Daily Digest 3/28 - Oil Import Bill Heading For $2T, Secrets To Paying For College, Spain To Raise Power Prices
- World oil import bill heading for record $2T: IEA
- Turkey Raises Gold Deposit Allocation For Banks To Ease Liquidity Squeeze
- Spain Jan-Feb Budget Deficit At 1.9% Of GDP
- Spanish Economy Enters Second Recession, Bank of Spain Says
- Spain risks years without economic growth
- Netherlands euro ‘core’ status in peril
- Woonsocket budget showdown
- Another credit agency drops Providence's rating closer to junk-bond status
- Why college students stop short of a degree
- Fitch: Portuguese Banks Still On "Shaky Ground"
- Fitch Sees Portugal Econ Contracting More, Target Risks
- Spain to lift power prices 5% to 7% in April: aide
- New Head of Philadelphia Schools Blames Previous Board For Huge Shortfalls
- Thousands riot over fuel prices
- Denver targets illegal camping; critics call it a bid to criminalize homelessness
- Secrets to paying for college
- Greek Rectors Sound the Alarm: Universities Are at Stake due to PSI Cuts
- Stockton Gets Ratings Cut by Moody’s as Bankruptcy Option Looms
- Bernanke: Fed Was 'Helpless' In Lehman Failure
- Providence Bankruptcy Seen as Unavoidable on Budget Gap
Oil consumer nations are set to pay a record $2 trillion this year for oil imports if crude prices do not fall, the International Energy Agency (IEA) said on Tuesday, undermining economic recovery.
Crude hit $128 a barrel this month, only $20 short of its 2008 peak, and is up more than 15 percent since January, largely because of sanctions against oil producer Iran. “For the first time the world will pay $2 trillion of oil import bills,” the IEA’s chief economist Fatih Birol told Reuters.
Turkey's central bank Tuesday doubled the amount of lira reserve requirements lenders could hold in gold, in a technical move that could give breathing space to banks as Ankara moved to tighten rates to shore up the lira. In a statement accompanying the bank's move to hold its key policy rates steady, the monetary policy committee said banks would now be allowed to hold up to 20% of lira deposits in gold.
Spain's central government said its budget deficit stood in the first two months of the year at EUR20.7 billion, or 1.9% of the country's gross domestic product, a sign that the euro-zone's fourth-largest economy is still struggling to close a sizeable fiscal gap.
The deficit includes early transfers to regional governments and other expenses that will be lower, on a monthly basis, for the remainder of the year, the ministry said in a press release. "These numbers shouldn't be taken as a definitive indication of how public accounts will evolve throughout the year," the ministry added. The data doesn't include budget numbers from local or regional governments, which accounted for much of Spain's large budget overrun last year. In 2011, Spain's overall budget deficit stood at 8.5% of GDP, well above the 6%-of-GDP target. This year, Spain's budget deficit target is 5.3% of GDP, a level that many economists consider almost impossible to achieve without triggering a major recession.
Spain’s economy is suffering its second recession since 2009, the Bank of Spain said, a development that obstructs the government’s efforts to reorder public finances as it prepares the budget for this year.
With the economy on the verge of its second recession in three years, soaring unemployment and rising borrowing costs, some economists are predicting a lost decade of growth such as the one experienced by Japan in the 1990s from which it has never fully recovered.
Others, including Italian Prime Minister Mario Monti, say Spain could drag the euro zone back into a deep crisis. "We've signed a suicide pact in Europe by agreeing that we all need to make cuts," said Luis Garicano economist at the London School of Economics and head of Spanish think tank Fedea.
After three weeks of negotiations, the Netherlands’ coalition government remains divided over the drastic budget cuts needed to slash its deficit to the European Union’s-mandated level of 3 per cent.
As the conflict threatens to bring down the conservative coalition, investors have begun to worry that the country lacks the political capacity to make the reforms it needs to maintain its status as a “core” eurozone economy, along with Germany and Finland.
More than 500 residents packed into Hamlet Middle School last night to decry the supplemental tax increase city officials have proposed as a partial solution to a cash crunch that’s rushing toward the city like a freight train.....
Recriminations aside, the Fontaine adminstration says the city may run out of cash by the first week of April, forcing the city into bankruptcy, without a comprehensive plan of raising revenue, borrowing in anticipation of collecting supplemental taxes, and cutting costs to bridge the budget chasm. The supplemental tax bill alone, calling for a 13 percent increase over current rates, would be $3.13 per thousand on residential property. That means the owner of a home worth $100,000 would pay an unplanned $313 more this year, while business properties and motor vehicles would be slapped with even higher rates.
Like Fitch, Moody's included Providence's poor financial state, including its $22-million deficit and more than $900 million of unfunded pension liability, as reasons for the dropped rating.
The Harvard study's assertions are supported by data collected by the Organization for Economic Co-operation and Development for its report "Education at a Glance 2010." Among 18 countries tracked by the OECD, the United States finished last (46 percent) for the percentage of students who completed college once they started it. That puts the United States behind Japan (89 percent), and former Soviet-bloc states such as Slovakia (63 percent) and Poland (61 percent).
The failure to complete a college education in the United States is especially marked at four-year private for-profit schools, where 78 percent of attendees fail to get a diploma after six years, according to a 2011 report from the National Center for Education Statistics.
Fitch ratings said today that Portuguese banks are still on "shaky ground," with liquidity pressures that make them highly dependent on funding from the European Central Bank.
Their financial performance will depend on how deep the Portuguese recession is and on broader developments in the Eurozone sovereign debt crisis, Fitch said. Portugal's banks are on "negative outlook," in line with Portugal's sovereign rating, and would be downgraded if the government in Lisbon suffers a further downgrade, the agency said.
Fitch Ratings said Tuesday that Portugal's economy will contract more than it expected in November, and called risks of deficit-target slippage "large." The agency said Portugal's economy will fall 3.7% this year, more than the 3.3% estimated by the government and above the 3% it had forecast in November, when it dropped its credit rating into junk territory. In a euro-zone snapshot report released Tuesday, Fitch said a further downgrade is possible if the economy worsens
Spain's government plans to increase power prices by between 5% and 7% at the beginning of April, Industry Minister Jose Manuel Soria said Tuesday in an interview with broadcaster Antena 3.
The rise of what is known as "last recourse" prices--a price ceiling for mostly domestic consumers of electricity--would affect about 20 million households and small companies and will be approved at the government's cabinet meeting Friday, Soria said.
At a daylong City Council hearing today, councilmembers wanted answers on how the Philadelphia school district ended up with a current deficit of $26 million and a projected deficit in the coming fiscal year in the hundreds of millions
Thousands of Indonesians protesting at plans to push up fuel prices by more than 30% have clashed with riot police.
Rallies were held under tight security in big cities all over the country as parliament debated the need for a rise. Some MPs said the government had no choice but to cut budget-busting fuel subsidies, which have for years enabled motorists to fill up for roughly £1.20 per gallon. Others argued raising prices could more than double inflation to 7%.
In an effort to deal with increasing numbers of the homeless on Denver's streets, the City Council is expected to consider an ordinance that would "ban unauthorized camping" throughout the city.
The National Law Center on Homelessness and Poverty surveyed 234 cities, finding municipalities are cracking down on the homeless: 24 percent prohibit begging, 22 percent prohibit loitering, and 16 percent have enacted laws making it illegal to sleep in public places. Boulder and Colorado Springs have banned camping on public property. Boulder District Court last year upheld that city's law.
You knew it was bad, but now that your child is close or getting ready to go to college, you're starting to get a truer picture of how bad. This year's estimated $22,300 total price (including tuition, room, board, books, and fees) for the average public college takes nearly a third of the annual income of a typical family with college-aged kids. That's up from 15% a generation ago.
Universities’ function is at stake as a result of the extensive cuts to University assets in the Bank of Greece at the beginning of March (PSI).
During today’s urgent Hellenic Universities Rectors’ Synod it was established that several Greek universities are on the brink of economic collapse as their bank accounts are almost empty.
Stockton (3654MF), the California city on the brink of bankruptcy, had its pension-obligation and lease- revenue bond ratings cut by Moody’s Investors Service on about $341 million in debt.
Moody’s lowered the city’s 2007 pension-obligation bonds to B3 from B1 and reduced the 2006 lease-revenue bonds to Caa1 from B2, the New York-based rating company said today in a statement. The ratings are six and seven levels below investment grade, respectively.
The action “reflects the growing likelihood of default and the potential for less than 100 percent recovery for bondholders as the city continues down the path of mediation and potential bankruptcy,” Moody’s said in the statement.
"Lehman Brothers was in itself probably too big to fail, in the sense that its failure had enormous negative impacts on the global financial system," Bernanke said. "But there we were helpless, because it was essentially an insolvent firm."
Providence (1055MF), Rhode Island’s capital and biggest city, probably will seek bankruptcy court protection to deal with a budget deficit, Robert Flanders, the state- appointed receiver for nearby Central Falls, said today.
I don’t see how they can get out of it without going there,” said Flanders, a former state Supreme Court justice and a partner at Hinckley, Allen & Snyder LLP. He put Central Falls into bankruptcy in August and has used the city’s legal status to tear up contracts with city workers and cut pension benefits
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