Daily Digest

Daily Digest 3/23 - U.S. Debt Situation At Tipping Point, NJ School Cuts Unconstitutional, Gas, Food Prices Hurt Rural Families

Wednesday, March 23, 2011, 10:42 AM
  • Rural Oregon counties face bankruptcy without state help
  • Fed's Fisher: U.S. debt situation at tipping point
  • Massive enrollment cuts at CSU expected
  • Florida Courts May Furlough Without Emergency Cash
  • Starbucks raises prices on packaged coffee
  • State health plan faces higher costs, fewer benefits
  • Plan would charge San Francisco workers more for benefits
  • Judge: New Jersey School Cuts Unconstitutional
  • Budget Board OKs $100M SC Medicaid Agency Bailout
  • China to count local debt in national budget: minister
  • Fed makes record $79.3B payment to U.S. Treasury
  • Portugal braces for government collapse over debt vote
  • Eurozone bonds face boycott by investors
  • Higher oil prices hamper fuel-dependent businesses
  • Gas, food prices double whammy for rural families
  • Food prices expected to rise in Arizona

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Economy

Rural Oregon counties face bankruptcy without state help

Rural counties desperate to keep their jails open and sheriff's patrols on the road if a federal timber-related subsidy goes away are hoping the Legislature will come to the rescue with a stopgap funding plan.

But lawmakers have no idea where the money would come from, given the state's budget crisis, and the best counties can expect may be loans instead of grants.

Fed's Fisher: U.S. debt situation at tipping point

The U.S. debt situation is at a "tipping point," Dallas Federal Reserve Bank President Richard Fisher said on Tuesday, and urged the U.S. central bank to refrain from any further stimulus measures.

"If we continue down on the path on which the fiscal authorities put us, we will become insolvent. The question is when," Fisher said in a speech at the University of Frankfurt.

Massive enrollment cuts at CSU expected (California)

Might drop by 10,000 students – or far more..... The nation’s largest university – California State University – is shrinking as state funding is cut.

CSU trustees on Tuesday heard a series of proposals to cope with a cut of $500 million in state support – or possibly as much as $1 billion if some taxes set to expire June 30 are not extended.

Florida Courts May Furlough Without Emergency Cash

Facing an immediate $72 million shortfall because of the unforeseen slowdown in foreclosures to wrestle with the “robosigning” scandal, Supreme Court Chief Justice Canady is asking lawmakers and to approve emergency transfers to avoid furloughs of court personnel.

Starbucks raises prices on packaged coffee

Starbucks Corp. is raising prices it charges retailers for packaged coffee by up to 12 percent to cope with higher costs for beans....Coffee beans, like many commodities, are on the rise. But coffee companies and analysts say the bulk of the increase in price is due to speculators in the market rather than supply or demand.

Starbucks said in a statement that it saw sustained increases in the market and determined it could no longer fully absorb the costs and needed to take action.

State health plan faces higher costs, fewer benefits (North Carolina)

The state health insurance plan bailout would cost $515 million, with most of that coming from reduced benefits and higher costs for its 663,000 members. The measure would, for the first time, force all active state employees and those retirees in a more-generous plan to pay monthly premiums of between $11 and $22 a month. Lawmakers pumped $675 million into the plan two years ago but rising costs have contributed to budget gaps.

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Plan would charge San Francisco workers more for benefits

This year, the city is paying $360 million toward pensions, an amount projected to hit $800 million by 2014, according to the controller's office. The entire city budget is $6.6 billion.

Health care costs are growing even faster, and the city now owes $4.3 billion in promised health benefits to its employees and retirees, but has saved almost nothing to pay the tab.

Judge: New Jersey School Cuts Unconstitutional

A judge has found that New Jersey Gov. Chris Christie's $1 billion in school aid cuts last year left the state unable to meet its obligation to provide all children with a "thorough and efficient" education.... Last year, Christie cut state funding for all districts,including the needy ones, saying the state government couldn't balance its budget otherwise.

Budget Board OKs $100M SC Medicaid Agency Bailout

South Carolina's Budget and Control Board has approved another $100 million in deficit spending for the state's Medicaid program. The board last month approved $100 million of a projected $225 million deficit at the state Department of Health and Human Services, which runs the Medicaid program in the state.

After the vote last month, members of the Budget and Control Board told HHS director Tony Keck to look for ways to save money in the program and try to eliminate some of the remaining $125 million deficit.

China to count local debt in national budget: minister

China's official debt was about 17 percent of gross domestic product at the end of last year, putting it at the low end of debt loads in developing and developed countries. But that does not include hidden debt at the local-government level, which estimates suggest have reached as high as 10 trillion yuan ($1.52 trillion), or another 25 percent of GDP.

Fed makes record $79.3B payment to U.S. Treasury

The Federal Reserve is paying a record $79.3 billion to U.S. Treasury after the central bank earned a record amount of money last year from programs aimed at boosting the economy. The Fed says its payment to the Treasury Department for 2010 is 67% higher than the $47.4 billion it paid in 2009, the previous record.

Portugal braces for government collapse over debt vote

The expected defeat of the minority government's latest spending plans in a parliamentary vote Wednesday will likely force its resignation and could stall national and European efforts to deal with the continent's protracted debt crisis.

The vote comes on the eve of a two-day European Union summit where policymakers are hoping to take new steps to restore investor faith in the fiscal soundness of the 17-nation eurozone, including Portugal.

Eurozone bonds face boycott by investors

Investors warned they could boycott peripheral eurozone bond markets as reform of the region’s bail-out fund sparked fears of a sovereign default in Europe. Irish three-year bond yields leapt close to a full percentage point at one point on Tuesday, while the cost of borrowing for Portugal and Greece also shot up on worries that one of these countries would have to restructure their bonds.

Energy

Higher oil prices hamper fuel-dependent businesses

Airlines, cruise ship companies and other businesses that buy a lot of fuel say the sharp rise in oil prices will be a major drag on revenue this year. Here's a look at how some are responding.

Airlines: Delta Air Lines President Ed Bastian said Tuesday that fuel costs will rise by about $600 million in March alone. The nation's No. 2 airline hasn't been able to raise fares fast enough to keep up with the surge in jet fuel, which will cost between $3.13 and $3.18 per gallon in the second half of the year.

Environment

Gas, food prices double whammy for rural families

Living out in Montana's Big Sky Country often means driving long distances for the basic necessities, and people on tight budgets like Garcia, 49, and Merenz, 26, have long been creative in making ends meet.

But with food prices up nearly 4 percent last month - the biggest leap in 36 years - and the national average for a gallon of gas at a whopping $3.57, this economic double-whammy is stretching family budgets to the breaking point. "It took me $50 to fill up my car yesterday. And it will be gone in three days, probably," Merenz said.

Food prices expected to rise in Arizona

Arizona Food Marketing Alliance President Tim McCabe tells The Arizona Republic he believes prices could increase between 5 percent and 6 percent this year. The Arizona Food Marketing Alliance is a trade group that represents the state's grocery chains and other food retailers.

That would rival a 5.5 percent jump in 2008, the largest gain in almost 20 years.

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13 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4164
Sales of new U.S. homes tumble 16.9% to record low

"WASHINGTON (MarketWatch) — Sales of new single-family homes collapsed in February, the Commerce Department reported Wednesday, as a combination of high unemployment, tumbling prices and a glut of cheaper alternatives brought activity to a near-standstill.

New-home sales fell 16.9% to a seasonally adjusted annual rate of 250,000 in February, though January’s figures were revised higher to 301,000 from 284,000. Compared to February 2010, sales collapsed by 28%.

Every region but the West saw record lows, and in the Northeast, sales dropped by 50% compared to year-earlier levels. "

  • Other news, headlines and opinion:

Japanese disaster now world's costliest

'Ocean' of Money to Drive Gold's Record Rally, Phoenix Says

Europe's Banks Would Need $355 Billion in S&P Stress Scenario

US municipal bonds sales down 44% in 2011

State has borrowed $1.56 billion for unemployment benefits (Wisconsin)

Kentucky's Beshear Seeks Fix for 'Devastating' Cuts in Medicaid

Detroit population drops to lowest level in 100 years

Fresno State to turn away 600 as CSUs ordered to make cuts

The Land of the Rising Yen (McAlvany audio)

Illinois teacher pension system nearly $40 billion in the hole

Stanislaus County pension fund to tap reserves again

China May Match India as World's Biggest Gold Consumer on ‘Amazing’ Demand

Gold's appeal boosted by Portugal vote

bandvbandv's picture
bandvbandv
Status: Bronze Member (Offline)
Joined: Jul 30 2010
Posts: 26
CB's picture
CB
Status: Gold Member (Offline)
Joined: Mar 18 2008
Posts: 365
TEPCO: Rolling power cuts to last at least a year

http://www.asahi.com/english/TKY201103220186.html

"The prolonged power outages through this summer and winter will deal a blow not only to residents of Tokyo and surrounding prefectures but also add to business woes.

The TEPCO official told The Asahi Shimbun that the utility will continue power outages because equipment and fuel storage facilities at the Hirono thermal power plant in Hirono, Fukushima Prefecture, and the Hitachinaka thermal power plant in Tokai, Ibaraki Prefecture, were severely damaged in tsunami triggered by the March 11 Great East Japan Earthquake."

DRHolden's picture
DRHolden
Status: Silver Member (Offline)
Joined: Oct 18 2009
Posts: 131
Thanks SaxPlayer

Wednesdays are always good because we get the double whammy from SaxPlayer.  Keep up the great work!

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
The Cost of Food and Energy across Consumers

Food

Energy

from The Cost of Food and Energy across Consumers. Cleveland Fed

AKGrannyWGrit's picture
AKGrannyWGrit
Status: Gold Member (Offline)
Joined: Feb 6 2011
Posts: 474
Fed makes record $79.3B payment to U.S. Treasury

The Federal Reserve is paying a record $79.3 billion to U.S. Treasury after the central bank earned a record amount of money last year from programs aimed at boosting the economy. The Fed says its payment to the Treasury Department for 2010 is 67% higher than the $47.4 billion it paid in 2009, the previous record.

Please excuse my ignorance, I don't get it.  Doesn't the Treasury (Govt)  borrow from the Federal Reserve (private bank)?  So wouldn't it be the other way around, the Treasury paying back the Federal Reserve the debt and interest?  Why is this blurb significant?  Perhaps if I have this questions others do as well.

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4164
Japan Commission Estimates Elevated Radiation Outside 30-Km Radi

(Thanks DRHolden)

 

 

"In some parts of cities and towns more than 30 kilometers northwest and south of Tokyo Electric Power Co.'s (9501.TO) Fukushima Daiichi nuclear power station, people may have been exposed to a total of more than 100,000 microsieverts of radioactive iodine since the beginning of the nuclear disaster following the March 11 earthquake and tsunami in Japan, the estimate showed.

The allowable annual radiation exposure for workers in radiation operation and police and firefighters in disaster prevention is 50,000 microsieverts, and the limit in case of an emergency operation is at 100,000 microsieverts, according to Ministry of Education, Culture, Sports, Science and Technology."

"SAN FRANCISCO (MarketWatch) -- The euro fell further against the dollar after Portugal's opposition lawmakers shot down a government austerity plan. The euro /quotes/comstock/21o!x:seurusd (EURUSD 1.4105, -0.0092, -0.6479%) recently bought $1.408, compared to $1.403 earlier. Portugal, considered the next domino to drop in Europe after bailouts for Greece and Ireland, faces a political crisis and the potential resignation of Prime Minister Jose Socrates. Socrates is scheduled to speak to the nation later Wednesday, and has said he wouldn't be able to run the country without the plan. "

 

Low Levels Of Radiation Found On Ship At Port Of Tacoma

Japan atom plant worker received high radiation-IAEA

dave s's picture
dave s
Status: Bronze Member (Offline)
Joined: Feb 20 2009
Posts: 56
The Treasury does not pay

Please excuse my ignorance, I don't get it.  Doesn't the Treasury (Govt)  borrow from the Federal Reserve (private bank)?  So wouldn't it be the other way around, the Treasury paying back the Federal Reserve the debt and interest?  Why is this blurb significant?  Perhaps if I have this questions others do as well.

The Treasury does not pay interest (well, net interest, anyway) to the Fed.  Interest collected by the Fed on things like government bonds is rebated to the Treasury each year.  Money "borrowed" from the Fed does not create a Treasury obligation.  Many dear readers here overstate the evils of the Fed.  As a practical matter, a well run Fed is probably the only way to effectively manage a fiat currency system.  Now, you can rush to criticize such a system of course.  And you can question whether the Fed has at all times demonstrated perfect wisdom.  However, had we as a people refused to allow runaway federal budget deficits, huge unfunded liabilities, outright theft from the SSA, so on and so on, many of the Fed's contortions today would still be generations down the road.  We have gotten the Fed we deserve.

Brainless's picture
Brainless
Status: Silver Member (Offline)
Joined: Dec 9 2008
Posts: 150
JPM Now owns a vault, can make and take delivery

End of march is approaching and JPM is granted a license to open a vault within days. Can not get any worse.

Have silver?

http://seekingalpha.com/article/259549-will-jpmorgan-now-make-and-take-delivery-of-its-own-silver-shorts

plato1965's picture
plato1965
Status: Platinum Member (Offline)
Joined: Feb 18 2009
Posts: 615
dave s: "The Treasury does

dave s: "The Treasury does not pay interest (well, net interest, anyway) to the Fed.  Interest collected by the Fed on things like government bonds is rebated to the Treasury each year."

 And do the front-running primary dealers reimburse the treasury also ?

 The Fed can't buy direct.. the PD's need to "dip their beaks" first... -  Godfather reference..

 

yoshhash's picture
yoshhash
Status: Martenson Brigade Member (Offline)
Joined: Sep 20 2008
Posts: 271
Portuguese Governmt Rejects Austerity Plan, Government Collapses

http://www.zerohedge.com/article/portuguese-government-rejects-austerity...

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Disruption in Japan Slows Rise in Oil Price

<http://www.nytimes.com/2011/03/23/business/global/23oil.html>

Disruption in Japan Slows Rise in Oil Price

By CLIFFORD KRAUSS
Published: March 22, 2011

HOUSTON — The recent economic jolt to Japan’s economy, by lowering energy demand, has at least temporarily offset some of the Libyan uprising’s impact on oil prices. But experts say there are limits to how long that buffering effect might last.

In addition to Japan’s nuclear power industry, the earthquake and tsunami also damaged nine oil refineries, disrupting nearly one-third of the country’s refining capacity. Many factories and businesses have ground to a halt, and vehicle traffic in Japan’s bustling cities has eased. Oil shipments have been curtailed by damage at seaports along the tsunami-ravaged coast that will take months to repair.

All told, Japanese demand for oil has been reduced by an estimated 1 million barrels a day. That is nearly one-quarter of what Japan imports, and roughly the same amount of oil that has been withdrawn from world markets by the unrest in Libya.

More than three-quarters of the oil Japan imports comes from the Middle East. The slowdown in Japanese imports, oil experts say, is giving Saudi Arabia some breathing space as it tries to ramp up production to make up for lost Libyan oil.  (emphasis mine...)

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
Portuguese government falls after austerity vote

Portuguese government falls after austerity vote

http://www.marketwatch.com/story/portugal-government-faces-key-austerity-vote-2011-03-23?siteid=YAHOOB

SAN FRANCISCO (MarketWatch) — Portugal’s prime minister resigned Wednesday after Parliament rejected his plan to impose further austerity on the debt-laden country, leaving a power vacuum in Lisbon and casting doubt on the European Union’s efforts to control a persistent sovereign-debt crisis.

...The vote and government collapse is expected to increase pressure on Portugal to seek an EU bailout worth tens of billions of euros to help Lisbon meet debt repayment obligations. Greece and Ireland have already been forced to take bailouts to help them contain debt crises spawned in the global recession.

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