Daily Digest

Daily Digest 2/29 - Cities Borrowing From Pensions, Euro Leaders Postpone Debt Meeting, EU Pressures Spain On Budget

Wednesday, February 29, 2012, 11:45 AM
  • European Investment Bank Said to Share ECB Exemption From Greek Writedowns
  • GE to 3M Pension Pain Mounts as Fed Policy Boosts Liabilities
  • ECB to launch second wave of euro 'quantitative easing'
  • Greece cuts minimum wage as austerity drive begins
  • 880,000 pensions hit by Japan investment scandal
  • To Pay New York Pension Fund, Cities Borrow From It First
  • European Leaders Postpone Debt Crisis Meeting
  • Schaeuble says would regret but accept any eurozone exit
  • EU Commission pressures Spain on budget
  • Federal budget cuts could cost Mass. 50,000 jobs
  • The price of diesel hits record high of £1.50 a litre
  • Spain to Present 2012 Spending Plan After Missing Deficit Target
  • Tricare Military Retiree Costs Would Jump in Budget Plan
  • Postal Service to Close 14 Mail Processing Centers in California
  • Yorkshire Water fibreglass covers to stop metal theft
  • Kraemer Says Greek Debt Swap May Impede Portugal Selling Bonds
  • Huge private debts spell trouble in Europe
  • Stockton Vote May Avoid Bankruptcy
  • Despite tax growth, Palo Alto braces for deficits
  • Will higher gasoline prices change the way we live?
  • Harris wants Fannie and Freddie to halt foreclosures
  • Rise in Homeless Students Stifles Florida Town
  • Fear of death on the streets as homeless numbers soar
  • Small firms prep for rise in gas prices
  • Airlines Respond to Rising Fuel Costs with Fresh Fare Hikes
  • Gas prices lead to bike boom in OK
  • 10 countries with the most massive debt
  • Analysis: New central bank cash glut risks "monetary anarchy"
  • Tehran considers trade payments in gold
  • City Collects $1M In Red Light Camera Fines; New Sites Planned
  • Memphis Faces $47 Million Shortfall for 2013 Budget
  • Ex-city treasurer charged in Detroit pension probe
  • Retirement Funds Used to Boost Company Profits
  • Dallas Has $1.5 Billion in Unfunded Flood Control Problems

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Economy

European Investment Bank Said to Share ECB Exemption From Greek Writedowns

The European Investment Bank, owned by the 27-member bloc, is getting exemptions from Greek debt writedowns in the same way as the euro area’s central bank, according to two regional officials familiar with the matter.

The European Central Bank negotiated a deal to avoid the 53.5 percent loss on principal that’s costing private investors as much as 106 billion euros ($143 billion). The EIB, which unlike its Frankfurt-based counterpart represents the entire European Union, also owns Greece’s debt and is sidestepping the so-called haircut in the same way, said the officials, who declined to be identified because the plan isn’t public.

GE to 3M Pension Pain Mounts as Fed Policy Boosts Liabilities

General Electric Co., Boeing Co. and 3M Co. will join big U.S. employers in making a record $100 billion in 2012 pension contributions, 67 percent more than two years ago, as low interest rates boost companies' liabilities.

Payments may total $400 billion from 2011 through 2015 to ease underfunding at the 100 largest defined-benefit programs, according to consultant Milliman Inc., which estimated that assets in January were enough to cover less than three-fourths of projected payouts.

ECB to launch second wave of euro 'quantitative easing'

The European Central Bank will on Wednesday step up its campaign to stabilise the euro, forestall a new credit crunch and shore up troubled banks when it floods the markets with hundreds of billions of easy money for the second time in two months.

The offer of three-year loans to banks at the cheap interest rate of 1% represents a boon for the banking sector in the troubled eurozone periphery, and is broadly seen as a masterstroke by ECB president Mario Draghi of Italy, who launched the policy in December in one of his first moves as president.

Greece cuts minimum wage as austerity drive begins

Greek ministers agreed deep cuts to the minimum wage on Tuesday, slashing living standards for low-paid workers as Athens began implementing measures demanded by international lenders in return for a 130 billion euro (110 billion pound) rescue package. Cabinet approved the cuts, which will hit workers already struggling after more than four years of deep recession, as it signed off on a series of steps agreed in principle by parliament last week, a government official said.

880,000 pensions hit by Japan investment scandal

A growing scandal around an investment company that has lost $2.3 billion has affected pensions for up to 880,000 people, Japan’s government said Tuesday. AIJ Investment Advisors has reportedly been lying to clients for years, boasting of annual returns of up to 240 percent while in fact 185 billion yen in pension investments has melted away. The company’s operations were suspended last week and the government ordered a probe of 260 asset management firms nationwide after allegations that most of the money in its care had disappeared. The scandal has shocked Japan, where a rapidly ageing middle class population is increasingly looking to private pension funds, while the state retirement pot also struggles due to gross mismanagement of its own.

To Pay New York Pension Fund, Cities Borrow From It First

And now, their fears are being realized: cities throughout the state, wealthy towns such as Southampton and East Hampton, counties like Nassau and Suffolk, and other public employers like the Westchester Medical Center and the New York Public Library are all managing their rising pension bills by borrowing from the very same $140 billion pension fund to which they owe money.

European Leaders Postpone Debt Crisis Meeting

European political leaders on Tuesday postponed a crucial crisis meeting planned for later this week after a series of new setbacks to the euro illustrated again how hard it is to reconcile impatient financial markets with democratic processes.

Schaeuble says would regret but accept any eurozone exit

Finance Minister Wolfgang Schaeuble pointed out that the 17-member eurozone and 27-strong European Union were based on various principles, which included freedom, a constitutional state and non-discrimination.

"If a country were to decide to leave them, it's something we would regret but which it would be necessary to accept in accordance with these principles," he told reporters. The minister was questioned in particular about debt-stricken Greece. German lawmakers on Monday widely endorsed a second, 130-billion-euro ($175-billion) rescue package from the eurozone and International Monetary Fund for Athens. His comments follow those by German Interior Minister Hans-Peter Friedrich in Der Spiegel news weekly that Greece would stand a better chance of becoming competitive outside the eurozone

EU Commission pressures Spain on budget

Spain must explain soon to the European Commission why its 2011 budget deficit was substantially higher than expected and deliver clear future budget plans, the Commission said on Tuesday.

Spain's 2011 budget deficit came to 8.51 percent of GDP, the finance minister said on Monday, up from early estimates of 8.2 percent and far above forecasts from the Commission for something nearer 6.5 percent.

Federal budget cuts could cost Mass. 50,000 jobs

Looming federal budget cuts could cost Massachusetts more than 50,000 jobs over the next decade - mainly in key sectors such as defense, technology, and health care - and "strike at the very heart" of the state's innovation economy, an analysis by researchers at the University of Massachusetts Donahue Institute shows.

Automatic across-the-board cuts are scheduled to start in 2013 unless the deeply divided Congress agrees to a better deal to lower the national debt. The automatic cuts would reduce federal spending by $1.2 trillion over the next 10 years by slashing the defense budget and support for other programs, including Medicare.

The price of diesel hits record high of £1.50 a litre (UK)

Yesterday the price of diesel hit a record high of £1.50 a litre, as Chancellor George Osborne made the announcement that in next month’s Budget he couldn’t afford fuel duty cuts.

The expensive Shell garage was spotted on the M6 near Coventry, with the average prices now standing at 143.61p for diesel and 135.39p for petrol. Since the fuel protests in 2000, the cost of filling up has doubled and experts have predicted the price will continue to rise, due to the instability in the Middle East.

Spain to Present 2012 Spending Plan After Missing Deficit Target

The premier has already increased taxes and cut spending to reduce the deficit by 15 billion euros ($20 billion). He will need to find another 25 billion euros if 2012 deficit goals are left unchanged, Moody’s Investors Service estimates.

Montoro said the larger-than-estimated 2011 deficit was due to slippage in Spain’s 17 semi-autonomous regions and the social-security system. The adjustment effort needed this year is not known yet and the government is working on it, he said.

Tricare Military Retiree Costs Would Jump in Budget Plan

Pentagon officials will continue pressing in 2013 for significantly higher Tricare fees for military retirees, including older retirees covered by Tricare for Life, as well as higher drug co-pays for all Tricare beneficiaries.

The Defense Department's proposed 2013 budget calls for annual enrollment fees for retirees in Tricare Prime to rise next year by 30 percent to 78 percent, from the current $460 or $520 for families to between $600 and $820, depending on military retirement income.

Postal Service to Close 14 Mail Processing Centers in California

The U.S. Postal service plans to close nearly half of the nation’s mail processing centers beginning May 15 -- fourteen of which are in California alone. The move, which follows a five-month study on 264 of the country’s 461 centers, puts more than 35,000 workers’ jobs at stake.

The plan is USPS’s latest attempt to stem mounting losses. At the current rate, the postal service’s debt is projected to reach $18 billion by 2015. The mail center consolidations are part of a plan to save $2 billion per year and $20 billion by 2015.

Yorkshire Water fibreglass covers to stop metal theft

Peter Ramsay, security and emergency planning manager at Yorkshire Water, said: "The problem ranges from the opportunist theft of one of our sewer or hydrant covers, to the organised theft of hundreds of metres of cable or copper pipe, and even larger appliances such as lifting equipment and generators."

Kraemer Says Greek Debt Swap May Impede Portugal Selling Bonds

Moritz Kraemer, head of sovereign ratings at Standard & Poor’s, said the terms of Greece’s debt restructuring and the European Central Bank’s move to isolate itself from any resulting losses may make it harder for other indebted euro nations such as Portugal to raise financing.

“Some of the decisions that have been taken recently may make re-accessing the capital markets harder, rather than easier,” Kraemer said in an interview with Bloomberg Television’s Linda Yueh in London today. “Many of these decisions may actually make it harder for countries like Portugal to return to the markets.”

Huge private debts spell trouble in Europe

Away from the markets' fixation with the debts of Greece and other governments, concern is growing at the painfully slow progress Europe is making in tackling a much bigger mountain of corporate and household debt. With austerity pointing to weak growth if not outright recession, the risk is that the burden of servicing the debt can only increase, causing a rise in bad loans. The spotlight then would fall on the capacity of banks to take losses and whether they might have to turn to their governments for help.

And overindebtedness is not con-fined to the periphery of the bloc. Denmark, Sweden and the Netherlands all have private-sector debt that far exceeds the safety threshold of 160 per cent of GDP set by the European Commission as part of a new exercise to detect and correct risky macroeconomic imbalances.

Stockton Vote May Avoid Bankruptcy (News video)

The Stockton City Council will vote today on a package of measures that would allow the city to stall debt payments and renegotiate contracts in an effort to avoid bankruptcy.

City Manager Bob Deis announced last week the city will attempt to use mediation to work out debt with creditors and long-term health benefits with employees. The city is facing a $450 million, unfunded liability in long-term health benefits for past employees.

Deis called the benefit a “Ponzi scheme” that never had funding and has locked the city into unaffordable payments.

Despite tax growth, Palo Alto braces for deficits (California)

But while revenues are projected to grow, they are not expected to keep pace with expenditures, particularly the sharply rising cost of employee health care and pension benefits. The forecast pegs the total cost of benefits in fiscal year 2012 at $36.8 million. By 2017, the number is expected to gradually balloon to $51.2 million because of the two trends.

The city's health care expenditures, according to the forecast, have grown by 126 percent over the past decade, going from $6.6 million in 2002 to $14.9 million this year. The trend is expected to continue and to swallow up a greater chunk of the city's General Fund. The pension costs are following a similar trend, having jumped from $15.6 million in 2005 to $23.9 million in 2012.p>

Will higher gasoline prices change the way we live?

Rising gasoline prices may finally kill the milkman, as an article in The Times notes. As gas prices continue to climb – 26 cents in the last week in California, 57 cents in the last year – they may also fundamentally change the way we live. Picture $1,000 cross-country flights, no school buses, more expensive mail. Homes concentrated around job centers, extensive train networks and far fewer things made out of plastic – which contains petroleum.

“For us to avoid those types of prices, we’re going to have to dramatically change,” said Chris Steiner, author of "$20 Per Gallon, How the Inevitable Rise in Gasoline Prices Will Change Our Lives for the Better."

Harris wants Fannie and Freddie to halt foreclosures (California)

California Attorney General Kamala Harris is going after the two giant government-owned mortgage companies -- demanding that they push the pause button on home foreclosures. Harris is asking Fannie Mae and Freddie Mac to stop all home foreclosures for now. It would be a massive move, because between them, they own more than 60 percent of California mortgages.

Earlier this month, Harris secured for California $18 billion out of a $26 billion settlement with five banks, to help underwater homeowners. Most of the money is slated to reduce the mortgage principle for underwater homeowners. Fannie and Freddie have so far balked at doing the same.

Rise in Homeless Students Stifles Fla. Town

Here in Lake County the number of homeless students has skyrocketed, from 122 in 2005 to more than 2,600 this school year. It's the largest increase in hard hit Florida and echoes the rising numbers seen nationwide as well.

Fear of death on the streets as homeless numbers soar (Manchester..UK)

The number of people sleeping rough in Manchester is soaring, according to homeless charities. The Mustard Tree says this winter has brought its busiest three months since opening in 1994.

And a boss at the Ancoats-based charity has warned the situation is so bad Manchester could end up with dead bodies on the streets. Another charity, city centre-based Barnabus, says the number of men and women accessing its drop-in centre has almost doubled in 12 months. Charity chiefs have warned the number could grow worse as economic woes continue.

Small firms prep for rise in gas prices

If the spike continues, Yamini expects his suppliers to charge him more for goods, a cost he'll pass along to consumers. He expects suppliers to also apply fuel surcharges. But if that translates into slower business, Yamini said he'll be forced to let go of drivers and operators, too.

Airlines Respond to Rising Fuel Costs with Fresh Fare Hikes

Airlines are raising their fares again because of skyrocketing fuel prices, and that has people thinking twice about flying.

The price of oil is going up. Drivers in Southern California are feeling the pain at the pump, and airlines are paying more for jet fuel. Now, they're looking to pass that extra cost on to passengers by raising fares. United Continental was the first airline to do so. A few days ago, they raised prices between $4 and $10 per round trip ticket. Other airlines, including American, Delta, U.S. Airways, Frontier and Virgin, followed suit.

Gas prices lead to bike boom in OK

Move over motor vehicles, you may have noticed more bikes on Oklahoma roads lately. A sharp increase in gas prices has made bikes a popular and practical alternative. Cyclist Brian Bottoms said, "Not only does it help with the fitness end, it also saves money in the long run getting to and from work." Brian Bottoms rides to and from work every day, 25 miles round trip, and saves about $80 a month in fuel.

He's among an estimated 87 million people nationally who have climbed on a bike in the past 12 months.

10 countries with the most massive debt

According to 24/7 Wall Street, these nations have the developed world’s highest debt-to-GDP ratios.

Analysis: New central bank cash glut risks "monetary anarchy"

The scale of money printing in the West has become so massive that the world may fall prey to "monetary anarchy," with traces of bubbles appearing everywhere. At least that's what some critics see in the latest round of cash pumping by major central banks.

It is also an eerily reminiscent of 2011, when similarly generous monetary easing sparked higher oil prices, slowed the recovery and stoked speculative hot money flows into vulnerable emerging markets.

Tehran considers trade payments in gold (FT)

Iran is to consider accepting gold as payment for oil and other commodities

City Collects $1M In Red Light Camera Fines; New Sites Planned (Columbus)

The first red light camera came online in Columbus in 2006. Last year, public safety collected more than $1 million in fines, and new intersections are on the list for a camera.

Memphis Faces $47 Million Shortfall for 2013 Budget

Councilman Myron Lowery believes there are a couple of things the city can do to curb the deficit, “We need to have a new source of revenue bringing in more dollars to the city, and I’m not talking about taxes I’m taking about new sources of revenue.” Lowery would like to add speed violation to red light cameras.

This could charge anyone a fine that speeds through an intersection. An Increase of revenue could also mean adding fees for city inspections and collecting on old fines like parking tickets or court fees.

Ex-city treasurer charged in Detroit pension probe

Beasley, a fraternity brother of ex-mayor Kwame Kilpatrick's at Florida A&M University, accepted the bribes and kickbacks in return for approving more than $200 million in pension fund investments, prosecutors said Tuesday.

Beasley conspired with others to pocket bribes, including cash, travel, meals, golf clubs, drinks, gambling money, hotel rooms, entertainment, Las Vegas concert tickets, massages, limousine rides and private plane trips, prosecutors said.....The city's pension funds have lost more than $84 million on investments linked to Beasley's actions, prosecutors said.

Retirement Funds Used to Boost Company Profits

Beware, your employer could be stealing your retirement savings. Remember back in the 1990s when pension plans touted surpluses? Those days are long gone, as many corporations froze the plans or eliminated them altogether. Underfunded pensions became the norm.

Dallas Has $1.5 Billion in Unfunded Flood Control Problems

Dallas has $1.5 billion in unfunded flood control problems, according to a City Council committee briefing Monday.

Widespread flooding in March 2006 that made Baylor Medical Center an island and submerged several freeways is blamed in part on the problems the city had known about for years.

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: 4145
Bill Hicks's picture
Bill Hicks
Status: Bronze Member (Offline)
Joined: Jul 3 2011
Posts: 34
U.S. Job Quality Crashes During The "Recovery"

http://billhicksisdead.blogspot.com/2012/02/us-job-quality-crashes-during-recovery.html

Surprise! Surprise!

The story:

A July report from the National Employment Law Project, a New York–based advocacy group, found that while employment losses during the recession were concentrated in midwage occupations, gains during the early part of the recovery were greatest in lower-wage occupations. During the early recovery, there was relatively large employment growth in lower-wage jobs such as retail salespeople and office clerks, compared with losses in higher-wage occupations such as police officers, first-line supervisors, and managers of construction trades and extraction workers.



With almost 13 million unemployed workers, competition is intense, and some workers with new jobs are taking cuts in pay and responsibilities. Henry Farber, an economist at Princeton University in New Jersey, studied employment in the Great Recession, and found that job losers who found new positions earned on average 17.5% less in the new job.

And my reaction:

See, all it took was for the country to borrow over $5 trillion it didn't have in just over three years to bring us all the way back to where we are slowly creating crappy jobs with no benefits.

 

 

thc0655's picture
thc0655
Status: Diamond Member (Offline)
Joined: Apr 27 2010
Posts: 1614
Jesse's take on 2/29 gold+silver plunge

 Here's a different take on today's take down in gold and silver (as of 11:55 am, anyway):

http://jessescrossroadscafe.blogspot.com/2012/02/today-is-first-notice-d...   

thc0655's picture
thc0655
Status: Diamond Member (Offline)
Joined: Apr 27 2010
Posts: 1614
Red light and police tickets in Philly

In Philadelphia, police tickets for motorists are down 35% so they are pressured to write more (for the sake of public safety of course, not city finances).  There are more tickets from red light cameras, but that's because more have been installed.  

http://www.philly.com/philly/news/homepage/20120221_35_percent_dropoff_i...  

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4145
Portuguese bond yields climb on default fears

 

Portuguese bond yields climb on default fears

ezlxq1949's picture
ezlxq1949
Status: Silver Member (Offline)
Joined: Apr 29 2009
Posts: 217
Fuel prices in Canberra

FYI.

Yesterday I paid $1.519 per litre for diesel, which converts to USD$ 6.18 per gallon. Petrol is 10-15 cents cheaper per litre. Gas costs about half diesel.

There's some complaining about the prices but not as much as one might expect. People have adjusted to the higher prices. A bit like boiling the frog, perhaps? I have no idea how expensive diesel & petrol must become before complaining starts in earnest and people start suffering.

tomccoy1's picture
tomccoy1
Status: Member (Offline)
Joined: Nov 8 2010
Posts: 21
Banks Flock to ECB for $712 Billion USD.

 This appears to be the most important news item of 2012 and the ECB hands out $712 Billion US in candy today.  QE3 is now here, as the US Federal Reserve provides swaps and $ through the IMF to the ECB.  Very interesting day indeed.  

KennethPollinger's picture
KennethPollinger
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 654
Surviving and Living Well in Costa Rica

 CONGRATULATIONS to Chris and the EEEcommunity.  I've been following all this informative

correspondence for some time and want to express my GRATITUDE to Chris and all you far-seeing
colleagues.
 
As preparation for whatever, which may include:
 
-financial collapse, and/or economic upheaval
-major solar flare disturbances
-earth changes: earthquakes, floods, fires, volcanoes, hurricanes, tsunamis, etc.
-geomagnetic and geophysical pole shifts (just pray in the latter)
-nuclear accidents
-peak resources, especially oil
-food and water shortages
-political/military takeover (fascism, USA style)
-planet X (Nibiru) return, with concomitant upheavals
-diseases/wars
-internet sabotage
-astroid/comet impacts
-fill in the blank ___________
 
 
So, in appreciation and GRATITUDE, I'd like to share ANOTHER OPTION:
 
SURVIVING and even LIVING WELL IN COSTA RICA
 
Some benefits:
 
-weather: if on higher ground, 80 daytime, 60 at night--delicious!
              (there are 13 climate zones here, everything EXCEPT snow and bitter cold)
-sun power: solar creativity abounds, all year round
               (wind and small scale hydroelectric systems available)
-Food: many organic farmers's markets; or, grow your own all year round
-eat all meal outside on the porch all year round  (the tropics)
-heat/AC: not needed  SAVE A BUNDLE!  Or, if in a cooler climate, wood heat is sufficient
-clothes:  light set, plus sandals; wash by hand, dry by sun
-electricity: mostly hydroelectric dams for about 95% of country's needs
-property TAX: 0.25%  (that's right, folks!)
-capital gains: ZERO
-location: southern section: green all year round: forests, trees, rivers, waterfalls, etc
-people: salt of the earth: family/community is top value/beautiful people in appearance as well as in spirit
-living costs: retire here part-or-full time on your pension/social security
                   (many northamericans live here on social security alone)
-real estate: a lot and a house could easily be about $75,000.
-no military!!!
-internet: decent and getting better all the time
-neighbors: many "foreigners" with wonderful skills, builders, plumbers, electricians, etc.
       MOST IMPORTANT:  you build once but maintenance/caretaking is constant
-more but this is a good start.
 
As an example, please see my website: www.AwarenessCenters.com,
click onto Costa Rica Retreat on left side, then onto Overview of Three Communities
as well as two videos or the FLYER.
 
 
NOTE: It is important that you visit and see for yourself.  Best to RENT
awhile BEFORE buying to evaluate if Costa Rica is for you.
 
Again, I thank all of you for your inspiring assistance.
robie robinson's picture
robie robinson
Status: Diamond Member (Offline)
Joined: Aug 25 2009
Posts: 1182
Doggonit

and i've been waiting to die to get to heaven,KennethPollinger. Sounds like you've found it. Actually, if you can't find "Walden" where you are, you won't find it.  robie

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