Daily Digest

Daily Digest 1/5 - Catalonia Missed Budget-Deficit Target, Unemployment Rises in Metro Areas, Fed: Economy Too Weak

Wednesday, January 5, 2011, 11:00 AM
  • Currency Intervention by Chile Central Bank
  • Harrisburg Workers Again At Risk Of Not Getting Paid
  • Spain’s Catalonia Region Says Missed 2010 Budget-Deficit Target
  • Kansas Delays School Aid Payments
  • VAT Increased To 20 Per Cent (UK)
  • Berkeley Heights School Facing Harsh Budget Reality (NJ)
  • Unemployment Rises In Two-Thirds Of Metro Areas
  • Fed Minutes: Economy Still Too Weak To Cut Off Stimulus
  • Unemployment Health Fee Rises (Massachusetts)
  • Christie Says He Is Preparing To Reduce Health Benefits For Public Employees (New Jersey)
  • Rogoff Says EU Debt Crisis Will Take Years to Clear, Members Face Default

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Currency Intervention by Chile Central Bank

Central Bank of Chile plans to buy $12 billion in the foreign exchange market tomorrow in order to depreciate the peso against the US dollar.
Jose De Gregorio, Central Bank President disclosed a plan yesterday to buy $50 million a day from January 5 until February 9, the second times in less than three years.
Chile's peso appreciated 17 percent against the US dollar since the end of June 2010, and also against the Australian dollar due to rise in copper prices that boosted the trade prospects in the country, the world's biggest producer of copper.
"This is the biggest exchange rate intervention that has been announced in our country," Finance Minister Felipe Larrain told reporters in Santiago. "It seems to us to be a measure that is on the right track and that will have an impact on the exchange rate."

Harrisburg Workers Again At Risk Of Not Getting Paid

Employees in the distressed capital city Harrisburg, Pa., once again find their paychecks this week in jeopardy--this time because of a disagreement over protocol. 
City Controller Dan Miller is barring the release of paychecks due Thursday for the city's 543 workers because the 2011 budget hasn't been enacted. 
"Without a budget, we can't pay bills," said Miller.... Harrisburg last month was accepted into the state's oversight program for distressed municipalities known as Act 47. City administration officials hope the program will lead to fiscal recovery. Meanwhile, New York law firm Cravath, Swaine & Moore LLP has started work on advising the city council on a possible bankruptcy filing; the mayor opposes bankruptcy.p>

Spain’s Catalonia Region Says Missed 2010 Budget-Deficit Target

Catalonia, Spain’s biggest region, missed its budget-deficit target last year, as it struggles with a slump in tax revenue and rising borrowing costs. 
The regional government elected in November expects the 2010 deficit to “significantly” exceed the overall target set for the regional administration of 2.4 percent of gross domestic product, said an official in the Catalan government, citing the region’s new president, Artur Mas.

Kansas Delays School Aid Payments

Kansas delayed half of the aid payments due to its public school districts at the start of the new year for a few days because of concerns about a short-term cash crunch, an official confirmed Tuesday.
Elaine Frisbie, deputy state budget director, told The Associated Press that $98 million in funds that normally would have reached school districts Monday won't get to them until the end of this week. The state paid the other half of the aid on time.
She said the state decided to be cautious after its tax collections in December were about $22 million short of expectations.

VAT Increased To 20 Per Cent (UK)

The rate of VAT has risen from 17.5 to 20 per cent as the government attempts to cut the UK’s debt.
Analysts believe retailers will be significantly affected by the change. Opponents of the increase fear the poorest will suffer the most from the change.
The rise was announced in the June budget. The government says boosting tax revenues is necessary to cut the country’s debt levels.

Berkeley Heights School Facing Harsh Budget Reality (NJ)

Although the current budget is more than $1 million less than last years, the unexpected loss of $2.1 million in state aid plus an additional $700,000 in state aid that was to be paid in the 2009/2010 budget had severe repercussions that will last into the next budget.
In order to “make up” for the loss of $2.8 million, the district had to use almost all of its available surplus to close the gap and that means there is almost no surplus left to use as tax relief for the 2011 budget. Board Vice President John Sincaglia put the surplus figure around $400,000 and said it was “dangerously low.”

Unemployment Rises In Two-Thirds Of Metro Areas

Unemployment rates rose in more than two-thirds of the nation's largest metro areas in November, a sharp reversal from the previous month and the most since June.
The Labor Department said Tuesday that unemployment rates rose in 258 of the 372 largest cities, fell in 88 and remained the same in 26. That's worse than the previous month, when rates fell in 200 areas and rose in 108.

Fed Minutes: Economy Still Too Weak To Cut Off Stimulus

The economy remains sluggish and the jobs situation too bleak for the Federal Reserve to consider halting the $600 billion asset purchase plan announced in November, the minutes of the last Federal Open Market Committee meeting said Tuesday.
Although participants saw incoming info "pointing to some improvement in near-term outlook," policy makers remained deeply concerned about unemployment hovering near 10 percent.
With the Fed suggesting the risk of deflation is receding and that core inflation has bottomed out, the benefits of the bond purchase program outweigh any possible negative consequences, according to Fed officials.

Unemployment Health Fee Rises (Massachusetts)

The Unemployment Health Insurance Rate Review Board voted to raise the rate on employers from $33.60 per employee in 2010 to $50.40 this year, according to the Statehouse News Service.
The increase will help the state address a $95 million deficit in the fund projected for June 30, 2011. Enrollment in the program rose from 8,396 in November 2008 to more than 23,700 in November 2010....According to the news service, Gov. Deval Patrick has not yet decided whether to freeze unemployment insurance rates for employers in 2011. The rates are scheduled to rise by $259 per employee this year.

Christie Says He Is Preparing To Reduce Health Benefits For Public Employees (New Jersey)

Christie said the state public employees' pension system is underfunded by $54 million and that he is attempting to cut benefits, raise the retirement age and the amount of public employee contributions. "If our plan gets put into place, we can cut that deficit in half in 15 years," he said.
Christie reiterated his opposition to President Obama‘s fledgling health care program. He described the plan as "insane" and said it will bankrupt the states. 
"What the (now Republican-controlled) House needs to do is to stop shoveling money to the states," the governor said. "It's like giving more drugs to addicts. Let everybody (the states) buck up and make the tough (financial) decisions. We are doing that in New Jersey and the public is responding extremely well."

Rogoff Says EU Debt Crisis Will Take Years to Clear, Members Face Default

Harvard University professor Kenneth Rogoff said the fallout from Europe’s debt crisis will linger for years as the region faces the possibility of default amongst some of its fiscally weakest members.... “The unsustainable public debt and public expenditure is a question Europe and the United States will be confronted with big time over the next decade,” Rogoff said.

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."


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Re: Daily Digest 1/5 - Catalonia Missed Budget-Deficit ...

"BEIJING (MNI) - China should cut its holdings of U.S Treasuries to minimize losses on its foreign exchange reserves and let the yuan move more freely, Yu Yongding said in an opinion piece published in Caijing magazine.

Moving towards a more market-driven exchange rate would mean reduced intervention in the foreign currency markets, giving China the option of winding down its holdings of U.S. debt, Yu said. "

"Yu reiterated that the latest round of U.S. government stimulus could lead to a weaker dollar which would, in turn, erode the value of China's dollar-denominated holdings. These are estimated to total about 70% of its $2.65 trillion in foreign exchange reserves."

"Europe’s currency has extended last year’s 6.5 percent decline against the greenback as concern about the sovereign- debt crisis dogs the region. Switzerland’s central bank won’t take Irish government bonds due to be repaid between 2011 and 2025 as collateral, the Irish Independent reported today, citing data from the bank.

Portugal Bill Sale

The bank excluded Irish government debt and bonds held by a group of Irish and foreign lenders based in the country from its list of eligible assets for so-called ‘repo’ deals, the Dublin- based newspaper reported today.

Portugal sold 500 million euros of bills due in July at an average yield of 3.686 percent. That compares with a yield of 2.045 percent at a previous auction on Sept. 1. The auction attracted bids for 2.6 times the amount offered, compared with a bid-to-cover ratio of 2.4 in September.

The sale makes Portugal the first of Europe’s high-deficit nations to test investor demand for debt this year after the threat of default forced Greece and Ireland to seek bailouts in 2010."

.......................2A) Portugal Pays Higher Rate to Sell Debt

"The average interest rate of 3.7 percent was close to twice 2 percent rate Portugal paid on similar bonds in September — a reminder that Europe's debt crisis isn't over, as investors continue to demand a higher premium to back more indebted countries.

"This is a major hike in cost — 80 percent," said David Buik, markets analyst at BGC Partners."

"Without revealing details of his inaugural remarks and his State of the State speech kicking off the legislative session, Malloy indicated he will join California Gov. Jerry Brown and New York Gov. Andrew Cuomo in preaching the need for sacrifices.

"I am preparing the people of Connecticut for the challenge that lays before them," he said, calling the state's looming $3.5 billion deficit the largest per-capita shortfall in the United States. "A deficit that I can't cut my way out of, nor can I tax my way out of.""

"Denmark’s biggest pension fund, ATP, said it won’t touch government bonds issued by the European Union’s most indebted nations as it deems the risk too great.

“We invest in government bonds in order to purchase interest-rate risk, whereby we try to avoid credit risk entirely,” said Lars Rohde, chief executive officer at ATP, which is based north of Copenhagen, in an e-mailed reply to questions today. “This means that we for a long time have completely avoided government debt issued by Greece, Ireland and so forth; our European government bond holdings only include Danish, German and, to a lesser degree, French bonds.”"

"Pacific Investment Management Co.’s Bill Gross said investors should favor emerging market corporate and sovereign debt as “mindless’ U.S. deficit spending may result in higher inflation, a weaker dollar and the eventual loss of America’s AAA credit rating.

Buying debt in emerging market countries with higher real interest rates and wider credit spreads will offer more return as well as protection from dollar depreciation as U.S policy makers run up record deficits at the expense of economic growth, Gross, the manager of the world’s biggest bond fund, wrote in his monthly investment outlook."

"Food prices hit a record high last month, surpassing the levels seen during the 2007-08 crisis, the UN’s Food and Agricultural Organisation said on Wednesday.

The Rome-based organisation said the increase did not constitute a crisis. But Abdolreza Abbassian, senior economist at the FAO, acknowledged that the situation was “alarming”. He added: “It will be foolish to assume this is the peak.”"

......................6A) World Food Prices Rise to Record on Sugar, Meat Costs

"World food prices rose to a record in December on higher sugar, grain and oilseed costs, the United Nations said, exceeding levels reached in 2008 that sparked deadly riots from Haiti to Egypt.

An index of 55 food commodities tracked by the Food and Agriculture Organization gained for a sixth month to 214.7 points, above the previous all-time high of 213.5 in June 2008, the Rome-based UN agency said in a monthly report. The gauges for sugar and meat prices advanced to records. "

.........................6B) Clashes in Bolivia over rising bread prices (Video)

"Deutsche Bank AG and Rabobank Nederland led European lenders selling U.S. bonds yesterday ahead of euro-area countries, beset by the sovereign debt crisis, that need to raise $1.1 trillion this year. "

"Vacancies at U.S. neighborhood and community shopping centers climbed in the fourth quarter from a year earlier as unemployment lingered close to 10 percent, real estate research company Reis Inc. said.

The vacancy rate at shopping centers rose to 10.9 percent from 10.6 percent a year earlier, the New York-based firm said today in a report. It was unchanged from the prior two quarters, when the rate reached the highest level since 1991. The record of 11.1 percent was set in 1990, according to Reis data going back 30 years.

Retail tenants and landlords are grappling with a jobless rate that rose to 9.8 percent in November, the latest period for which figures are available, from 9.6 percent the prior month. The best holiday sales in five years likely had little impact on vacancies, leading only to short-term leases by seasonal retailers, according to Reis. "

  • Other news, headlines and opinion:

World Bank issues first yuan-denominated bond

Fed May Keep Easing at `Full Throttle' Until Jobless Rate Falls

Monetary Base Tops Y100tln 1st Time Since April '06 (Japan)

FDIC Sues Ex-Bank Executives for $2.5 Billion

State's Billion-Dollar Investment Still Frozen (Hawaii)

Poland Plans Biggest Bond Issue Since August as Yields Increase on Rates

State plan gives some services to cities, counties (California)

Debt protection cost on Irish financials increases over holidays

EU Prices Euro Bond for Debt Bailouts

Most City Unions Accept Wage Concessions As Santa Clara Faces Ongoing Deficit

At Least 40% of LME Copper Shorts in March Held by One Company, Data Show

Romania May Seek EU Financing to Revive Credit, Basescu Says

InformedCitizenNews (Video)

High oil prices could crimp recovery (Video)

2011: A Look at Risk and Uncertainty (McAlvany audio...Please listen at 27 minutes to hear about China/US Treasuries. Very important.)

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Re: Daily Digest 1/5 - Catalonia Missed Budget-Deficit ...

Tonight on History Channel (from today's Drumbeat at ToD):

Premiere: Prophets of Doom (airing tonight on The History Channel)

Three futurists look to the past and propose different theories on how America will decline, and ultimately meet its end.

   Nate Hagens and Jim Kunstler are among those interviewed.

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Re: Daily Digest 1/5 - Catalonia Missed Budget-Deficit ...
jkibbe wrote:

Tonight on History Channel (from today's Drumbeat at ToD):

Premiere: Prophets of Doom (airing tonight on The History Channel)

Three futurists look to the past and propose different theories on how America will decline, and ultimately meet its end.

   Nate Hagens and Jim Kunstler are among those interviewed.

Should be interesting.  I passed on that one....didn't like the framing at all.  

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Re: Daily Digest 1/5 - Catalonia Missed Budget-Deficit ...

Is The New Madrid Fault Earthquake Zone Coming To Life? - What in the world is happening in the middle of the United States right now?  Thousands of birds are falling dead from the skies, tens of thousands of fish are washing up on shore dead, earthquakes are popping up in weird and unexpected places and people are starting to get really freaked out about all of this.  Well, one theory is that the New Madrid fault zone is coming to life.  The New Madrid fault zone is six times bigger than the San Andreas fault zone in California and it covers portions of Illinois, Indiana, Missouri, Arkansas, Kentucky, Tennessee and Mississippi.  The biggest earthquakes in the history of the United States were caused by the New Madrid fault.  Now there are fears that the New Madrid fault zone could be coming to life again, and if a "killer earthquake" does strike it could change all of our lives forever. So exactly what events have happened recently that are causing people to take a close look at the New Madrid fault zone?  *According to the U.S. Geological Survey, more than 500 measurable earthquakes have been recorded in central Arkansas just since September.

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Re: Daily Digest 1/5 - New Madrid ...

The New Madrid earthquake(s) of December 12, 1811 through April 1812...

Intersesting sidebar in the fall of 1811 it was noted thousands of squirrels were observed headed south....

For an excellent read check out:

"When the Mississippi Ran Backwards"  by Jay Feldman




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Re: Daily Digest 1/5 - Catalonia Missed Budget-Deficit ...
rjs wrote:

 What in the world is happening in the middle of the United States right now?  Thousands of birds are falling dead from the skies, tens of thousands of fish are washing up on shore dead, earthquakes are popping up in weird and unexpected places and people are starting to get really freaked out about all of this......


Reading this, I´m sure the divine biblical front will fall prey to another: "I knew it, the ungodly world is coming to an end." delusion.


Thousands of birds are falling dead from the skies,(Traumatized by fireworks?, a virus?)

Tens of thousands of fish are washing up on shore dead, ( I wonder where all that Deepwater Horizon oil went?)

Earthquakes are popping up in weird and unexpected places ( weird and unexpected? Looks like Humans only start to understand the nature of geology on Mother Earth. Since we live on a planet with a core that has a temperature of 4000-5000 degrees Celsius, with a liquid outer core ( width over 2k Kilometers), we problably have to realize that more is possible in geological terms, than we´ve learned during our short stay on this planet .)

However, I agree the list of tragedies on our planet is endless, in particular if you add the atrocities that one or many humans are capable of commiting to others.

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Aussie lamestreet media waking up...??

Food prices tipped to climb from record high
By Simon Lauder


There are worrying signs that the basic needs of the world's population are  reaching a critical point, after food prices hit an all-time high last month.

There are also warnings that oil prices are in a danger zone which could derail global economic recovery.

UN Food and Agriculture Organisation (FAO) chief economist Abdolreza Abbassian says food prices are expected to climb even higher due to the unpredictability of current weather activity.

"Something we were expecting to be of short period is not only being prolonged, but its intensity has increased," he said.

"This certainly is a concern for an organisation like FAO where our real responsibility is to look after how the poorer countries and countries which are food insecure would have to basically deal with the situations like we have

Prices of foods including cereals, dairy, meat and sugar are higher than they were in 2008, when a food crisis sparked riots in Egypt, Cameroon and Haiti.

But Mr Abbassian says while in the past prices rose quickly and fell quickly, the situation has changed.

"The supply/demand structures have changed," he said.

"Certainly the kind of weather developments we have seen makes us worry a little bit more, that ... it may last much, much longer."

Though Mr Abbassian says some of the factors which caused riots of recent years are absent, including a surge in crude oil prices, this week's two-year high in oil prices is causing concern on another front.

As stocks decline and demand increases, most analysts predict prices will continue to rise this year and the impact could be felt much more widely than the local petrol station.

The International Energy Agency says oil prices could threaten economic recovery in developed nations.

The agency's chief economist, Fatih Birol, told the Financial Times newspaper "oil prices are entering a dangerous zone for the global economy and oil import bills are becoming a threat to economic recovery".

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Re: Daily Digest 1/5 - Catalonia Missed Budget-Deficit ...

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Re: Daily Digest 1/5 - Catalonia Missed Budget-Deficit ...


The audio interview with David McAlvany (2011: A look at Risk and Uncertainty) was one of the best ever.  Thanks!

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Re: Daily Digest 1/5 - Catalonia Missed Budget-Deficit ...




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Re: Daily Digest 1/5 - Catalonia Missed Budget-Deficit ...

Frontrunning: January 5  http://www.zerohedge.com/article/frontrunning-january-5-0
One Minute Macro Summary  http://www.zerohedge.com/article/one-minute-macro-summary-0
Today's Economic Events  http://www.zerohedge.com/article/todays-economic-events-3
The Race to Debase Encompasses the Whole Planet  http://www.caseyresearch.com/gsd/edition/race-debase-encompasses-whole-p...
In The News Today, Hourly Action In Gold From Trader Dan, Improvement In Preliminary Jobs Report Misleading, Inflation In Eurozone, Jim’s Mailbox  http://jsmineset.com/

Kansas City Fed president calls gold standard 'very legitimate'  http://www.gata.org/node/9485
Brazil says it won't let U.S. 'melt the dollar'  http://www.gata.org/node/9484
World food price index hits record high  http://www.gata.org/node/9483

Tonight's guest is Lee Doren, communications coordinator at the Competitive Enterprise Institute & publisher of the "HowTheWorldWorks" YouTube channel, on whether House Republicans are wimping out before they even begin.  http://www.schiffradio.com/
Pentonomics - ADP May Stand For A Dubious Prediction  http://www.europac.net/pentonomics/adp_may_stand_dubious_prediction

FSN In Depth: Craig Smith, Crashing the Dollar: How to Survive a Global Currency Crisis  http://www.financialsense.com/financial-sense-newshour/in-depth/craig-sm...
John Embry - Gold Over $2,000, Silver Above $50 in 2011  http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/1/5_John_Embry_-_Gold_Over_$2,000,_Silver_Above_$50_in_2011.html
Strong 2011 Expected for Gold Shares Despite Initial Weakness  http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/1/5_Str...
Rick Rule (Audio)  http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/1/5_Ri...

Tonight's guest is Oz Griebel, CEO of the MetroHartford Alliance, who will discuss ways Connecticut can stop scaring away new jobs creators and instead start inviting new ones.  http://www.schiffradio.com/

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Re: Daily Digest 1/5 - Catalonia Missed Budget-Deficit ...

It's jobs, jobs, jobs. I would like to see a four hour day, guaranteed to anyone who wants a place to sleep and a bed. That way people would always have a place to eat and sleep for four hours of work doing anything, sweeping, answering a phone, watching a play ground, picking up trash. High unemployment and under employment is tragic. People need jobs. As times get tough there should be a safety net where people can go to get off the street and be safe but a place they earned, not one given to them. 

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Re: Daily Digest 1/5 - Catalonia Missed Budget-Deficit ...

Pentagon Seeks Biggest Military Cuts



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