Daily Digest

Daily Digest 5/23 - USPS Struggles Mean More Junk Mail, Top 3 Greek Risks Facing U.S., 9 in 10 Worry About Shopping Bills

Wednesday, May 23, 2012, 9:49 AM
  • European Banks May Require Third Round of ECB Loans, Fitch Says
  • Millions in the streets: Spain protests cuts to education
  • Post Office struggles may mean more junk mail
  • IMF calls on UK to do more to boost economy
  • Greece: Top 3 risks facing U.S.
  • Legislation Would Fight Blight With Jail Time
  • Illinois Medicaid bill makes nearly $1.4B in cuts
  • Metro school districts struggle with budget shortfalls
  • Harrisburg School District debates job cuts, curtailing bus service
  • Record number of school districts in state face bankruptcy
  • IMF's Lagarde, OECD Call For More Euro Debt Sharing
  • Ill. road fund being raided, transit group says
  • Jefferson County Commission votes to skip $15 million bond payment
  • Dubai prisoners on hunger strike over debt sentences
  • Japan's fiscal death is a warning to the West
  • Tourists face food shortages if Greece leaves euro, warns economist
  • Cost of living is five times higher than the average pay rise, official figures show
  • 9 in 10 worry about shopping bills
  • More elderly NYC residents are getting food stamps
  • Social Services Cites SNAP Caseload Growth in Charlottesville
  • The crisis through the eyes of middle-school students
  • Individual bankruptcy fee to double
  • Disneyland hikes prices, fans angry
  • Class of 2012? You’re F**ked
  • Prolonged Facebook slide could hurt California
  • China set to become world's biggest business travel market
  • Spanish banks caught in a turf war
  • Eurozone warned 'severe recession' looming
  • Secret Central Bank Aid Props Up Greek Banks
  • Japan utilities to hike peak rates sharply: report
  • Woonsocket financial situation dire as city awaits state aid

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Economy

European Banks May Require Third Round of ECB Loans, Fitch Says

The likelihood southern European banks will require a third round of emergency three-year loans from the European Central Bank is increasing as Greece’s debt crisis worsens, Fitch Ratings said.

Millions in the streets: Spain protests cuts to education

­The strike is taking place on all levels, from elementary schools to universities in all but three of Spain's 17 regions. As many as a million teachers and seven million students are expected to take part in Tuesday's demonstrations.

If the austerity package goes through, it will reduce government subsidies on education by more than 20 per cent. The measure, unions say, will result in worsening educational conditions, mass teacher layoffs and higher tuition costs.

Post Office struggles may mean more junk mail

The U.S. Postal Service needs to boost revenue and it sees your mailbox as a potential moneymaker.

It’s created a service, Every Door Direct Mail, to encourage small businesses to send advertisements through the mail. You’ve probably seen more junk mail in the last year because of Every Door Direct. And you can expect to see even more in the future.

IMF calls on UK to do more to boost economy

The IMF's report of its latest consultation with British authorities released Tuesday called for more stimulus, either through further rounds of quantitative easing or by a further cut in the all-time low base lending rate of 0.5 percent.

Greece: Top 3 risks facing U.S.

"Although U.S. banks have limited exposure to peripheral European countries, their exposures to European banks and to the larger, 'core' countries of Europe are more material," Federal Reserve Chairman Ben Bernanke said in March. "Moreover, European holdings represented 35% of the assets of prime U.S. money market funds in February, and these funds remain structurally vulnerable."

In addition, the real risk to the banking system would be whether financial markets would freeze up as a result of a Greek eurozone default, similar to what happened after the Lehman Brothers bankruptcy in September 2008, which led to a massive credit freeze.

Legislation Would Fight Blight With Jail Time (Michigan)

Legislation under consideration in Lansing would allow owners of blighted and neglected property to be jailed if they fail to comply with repair orders. The bills are aimed at putting teeth into blight enforcement. The lead sponsor is Democratic Senator Virgil Smith of Detroit, who says he's "sick and tired" of blighted properties in Detroit.

Ill. Medicaid bill makes nearly $1.4B in cuts

Illinois moved closer to drastic Medicaid cuts Monday with proposed legislation that could excise nearly $1.4 billion from the state's program by shrinking benefits, such as regular adult dental care, and cutting payments to most hospitals and nursing homes.

Metro school districts struggle with budget shortfalls

ATLANTA - As the school year comes to an end, districts all over the metro area are struggling to figure out how to pay next year's bills. DeKalb residents will get their chance to speak out about their district's plan later on Tuesday. The school district is facing major cuts due to more than a $70 million deficit.

Harrisburg School District debates job cuts, curtailing bus service

School adminsitrators say even if the board eliminated kindergarten, arts programs, athletics and other previously cited budget items, the district would still have to come up with about $7 million.

"Even if we eliminate all of those programs it isn’t enough to close the budget gap," says Kelly Winchester, a concerned parent. School board members are considering a property tax increase up to 2.5 percent. If that happens, the average homeowner’s bill would increase by $32.88.

Record number of school districts in state face bankruptcy (California)

Pummeled by relentless budget cuts, a record number of California school districts are facing bankruptcy, state Supt. of Public Instruction Tom Torlakson announced Monday. The Inglewood Unified School District and 11 others -– most in northern California -- are currently not able to pay their bills this school year or next, according to a biannual report on the financial health of the state’s 1,037 school systems compiled by the state Department of Education. An additional 176 school districts may not be able to meet their financial obligations.

All told, the financially troubled districts serve 2.6 million children. And the picture could dramatically worsen if initiatives to raise taxes for public schools by Gov. Jerry Brown and others fail to pass in November, officials said.

IMF's Lagarde, OECD Call For More Euro Debt Sharing

International Monetary Fund head Christine Lagarde Tuesday called on euro-zone governments to accept more common liability for each other's debts, saying that the region urgently needs to take further steps to contain the crisis.

"We consider that more needs to be done, particularly by way of fiscal liability-sharing, and there are multiple ways to do that," Lagarde told a press conference in London to mark the completion of a regular review of U.K. finances.

Her comments came an hour after the Organization for Economic Cooperation and Development had, for the first time, endorsed joint bond issuance in its latest Economic Outlook.

Ill. road fund being raided, transit group says

IDOT, like the rest of state government, has to try to catch up on pension payments because of years of politicians' short-changing of the system. Pension payments out of the road fund have jumped from $60 million five years ago to $172 million currently, according to Quinn budget spokeswoman Kelly Kraft. With no changes, that number will be $400 million in 2018.

"You can see what kind of impact that would have on the future health of the road fund," Kraft said. "That's why it is so important to deal with the pension issue."

Jefferson County Commission votes to skip $15 million bond payment

Petelos said the commission will prepare a $180 million fiscal 2013 budget, which is nearly $40 million less than the current fiscal 2012 spending plan and more than $130 million smaller than the fiscal 2011 county budget.

The county, which filed for bankruptcy in November, has been forced to slash spending repeatedly and reduce its work force drastically since the Alabama Supreme Court last year threw out its occupational tax because of a technical defect in the way the Alabama Legislature enacted it. The Legislature declined to approve a replacement tax in both its 2011 and 2012 regular sessions.

Dubai prisoners on hunger strike over debt sentences

Five expatriates jailed in Dubai said they were among a group of prisoners who have gone on hunger strike to protest against lengthy prison sentences handed down to most of them for financial crimes.

The men, most of them real estate developers and businessmen working in Dubai during its economic boom years, fell into debt when the emirate's property bubble burst after the 2008 global credit crisis.

Japan's fiscal death is a warning to the West

Key indicators are deteriorating on almost every front, raising concerns that the world's third largest economy is running aground after two "Lost Decades". Japan's debt has jumped by 61 percentage points of GDP since 2008, compared to eight points for the AAA bloc. Public debt is expected to reach 239pc of GDP this year, uncharted levels for a major economy in peace-time. `Net debt' –subtracting Japan's vast holdings of foreign bonds – is nearer 137pc but this is rising at an even steeper trajectory.

Tourists face food shortages if Greece leaves euro, warns economist

Drawing comparisons with Argentina when it defaulted on its debt in 2001, Clark said it would be a "fairly traumatic experience." He said that in Argentina "there was major civil unrest, people couldn't get money out of the bank, and the country had a non-functioning economy".

Cost of living is five times higher than the average pay rise, official figures show (UK)

The cost of living in Britain remains cripplingly high, with inflation currently five times greater than the average pay rise given to workers. The Office for National Statistics revealed the consumer prices index measure of inflation dropped from 3.5 per cent in March to three per cent in April. But the average pay rise is a paltry 0.6 per cent, far behind the high cost of living, which experts point out means ‘people are still getting poorer every month’.

9 in 10 worry about shopping bills (Ireland)

The watchdog has reported that 96% of people believe that their food bills are more expensive than they were a year ago. More than 80% have made changes to the way they shop, cook and eat as a direct response to higher prices.

Aodhan O'Donnell from the Consumer Council said: "Food and everyday household items are essential to a person's quality of life and consumers in NI already endure some of the highest prices in the UK for petrol and diesel, energy and car insurance.

More elderly NYC residents are getting food stamps

The number of New York City residents over the age of 65 receiving benefits through the food stamp program has increased about 30 percent in the weak economy.

Social Services Cites SNAP Caseload Growth in Charlottesville

Charlottesville's Social Services Advisory Board will present its annual report to city council Monday night. It shows the need for food stamps is rising in the area. The number of households relying on the Supplemental Nutrition Assistance Program (SNAP) now sits at 3,200 households in the city. That's up from around 1,800 households in July 2007.

The crisis through the eyes of middle-school students (Greece)

“The biggest problem is that our politicians are bad and instead of making things better, they are making them worse,” said Constantinos.....Eva wrote in her essay: “Once upon a time there was a country that had all that was good. The people were brave, ambitious, kind and hardworking. Slowly, though, they began to steal, not to work as hard; they became greedy. The politicians used tricks to make the people vote for them. Other countries, seeing the mess, began to take advantage of them. Many people lost their jobs and no longer had the basics; no longer had a home.”

“The economic crisis comes with a moral and social crisis,” said Kyriaki. “The most important is the moral crisis.” “Some people take advantage of others. These are the politicians,” added Thodoris.

Individual bankruptcy fee to double (UK)

Labour has failed to block a plan to double bankruptcy fees after MSPs heard the hike would save taxpayers £1.5 million.

People will soon have to pay £200 to enter bankruptcy after the agency that administers the applications found that the present £100 fee was not covering its costs. The hike was "insensitive" in the current economic slump and could push debtors "over the edge", forcing them to turn to loan sharks, Labour said.

Disneyland hikes prices, fans angry

Disneyland, the self-proclaimed "Happiest Place on Earth," has ignited a strong response from many people angry about the latest price increase on all ticket options.

With the new price hike, which took effect on Sunday, it now costs $87 (up from $81) for a one-day ticket to enter just one of the two California parks. For a one-day park-hopper ticket, guests are now paying $125 (up from $105). The biggest jump came to the premium annual pass program, climbing 30 percent from $499 to $649.

Class of 2012? You’re F**ked (Robert Reich)

First, you’re going to have a hell of a hard time finding a job. The job market you’re heading into is still bad. Fewer than half of the graduates from last year’s class have as yet found full-time jobs. Most are still looking.

Prolonged Facebook slide could hurt California

California's budget could take a hit if Facebook's stock price continues to slide. Gov. Jerry Brown estimated the state will generate between $1.4 billion and $1.9 billion over the next 13 months from taxes related to sales of Facebook stock. The estimates were based on prices at $35 per share.

Facebook went public Friday at $38 per share but was trading below $32, or 15 percent below its IPO price, on Tuesday afternoon. Deputy Legislative Analyst Jason Sisney says the "potential hit from Facebook's share price is nothing compared to the potential damage from a broader stock slump."

China set to become world's biggest business travel market

China is expected to become the biggest market for business travel within three years according to research by the GBTA.

The association’s Business Travel Index (BTI) is forecasting that corporate travel spending in China will rise by 17 per cent to $202 billion this year and by another 21 per cent to $245 billion next year.

Spanish banks caught in a turf war

Spain's central bank then announced on Friday that it has bad loans on its books from Spanish banks in the form of uncollectible loans worth €148 billion ($189.2 billion) from last year, a 33% jump.

This has now pushed the Spanish government to take measure to protect its banks. The measures being announced by Deputy Prime Minister Soraya Saenz de Santamaria and Economy Minister Luis de Guindos will now require Spanish banks to secure an extra €30 billion ($39 billion) to protect them against additional bad loans.

The banks are being left to scrabble and find the additional capital on their own on top of the €54 billion ($70.2 billion) mandated by the government earlier this year. If they cannot find the capital this will cause the banks to take loans from the Spanish government at a 10% interest rate.

Eurozone warned 'severe recession' looming

The 17-country eurozone risks falling into a "severe recession," the Organization for Economic Cooperation and Development warned on Tuesday, as it called on governments and Europe's central bank to act quickly to keep the slowdown from dragging down the global economy.

OECD Chief Economist Pier Carlo Padoan warned the eurozone economy could contract by as much as 2 percent this year, a figure that the Paris-based organization had laid out as its worst-case scenario in November.

In its twice-yearly global economic outlook, the OECD — which monitors economic trends for the world's most developed economies — said its average forecast was for the eurozone economy to shrink 0.1 percent this year and grow a mere 0.9 percent in 2013.

Secret Central Bank Aid Props Up Greek Banks

There has been no official announcement. No terms or conditions have been disclosed. But Greece’s banking system is being propped up by an estimated €100 billion or so of emergency liquidity provided by the country’s central bank — approved secretly by the European Central Bank in Frankfurt. If Greece were to leave the eurozone, the immediate cause might be an ECB decision to pull the plug.

Japan utilities to hike peak rates sharply: report

Japanese utilities are planning to increase fees for peak-hour electricity usage in an effort to head off possible power shortages this summer following the closure of the nation's nuclear power plants, the Nikkei business daily reported Tuesday. Under plans beginning for Tokyo Electric Power Co. (JP:9501)(US:TKECF) on June 1 and for Kansai Electric Power Co. (JP:9503) on July 1, rates during the peak hours of 1 p.m. to 4 p.m. will be more than four to six times higher than those for nighttime hours, the report said.

Other utilities are likely to follow suit, except for Hokkaido Electric Power Co. (JP:9509)(US:HKEPF) and Tohoku Electric Power Co. (JP:9506), which see less of a difference in power usage between peak and night hours.

Woonsocket financial situation dire as city awaits state aid

Bruce said the Woonsocket School Department, which is grappling with a $10 million budget shortfall, needs the state aid to make payroll in two weeks. On Thursday, the school department had insufficient funds to make payroll and the city had to loan it $490,000. Bruce the School Department needs the state aid to pay back the city and help them start to manage the budgetary issues.

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saxplayer00o1
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saxplayer00o1
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Euro exit worry prompts more Greeks not to pay tax

"Greeks are notoriously reluctant to pay taxes, but even those that do are holding off at the moment until they are sure their country stays in the euro zone.

State coffers are on track for a 10 percent fall in revenues this month as a result, a senior finance ministry official said on Wednesday.

Two tax officials who declined to be named told Reuters that May revenues fell by 15-30 percent in tax offices away from the major cities and relative wealth centres of Athens and Thessaloniki.

"People are suspending some payments because we are in a pre-election period and also because of uncertainty stemming from a potential Greek euro exit," said the finance ministry official, who requested anonymity."

 

Spain struggles to meet regions' 36 bln euros debts

Spain to inject 9 bln euros into Bankia: reports

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