly
  • Social instability because of what is happening now
  • The larger issues surrounding our problems... not just evil banks
  • China on a commodites buying spree
  • China/US relations and interdependance

http://onpoint.wbur.org/2011/12/05/the-west-in-decline

Its well worth a listen (also downloadable on itunes).....

Chip

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Rebel Against the Banks or Accept Debt-Serfdom

http://www.informationclearinghouse.info/article29898.htm

 

It's Your Choice, Europe: Rebel Against the Banks or Accept Debt-Serfdom

The European debt Bubble has burst, and the repricing of risk and debt cannot be put back in the bottle.

By Charles Hugh Smith

December 06, 2011 "Of Two Minds" --  It's really this simple, Europe: either rebel against the banks or accept decades of debt-serfdom. All the millions of words published about the European debt crisis can be distilled down a handful of simple dynamics. Once we understand those, then the choice between resistance and debt-serfdom is revealed as the only choice: the rest of the "options" are illusory.

<SNIP>

In simple terms, this is the stark reality: now that debt and risk have been repriced, Europe's debts are completely, totally unpayable. There is no way to keep adding to the Matterhorn of debt at the old cheap rate of interest, and there is no way to roll over the trillions of euros in debt that are coming due at the old near-zero rates.

Never mind actually paying down debt, sovereign, corporate and private--the repricing of risk and debt mean even the interest payments are unpayable. Consider this chart of one tiny slice of total EU debt:

There is no way to push the repricing genie back in the bottle, and so there is no way to roll over this debt and add to it--and to support the high-cost structure of Euroland's welfare-state governments and their astounding debt, then debt must be added, and in staggering quantities.

 

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