Daily Digest

Daily Digest 2/8 - State Pension Fund Shortfall Grows, Portugal Unions Want Debt Renegotiation, Student Debt Could Be Next Bomb

Wednesday, February 8, 2012, 10:42 AM
  • Robert B. Reich: The downward mobility of the American middle class
  • State pension fund shortfall grows
  • 48,000 empty shops blight UK high streets
  • Pa. universities face steep cuts in gov's proposed budget; student aid also on chopping block
  • Swiss central banker warns on slowing economy
  • Portugal union leader wants debt renegotiation
  • Chinese banks cut exposure to euro zone -paper
  • Europe’s Banks Reluctant to Lend to Companies in Need of Cash
  • CBO: Federal Budget Deficit $349 Billion Through First Four Months Of FY12
  • British pensions face 85 bln pound deficit-study
  • Detroit squatters may be allowed to keep foreclosed homes
  • Cleveland: City mistakenly boards up man's home
  • Company Faces Forgery Charges in Mo. Foreclosures
  • Average U.S. gas prices hover at record-high levels
  • U.S. Student Debt Could Be Next ‘Bomb’
  • Airline industry split widens over EU carbon 'tax' row
  • Japan’s interest in gold and silver is growing

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Economy

Robert B. Reich: The downward mobility of the American middle class

January's increase in hiring is good news, but it masks a bigger and more disturbing story -- the continuing downward mobility of the American middle class.

Most of the new jobs being created are in the lower-wage sectors of the economy -- hospital orderlies and nursing aides, secretaries and temporary workers, retail and restaurant. Meanwhile, millions of Americans remain working only because they've agreed to cuts in wages and benefits. Others are settling for jobs that pay less than the jobs they've lost. Entry-level manufacturing jobs are paying half of what entry-level manufacturing jobs paid six years ago.

State pension fund shortfall grows (Iowa)

The gap between the promises Iowa has made for public employees’ retirement benefits and the money set aside to pay for them has grown to $5.7 billion – a 1,643 percent increase over 11 years, State Auditor David Vaudt said Monday.

“We had just a $327 million liability at the end of 2000. That has now grown to $5.7 billion, and that’s equal almost to one year’s general fund budget,” Vaudt said. “We’re going to need substantial resources in the future to improve the funded status of this particular plan.”

48,000 empty shops blight UK high streets

Britain's high streets are blighted by 48,000 vacant shops, according to the latest figures to highlight the problems afflicting the retail sector. During 2011, 14.3pc of all shops stood empty, equating to 48,000 units on shopping centres, retail parks and high streets, Local Data Company (LDC (Paris: FR0000053829 - news) ) figures showed.

This is a very modest improvement on the 14.5pc rate recorded a year ago, but nonetheless significantly worse than in 2009, when the average rate was 12pc, and 2008 when it was 5.5pc.

Pa. universities face steep cuts in gov's proposed budget; student aid also on chopping block

Pennsylvania's public colleges and universities are again facing the possibility of steep cutbacks in their budgets next year. And college students could receive less financial aid.

The state budget proposed Tuesday by Gov. Tom Corbett seeks to cut $330 million, or 20 percent, from 14 state-owned universities. Corbett also wants to reduce aid to Penn State, the University of Pittsburgh and Temple University by about 30 percent.

Swiss central banker warns on slowing economy

Switzerland's economy is expected to "slow considerably" this year and might require more central bank intervention to steady it despite the Swiss franc falling back against the euro, the Swiss National Bank's vice chairman said Tuesday.

In a speech to the Swiss-American Chamber of Commerce, Thomas Jordan said the nation's economy will probably "grow only weakly over the next few quarters of 2012" as it continues to suffer from turmoil in the global economy and particularly the escalating sovereign debt crisis in the eurozone.

Portugal union leader wants debt renegotiation

Portugal must renegotiate its debts rather than impose harsh austerity measures to overcome its economic crisis, the head of the country's largest trade union said on Wednesday, threatening to step up strikes if the government pushed on with cuts.

Chinese banks cut exposure to euro zone -paper

Chinese banks and companies in the northern port city of Tianjin have cut their exposure to Europe as the euro zone debt crisis festers, the official Financial News reported on Tuesday.

In a recent survey of 53 banks and 15 firms done by the local foreign exchange regulator, 11 banks said they had cut or stopped trade finance for European countries with high debt risk, suspended derivatives business with European banks, cut or stopped lending to foreign peers, particularly those from Europe, the newspaper said.

Europe’s Banks Reluctant to Lend to Companies in Need of Cash

European governments are not the only ones struggling with debt. So are some of the region’s companies.

As profits and sales slip, some European businesses are scrambling to pay their bills. Because banks are reluctant to lend, the fear is that companies will not be able to borrow the cash they need and will be forced to take drastic action, further weighing on the economy.

CBO: Federal Budget Deficit $349 Billion Through First Four Months Of FY12

The federal government recorded a budget deficit of $ 349 billion through the first four months of fiscal 2012, a $70 billion improvement on the same period of the previous fiscal year, the Congressional Budget Office said Tuesday.

The agency said however that without the timing of some payments to the Treasury, the deficit would only have been $39 billion smaller than in fiscal 2011.

British pensions face 85 bln pound deficit-study

British companies with defined benefit pension schemes are likely to face rising pressure to plug deficits that could grow by 85 billion pounds ($134 billion) this year against a backdrop of falling bond yields and prolonged market volatility, a survey on Tuesday showed.

If equity markets drop 10 percent more, UK gilt yields fall another 30 basis points and inflation stays just below 5 percent, UK defined benefit pension funds could see deficits spiral, pension liability insurer Pension Insurance Corporation (PIC) estimates in its latest Pension Risk Tracker Index.

Detroit squatters may be allowed to keep foreclosed homes

Wayne County will send people door to door to offer thousands of foreclosed Detroit homes for as little as $500, a move that would keep a roof over the head of squatters and possibly get properties back on the tax rolls. More than 6,000 Detroit homes, foreclosed because taxes weren’t paid, didn’t sell at auction last fall. The county treasurer’s office doesn’t want to see them abandoned and is willing to negotiate with anyone living inside, including owners who no longer have a right to the property.

Cleveland: City mistakenly boards up man's home

Steven Saric has lived in his home on Vineyard Avenue for seven years. One morning last July, he pulled into his driveway to find nails in his windows, his gutters stripped from the sides and his doors boarded up. ......Saric says the damage has cost him thousands of dollars and he can not afford the repairs. "A mistake was made. I'm not at fault. This has ruined my life for seven months already. Who is liable?" Saric said.

Interim Law Director Barbara Langhenry says that because the boarding up of structures is a "governmental function," the city is immune from liability.

Company Faces Forgery Charges in Mo. Foreclosures

One of the largest companies that provided home foreclosure services to lenders across the nation, DocX, has been indicted on forgery charges by a Missouri grand jury — one of the few criminal actions to follow reports of widespread improprieties against homeowners.

Average U.S. gas prices hover at record-high levels

January is typically a month of falling gasoline prices because fuel demand falters in the slower travel weeks that follow the year-end holidays. Not so this year.

In January, retail gasoline prices averaged $3.37 a gallon, according to the Oil Price Information Service, a private fuel information service. That compared with the previous record average for the month of $3.095 a gallon, set last year. In 2010, January gasoline prices averaged just $2.71 a gallon.

U.S. Student Debt Could Be Next ‘Bomb’

The National Association of Consumer Bankruptcy Attorneys, a group that represents consumer debtors and their lawyers, released a survey today of 860 bankruptcy attorneys in the U.S who are members of the organization.

Federal and private student-loan debt is approaching $1 trillion and surpassed credit-card debt for the first time in 2010, according to Mark Kantrowitz, publisher of FinAid.org, a college grant and loan website. The borrowing represents a threat reminiscent of the mortgage crisis, the attorneys group said in a statement. Under U.S. law, student-loan debt -- unlike credit-card borrowings -- can rarely be discharged in bankruptcy court.

Airline industry split widens over EU carbon 'tax' row

A split widened within the aviation industry Tuesday over EU charges for carbon emissions, as Europe's low-cost carriers accused Chinese and US rivals of "gunboat" diplomacy against the system.

A day after China barred its airlines from complying with what many consider a tax, the head of the International Air Transport Association (IATA) warned that several nations view the EU scheme as an "attack on sovereignty".

Japan’s interest in gold and silver is growing (Marketwatch blog)

Trading data shows that Japan’s interest in gold and silver has climbed year on year. “Concerns about the Japanese economy and continuing debasement of the yen USDJPY+0.37% may be leading Japanese diversification into gold,” said Mark O’Byrne, executive director at GoldCore, noting that Japan had been “notably absent” in the gold market in recent years.

The “scale of domestic savings in Japan remains enormous,” he said. “This would be a new and potentially extremely important source of demand in the gold market, which could help contribute to much higher gold prices.”

Daily open interest in gold futures contracts averaged 124,352 contracts in 2011, up nearly 15% from 2010, according to data from the Tokyo Commodity Exchange (TOCOM). Silver futures saw daily open interest averaging 8,345 contracts last year, up 59.5% from a year earlier.

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5 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4239
Bill Hicks's picture
Bill Hicks
Status: Bronze Member (Offline)
Joined: Jul 3 2011
Posts: 34
Mass Layoffs Hammering the Solar Power Industry

 http://billhicksisdead.blogspot.com/2012/02/mass-layoffs-hammering-solar-power.html

The money quote from the story:

Some manufacturers blame their Chinese rivals for the pileup of unused solar panels and the big drop in prices. SolarWorld, which runs a solar panel factory in Oregon, joined six other manufacturers in filing a trade complaint with the U.S. International Trade Commission and the U.S. Department of Commerce last October. The companies contend that Chinese manufactures are selling their products at prices far below the cost of producing them, and they are able to do that because they receive heavy and unfair subsidies from the Chinese government.

 

And my reaction:

The fact that Chinese workers are willing to do the job for a fraction of what Americans are paid is no doubt a factor, as is the fact that China essentially has no environmental regulations. Look, we can argue all day about whether large scale solar power really has the potential to replace fossil fuels (as I've said before, I'm not a subscriber to that theory). Nevertheless, even if it could be part of the answer, I think it is clear from this story that as long as we have unrestricted globalization, what solar power will certainly not be able to do is create a substantial number of new good paying jobs in this country as politicos like President Hopey-Changey would like us to believe.

 

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4239
U.S. Faces Downgrade If No Plan: Chambers

U.S. Faces Downgrade If No Plan: Chambers

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
consumer credit

the last 2 months are breaking records:

http://www.federalreserve.gov/releases/g19/Current

h2oBoy's picture
h2oBoy
Status: Bronze Member (Offline)
Joined: Jun 18 2009
Posts: 52
Mass Layoffs Hammering the Solar Power Industry

 

...I think it is clear from this story that as long as we have unrestricted globalization, what solar power will certainly not be able to do is create a substantial number of new good paying jobs in this country as politicos like President Hopey-Changey would like us to believe.

In light of peaking oil and our massive debt, and the fact (as CM recently stated) that both political parties ignore these issues because they have no real answers, I take offense at the juvenile reference,President Hopey-Changey.

I am an independent and am convinced the Republicans would make an even bigger mess if allowed.

Peace

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