Daily Digest

Daily Digest 9/1 - Student Loan Debt Tops $850 Billion, State Budget Woes, Fed Discusses Further Stimulus

Wednesday, September 1, 2010, 10:55 AM
  • Student Loan Debt Clock near $850 billion
  • Abandoned Properties Saddle County With Unwanted Surplus (Indianapolis)
  • Fed Officials Discussed Further Stimulus Steps
  • California Lawmakers Fail To Pass Budget By End Of Session
  • Federal Spending Rises A Record 16% In 2009, Census Bureau Says
  • Local Governments Shed Part-Time Workers in 2009, Census Says
  • Miami Budget Woes
  • Facts, Figures Related To The Iraq War
  • Rising Prison Population Dampens Hopes Of Budget Relief (Connecticut)
  • Budge Woes Threaten Police And Firefighters' Compensation In Grand Rapids
  • Just As Berkeley Rejoices About Its Finances, UC System Revealed To Have $20 billion Pension Shortfall

Crash Course DVDShare the Crash Course with your neighbors: gift them a deluxe edition DVD. (NTSC or PAL)

Economy

Student Loan Debt Clock near $850 billion

Abandoned Properties Saddle County With Unwanted Surplus (Indianapolis)

Since the last tax sale in March, the number of surplus properties -- those left over after the sale -- has almost quadrupled, from 1,502 to 5,754. That initially means a $39 million loss in tax revenue at a time when local government is in dire need of cash. But in the long run, the public cost to care for those houses, the majority of which likely are abandoned or vacant, is millions higher.

Fed Officials Discussed Further Stimulus Steps

Federal Reserve officials signaled at their August meeting that they would consider going beyond a modest program to purchase government debt if necessary to boost the economy.

Minutes of the Fed's discussions from the Aug. 10 meeting show the central bank recognized that the economy could need further stimulus beyond the debt purchases. Those are intended to lower interest rates on a range of consumer and business loans.

California Lawmakers Fail To Pass Budget By End Of Session

The failure to pass a spending plan creates some real consequences for California. The state controller has already deferred September's payments to school districts, and he’s preparing to pay the bills with IOUs.

Federal Spending Rises A Record 16% In 2009, Census Bureau Says

Federal domestic spending increased a record 16 percent to $3.2 trillion in 2009, the Census Bureau reported Tuesday, largely because of a boost in aid to the unemployed and the huge economic stimulus package enacted to rescue the sinking economy.

The rise in spending was the largest since the Census Bureau began compiling the data in 1983.

    Crash Course DVDShare the Crash Course with your neighbors: gift them a deluxe edition DVD. (NTSC or PAL)

Local Governments Shed Part-Time Workers in 2009, Census Says

The number of part-time municipal- government workers shrank by 4.1 percent to 3.25 million in 2009 even as full-time state and local employment remained the same, the U.S. Census Bureau said today.

Miami Budget Woes

Miami commissioners could vote as early as Tuesday evening to downsize pension benefits for government workers, The Miami Herald reported. Commissioners are considering a plan to cut salaries by $31 million and pension benefits by $41 million, helping to plug a $105 million budget hole.



Commissioners are facing the budget shortfall because home prices dropped just as union salaries and pensions began to lift off. About one fifth of Miami's budget is now earmarked for pension obligations ($101 million), while firefighters earn an average salary of $90,000, police $74,000, and general service workers $66,000. According to the Herald report, union and non-union workers will see salary cuts between 5% and 13%.

Facts, Figures Related To The Iraq War

COST: More than $744 billion, according to the National Priorities Project. To date, $747.3 billion has been allocated to the war since 2003. In January 2010, the Congressional Budget Office projected that additional war costs for the next 10 years could range from $274 billion to $588 billion.

See also: cost per barrel

Rising Prison Population Dampens Hopes Of Budget Relief (Connecticut)

Connecticut politicians have been proposing prison closures as a means to help balance the state's finances. The legislature's nonpartisan Office of Fiscal Analysis is projecting a $3.37 billion shortfall built into the 2011-12 budget, an amount equal to nearly 20 percent of current spending.

Budge Woes Threaten Police And Firefighters' Compensation In Grand Rapids

Grand Rapids is West Michigan's largest city, and it's currently sinking in debt. If the city runs out of money, city parks and streets, and the repairs they need, will be in jeopardy.

When the current fiscal year ends, Grand Rapids will be almost $2.5 million in the hole. Cutting benefits to police and fire departments could save a lot of money, but the city won't be able to pass such measures without a fight.

Just As Berkeley Rejoices About Its Finances, UC System Revealed To Have $20 billion Pension Shortfall

Much of the problem with the retirement fund stems from a decision 20 years ago when UC and its employees stopped paying into the retirement system because it was believed to be overfunded, officials said. The university and employees resumed payments this year, but concerns about the possibility of unfunded pensions and post-retirement healthcare continue.

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12 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4147
Re: Daily Digest 9/1 - Student Loan Debt Tops $850 Billion, ...

"NEW YORK (Reuters) - Private employers unexpectedly cut jobs in August, a report by a payrolls processor showed on Wednesday, delivering another blow to the already faltering economic recovery.

The private sector cut 10,000 jobs in August compared to a revised gain of 37,000 in July, ADP Employer Services said. The July figure was originally reported as a gain of 42,000."

"How does a state of only 1.3 million people end up $4.4 billion behind in its payments for just one state program?

It doesn’t pay its bills on time, makes promises without knowing the costs, loses money in the stock market and ignores repeated warnings that the debt is getting worse by the year.

The official name of the debt is the unfunded actuarial liability, and the program is the pension for Maine state employees and public school teachers.

The $4.4 billion represents $3,385 in debt for every man, woman and child in the state.

The debt is so large it eats up 10 percent of the state budget – more than the budget for the state colleges – and is projected to need an even larger portion of tax dollars in coming years, perhaps as much as one out of every five dollars Maine residents pay in state taxes."

  • Other news, headlines and opinion:

 

Obvious or Subtle Default: Potentially Both (McAlvany audio....worse than Greece)

Spain Reaches Out to China on Government Debt

Grim August for Europe Default Index

S&P Downgrades $5.64 Billion Of CDOs On Worsening Credit

High-Yield, High-Risk Debt Sales Halt as Economy Slows: New Issue Alert

UK Credit-Card Debt Write-Offs Reach Record $3.2 Billion, Times Reports

UK Faces Second Recession on Spending Cuts, Hargreaves Says

Japan's Bonds Fall as Ozawa Spending Concerns Damp Demand at 10-Year Sale

European 2011 Debt Sales to Rise to 990 Billion Euros, ING Says

State Retiree Healthcare Costs Could Double Over Next Nine Years (NJ)

RI to plug state budget hole with federal money meant to save teacher jobs

SEC Not To Pursue Fraud Case Against Moody's, But Cautions Credit Rating Agencies

Problem bank list climbs to 829

GM August U.S. sales down 24.9% to 185,176 units

tabletop's picture
tabletop
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Posts: 29
How Hyperinflation Will Happen

Very well thought out piece and does a good job of explaining the difference between inflation and hyperinflation.

http://gonzalolira.blogspot.com/2010/08/how-hyperinflation-will-happen.html

rjs's picture
rjs
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Posts: 445
Re: Daily Digest 9/1 - Student Loan Debt Tops $850 Billion, ...
analysis by Felix Salmon
nex_s's picture
nex_s
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Posts: 17
Re: Daily Digest 9/1 - Student Loan Debt Tops $850 Billion, ...

 

  Hi Everyone,

  Firstly I thank Chris for this site and the few sites that offer a clear and guiding light.  I've taken some steps in preparing for what's to come and frankly after reading countless books and hours upon hours of reading blogs and responses (which in many cases can be as enlightening as the stories themselves) and watching Chris' Crash Course, and the latest video "Overdose - the next financial crisis" really laid things out well.

  Clearly the U.S. debt is insurmountable and we'd have to sell the moon to repay it.  My question is this, and forgive me if it sounds simplistic bordering on idiotic.  Since many countries are either bankrupt or on the verge could each country simply just forgive the other's debts?

Thanks,
nex_s

rjs's picture
rjs
Status: Gold Member (Offline)
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Posts: 445
Re: Daily Digest 9/1 - Student Loan Debt Tops $850 Billion, ...

saxplayer00o1: your original link: http://finance.yahoo.com/news/Private-sector-cuts-10000-rb-1841593174.html?x=0&sec=topStories&pos=1&asset=&ccode=

is being converted by yahoo to: http://finance.yahoo.com/news/Manufacturing-grows-in-rb-1841593174.html?x=0

yahoo has done that to me too...

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest 9/1 - Student Loan Debt Tops $850 Billion, ...
nex_s wrote:

 

  Hi Everyone,

  Firstly I thank Chris for this site and the few sites that offer a clear and guiding light.  I've taken some steps in preparing for what's to come and frankly after reading countless books and hours upon hours of reading blogs and responses (which in many cases can be as enlightening as the stories themselves) and watching Chris' Crash Course, and the latest video "Overdose - the next financial crisis" really laid things out well.

  Clearly the U.S. debt is insurmountable and we'd have to sell the moon to repay it.  My question is this, and forgive me if it sounds simplistic bordering on idiotic.  Since many countries are either bankrupt or on the verge could each country simply just forgive the other's debts?

Thanks,
nex_s

No question is dumb or simplistic - only answers are.

Yes. Possible. Probable that you are 200-/+ countries to get in a room and agree on anything? Not at all likely.

My hunch, and it is just a hunch, is that they (every freaking country in the world) will debase their currency (make their dollar worthless not worth less) and then wages and cost of goods will go up. As taxes and salaries go up this crud will get washed away.

The chances of them doing it orderly and NOT winding up in hyperinflation (my guess .000000000000000000000000000000000000001%). We are, after all talking about Moron Willy-Nilly Bernanke. The only thing that AH can win at is getting every question wrong.

I had lunch with a mentor of mine, the guy who told me most of what is in the Crash Course back of the napkin style in 1993. He joked that who cares if someone has a 100k mortgage when salaries are 500k because a loaf of bread is 50 bucks. 

I'd have laughed harder if we weren't competing globally.  This thing could have some twists and turns.

sammy's picture
sammy
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Posts: 35
Re: Daily Digest 9/1 - Student Loan Debt Tops $850 Billion, ...

Military Study Warns of a Potentially Drastic Oil Crisis

http://www.spiegel.de/international/germany/0,1518,715138,00.html

middleclassamerican's picture
middleclassamerican
Status: Member (Offline)
Joined: Apr 16 2010
Posts: 19
Secret of Oz...

Sorry if this has been posted...I'm sure it has, but if you have viewed, I would certainly like some comment.  It runs through the history of governments struggle of debt based money vs non-debt based money or with the Fed and no Fed.

 

Certainly eye opening!

It certainly confirms my belief that deflation is a bet with the central bankers and Hyperinflation is a bet against.  Unless of course the Central bankers own all the Gold...Then they can't lose!!!!!!!!!!  Keep in mind the Bank of International settlements, the so called central bankers bank has taken possession of gold through a swap for the first time!

Damnthematrix's picture
Damnthematrix
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Posts: 3998
Re: Daily Digest 9/1 - Student Loan Debt Tops $850 Billion, ...

http://www.sbs.com.au/news/article/1342252/Afghanistan

Afghanistan's biggest bank in near disastrous collapse

01 September 2010 | 01:06:22 PM | Source: AFP
Authorities have reportedly intervened to try to avert the potentially disastrous collapse of Afghanistan's biggest bank after uncovering a web of shady transactions involving well-connected insiders.

The suspect dealings at Kabul Bank, whose shareholders include a brother of President Hamid Karzai, have sparked huge losses that could bring down the lender and undermine the US-led war against the Taliban, US press reports said.
   
The central bank threw out Kabul Bank's two top executives and installed its own temporary managers in a move that was blessed by Karzai himself, the Wall Street Journal, Washington Post and New York Times reported Tuesday.
   
The central bank on Monday ordered Kabul Bank chairman Sherkhan Farnood to hand over 160 million dollars' worth of property including luxury villas bought in Dubai for his personal use and for associates, the reports said.
   
After the implosion of the Gulf emirate's property bubble, Kabul Bank is now saddled with estimated losses exceeding US 300 million dollars, and its assets stand at only about 120 million, the New York Times said.
   
"This could be catastrophic for the country," a senior Afghan banking official told the Times. "The next few days are critical. I am worried."
   
Kabul Bank has more than one billion dollars in deposits, and handles the pay of hundreds of thousands of Afghan soldiers, police and teachers, the Wall Street Journal said.
   
Any run on the bank or interruption to the flow of pay cheques could seriously harm the US-led war effort, the newspaper noted, at a time when President Barack Obama is pouring thousands more troops into the anti-Taliban struggle.
   
Farnood is also suspected of syphoning off Kabul Bank funds to shore up a struggling private airline that he owns, the Journal said.

Woodman's picture
Woodman
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Posts: 1028
Re: Daily Digest 9/1 - Student Loan Debt Tops $850 Billion, ...

 

I had lunch with a mentor of mine, the guy who told me most of what is in the Crash Course back of the napkin style in 1993. He joked that who cares if someone has a 100k mortgage when salaries are 500k because a loaf of bread is 50 bucks

The real scenario that has played out for me the last 10 years is about 3% salary raises per year, which comparable to official inflation rates, vs. about 10% true inflation per Shadowstats.    No wonder I can't save a dime like I used to!  The scenario that keeps me up at night is trying to pay for  $50/loaf bread plus $100k mortage at my current salary.

Tom

Damnthematrix's picture
Damnthematrix
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Posts: 3998
Re: Daily Digest 9/1 - Student Loan Debt Tops $850 Billion, ...

The dirty topic of peak oil: get ready to reduce your reliance Dr David Ingles, author of Running on empty? The peak oil debate, writes: CLIMATE CHANGE, GREENHOUSE GAS EMISSIONS, INTERNATIONAL ENERGY AGENCY, OIL

Wouldn't it be funny if we spent so long arguing about what to do about climate change that we ran out of cheap oil first? No, it wouldn't really, it would be catastrophic.

But given the government's delay in producing an Energy White Paper and the steady backsliding on the need to actually reduce our greenhouse gas emissions in Australia, it is not beyond the realms of possibility. Even the usually optimistic International Energy Agency (IEA) is starting to sound a little nervous.

No one can say with certainty how much oil is left in the ground nor how much it will cost to take it out. As with climate change, the search for certainty in relation to oil supply is a fool's errand. But while no-one can say with certainty how much is left, virtually no economists or oil industry analysts disagree with the statement that oil production cannot keep growing forever. The notion that oil production must one day peak is now referred to as 'peak oil'.

While there is virtually no debate that oil production must one day peak, there is much debate about the timing and significance of such a peak. For those who have become accustomed to talking about emission reduction targets for 2020 and 2050 it may come as some surprise to learn that the mid-range forecasts for the peak in global oil production are 10-15 years. This does not mean that there will be no oil in 10 or 15 years time, but it means oil is going to get a LOT more expensive. Put simply, if demand continues to rise and supply starts to fall the days of the average Australian driving their Landcruiser to work will be over.

Davos's picture
Davos
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Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest 9/1 - Student Loan Debt Tops $850 Billion, ...
Woodman wrote:

 

I had lunch with a mentor of mine, the guy who told me most of what is in the Crash Course back of the napkin style in 1993. He joked that who cares if someone has a 100k mortgage when salaries are 500k because a loaf of bread is 50 bucks

The real scenario that has played out for me the last 10 years is about 3% salary raises per year, which comparable to official inflation rates, vs. about 10% true inflation per Shadowstats.    No wonder I can't save a dime like I used to!  The scenario that keeps me up at night is trying to pay for  $50/loaf bread plus $100k mortage at my current salary.

Tom

lol, yeah, I hear you. Like I said, the 500k salary gave me pause and I didn't laugh too hard with my friend.

When gas prices went nuts a year or so ago - wages didn't budge. Competing against some unfortunate person making 2 bucks a day halfway across the job, is in my opinion, why. 

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