Daily Digest

Daily Digest 9/14 - U.S. Poverty Rate 1 in 6, Bankruptcy Grows Among College Grads, Europe Close To Banking Crisis

Wednesday, September 14, 2011, 9:46 AM
  • Alabama county at odds with creditors on bond debt
  • Mexico's Pemex Postpones Peso Bond Sale On Global Volatility
  • Census: U.S. poverty rate hit 52-year high in 2010
  • Census: US poverty rate swells to nearly 1 in 6
  • Pick the winner for August 2011's 'Blight in New Orleans' photo contest
  • Euro rises after Merkel rejects Greek bankruptcy
  • Bankruptcy among college grads grows
  • Global Demand Drives Food Prices Higher in Third Quarter
  • Budget Deficit in U.S. Grew to $134.2 Billion in August on Calendar Effect
  • U.S. Can’t Sustain Spending and Tax Levels, CBO Head Says
  • IMF Says No Loan For Belarus, Urges More Reforms
  • Europe Close to Banking Crisis: El-Erian
  • Weidmann urges ECB to quit bond-buy business
  • Canada's Household Debt Hits Record High
  • Former Fed Chief Greenspan Warns Of Budget Crisis, Urges Ending Tax Breaks
  • Port of Long Beach July container traffic slows
  • Under plan, UC tuition could rise by 16% a year
  • Pittsburgh City Council announces temporary parking enforcement hour rollback intentions
  • Rising copper prices hit commuters as thieves steal cables
  • Car makers to face tough times unaided

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Economy

Alabama county at odds with creditors on bond debt (Jefferson County)

Alabama's JeffersonCounty and creditors are still at odds over how to resolve a$3.14 billion bond debt ahead of a Friday deadline, County Commission President David Carrington said on Tuesday. The county will decide on Friday whether to pursue what would be the biggest municipal bankruptcy in U.S. history orreach some form of negotiated settlement with creditors who include JPMorgan Chase & Co.

Mexico's Pemex Postpones Peso Bond Sale On Global Volatility

Mexico's state-owned oil monopoly Petroleos Mexicanos, or Pemex, is postponing a planned bond sale this week for up to 10 billion pesos ($772.2 million) due to volatility in world financial markets, a company official said Tuesday.

Census: U.S. poverty rate hit 52-year high in 2010

Government analysts say the rising poverty levels are rooted in the 86.7 million working-age adults who were unemployed for at least a week last year, compared to just 83.3 million in 2009. That spike of 3.4 million people “might be the single most important factor contributing to the increase in the poverty rate,” said Trudi Renwick, head of poverty statistics at the U.S. Census Bureau.

It also helps explain why the median household income — the amount at which half of U.S. households earn more or less — fell 2.3 percent or $1,154 last year to $49,445. Meanwhile, the number of people without health insurance increased by 900,000 to nearly 50 million, according to Census estimates.

Census: US poverty rate swells to nearly 1 in 6

The ranks of the nation's poor swelled to nearly 1 in 6 people last year, reaching a new high as long-term unemployment woes left millions of Americans struggling and out of work. The number of uninsured edged up to 49.9 million, the biggest in over two decades.

Pick the winner for August 2011's 'Blight in New Orleans' photo contest

If you haven't already seen the full gallery, it's not to be missed. It's interesting to read the captions, too, to learn where these buildings are and what might have happened to them. Below are their top 10 picks.

Euro rises after Merkel rejects Greek bankruptcy

The euro is rising modestly against major currencies after German Chancellor Angela Merkel rejected the idea of a hasty bankruptcy by Greece.

Merkel said Monday that Europe should help Greece regain its financial footing. She rejected suggestions that Greece should seek court protection from its creditors. That would allow Greece to not repay some debts, but it would also threaten European banks that own billions in Greek debt. Merkel's comments made a default by Greece appear less likely.

Bankruptcy among college grads grows

Not surprisingly, the rate of unemployed Americans filing for bankruptcy increased by 21 percent since 2006. But since the study was first conducted in 2006, there has been a gradual shift in bankruptcy filings toward higher income earners.

In 2006, only 5.5 percent of the debtors participating in the report made more than $60,000, but this income bracket shifted to more than 9 percent by 2010.

Global Demand Drives Food Prices Higher in Third Quarter

Strong global demand, especially for pork and other protein-rich foods, was a primary driver behind higher retail prices at the supermarket during the third quarter of 2011, according to the latest American Farm Bureau Federation Marketbasket Survey.

The informal survey shows the total cost of 16 food items that can be used to prepare one or more meals was $53.12, up $1.95 or about 4 percent compared to the second quarter of 2011. Of the 16 items surveyed, 13 increased, two decreased and one remained the same in average price compared to the prior quarter.

Budget Deficit in U.S. Grew to $134.2 Billion in August on Calendar Effect

The gap climbed to $134.2 billion last month, exceeding the August 2010 shortfall of $90.5 billion, according to the Treasury Department’s monthly budget statement issued in Washington. For the fiscal year to date, the deficit increased to $1.23 trillion, less than at the same point in 2010.

U.S. Can’t Sustain Spending and Tax Levels, CBO Head Says

Congress would have to more than double its $1.5 trillion deficit-cutting goal to diminish the risk of a fiscal crisis and reduce the debt burden on the economy, the director of the nonpartisan Congressional Budget Office said.

“The nation cannot continue to sustain the spending programs and policies of the past with the tax revenues it has been accustomed to paying,” agency director Douglas Elmendorf said today at the first hearing of Congress’s debt-cutting supercommittee.

IMF Says No Loan For Belarus, Urges More Reforms

The International Monetary Fund urged Belarus to tighten its monetary policy and initiate structural reforms but didn't extend a loan to the cash-strapped country, the IMF said Tuesday in a statement.

Belarus turned to the fund for a loan of up to $8 billion in June to steady its economy. The funding came after pre-election spending by President Alexander Lukashenko depleted reserves and left the country with a gaping trade deficit, forcing it to devalue its ruble by 36% in May.

The IMF's refusal may drive the authoritarian Lukashenko to make concessions to Russia, which has been eyeing key Belarussian assets such as potash miner Belaruskali, which if merged with Russia's Uralkali would create the biggest maker of the fertilizer in the world.

Europe Close to Banking Crisis: El-Erian

“We’re getting close to a full-blown banking crisis in Europe,” El-Erian, Pimco’s chief executive officer and co-chief investment officer, said in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “We are in a synchronized global slowdown. There’s very little confidence in economic policy making both in Europe and the U.S.”

The World Bank and the IMF meet Sept. 23-25 in Washington as European officials work to keep the currency union from unraveling while weighing whether to allow Greece to default. French banks have become a focal point because of their holdings of bonds issued by the euro region’s most-indebted nations, topping the list of Greek creditors with $56.7 billion in overall exposure, according to a June report by the Bank for International Settlements.

Weidmann urges ECB to quit bond-buy business

The European Central Bank has burdened itself with "considerable risks" and these should be unwound, Bundesbank President Jens Weidmann said on Tuesday, in a thinly veiled attack on the ECB's bond-buy plan.

In his first speech since news broke on Friday that another German ECB policymaker, Juergen Stark, is resigning in protest at the bond-buying plan, Weidmann also criticised politicians' response to the debt crisis and said worries about the euro are increasing in Germany and other parts of the euro zone.....The ECB has purchased 143 billion euros worth of sovereign bonds from crisis-ridden countries, risking taking a hit should they default. It is also offering banks unlimited amounts of cash in its liquidity operations against collateral.

Canada's Household Debt Hits Record High

Canadian appetite for debt showed no sign of lessening with a key indicator hitting a new high, as consumers borrowed to purchase houses and cars at a rate that was more than three times faster than the growth in their disposable incomes.

The ratio of credit-market debt to personal disposable income in the household sector grew to 148.7%, Statistics Canada said Tuesday, marking the highest level since the agency began compiling the figures in 1990.

Former Fed Chief Greenspan Warns Of Budget Crisis, Urges Ending Tax Breaks

"What I do know is that if we presume that we have a year or two before starting serious long-term restraint, and we turn out to be wrong in that optimism, the impact on financial markets could be devastating," Greenspan said in remarks prepared for the panel. Finance Committee Chairman Max Baucus (D., Mont.) is one of 12 lawmakers who have the task of finding at least $1.2 trillion in deficit reductions over 10 years, under the deal reached to raise the debt ceiling last month.

Port of Long Beach July container traffic slows

Cargo volume through California's Port of Long Beach slowed 6.5% in August from July, an ominous economic signal during a month when U.S. retailers traditionally build inventories in advance of the holidays.

"An August downturn really has to do with retailers ... having to think about what kind of a holiday season they're going to have," port spokesman Lee Peterson said. "The importers especially are taking a little bit more of a cautious approach to bringing in goods at this point."

The figures from August for the nearby Port of Los Angeles weren't yet available. Together, the two big West Coast ports account for about 40% of U.S. inbound containerized cargo traffic, consisting mostly of consumer products and other finished goods from Asia.

Under plan, UC tuition could rise by 16% a year

The University of California would raise student tuition by at least 8 percent - or as much as 16 percent - every year through 2016 under a plan that UC leaders will propose to the regents Thursday in San Francisco.

Basic tuition could top $22,000 in just four years, not including other mandatory fees, books, room and board, if the regents adopt the idea at their November meeting as part of a multiyear budget plan. Undergraduate tuition is currently $12,192. UC officials say the hikes will help cover $2.5 billion in additional funds the university needs to pay its bills and grow enrollment over the next four years.

Pittsburgh City Council announces temporary parking enforcement hour rollback intentions

Adkins, along with other motorists and commuters, thought they were receiving relief last week when Pittsburgh City Council announced its intentions to cut the enforcement hours back from 10 p.m. to 6 p.m., but council, faced with dramatic budget problems, will announce another increase in January.

Downtown meter rates increased from $2 to $3 and in Oakland, South Side, Strip District, and North Shore, the hourly rate changed to $1.

Rising copper prices hit commuters as thieves steal cables (London)

The incident, believed to have taken place on Sunday night, disrupted the journeys of hundreds of thousands of rail customers travelling on South West Trains between Hampshire and London Waterloo.

There have been three further incidents of signal cable theft in the south east of England in the last week alone, delaying trains at London Bridge and Paddington stations. The British Transport Police has introduced a number of defensive measures to fend off this crime, but have been unable to prevent rising cable theft amid soaring demand for copper worldwide.

Car makers to face tough times unaided

Car makers are bracing for tough times as Europe's economic woes threaten consumer confidence at a time when governments can ill afford to bail out the industry again and revive incentive schemes for buyers of new cars.

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2 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4240
China Buys EuroBonds to Diversify FX Reserves,Reduce Dollar Role

 

"China, as the world's biggest foreign buyer of U.S. Treasury bonds, is purchasing European bonds in a bid to diversify its foreign exchange reserves and reduce global dependence on the U.S. dollar, the official Xinhua News Agency said Wednesday.

"This will lessen the world's dependence on the U.S. dollar as the sole global reserve currency and begin a shift toward a more multipolar reserve system," the news agency said in a commentary.

Chinese officials have said they want a bigger global role for their own currency and a reduced dependence on the dollar. "
 

"Moody's cut the credit ratings of two French banks on Wednesday because of their exposure to Greece's debt, highlighting growing risks to Europe's financial sector from the deepening euro zone sovereign debt crisis.

The one-notch downgrade of Societe Generale and Credit Agricole came hours before the leaders of Greece, France and Germany were due to hold a video conference on measures to head off a possible Greek default, which has prompted rising global alarm over the potential fallout. "

"Fitch Ratings Wednesday downgraded five Spanish regions, as worries mount that local governments could derail Spain's efforts to slash one of the euro zone's largest budget deficits.

In a short statement, the credit ratings company said it had lowered Andalusia and the Canary Islands to A+ from AA-, Catalonia to A- from A, Murcia to A from AA- and Valencia to A- from A. It has negative outlooks on all five.

Fitch cited "sharp fiscal deterioration" as the reason for the downgrades, noting that the Spanish finance ministry recently said first-half revenue for Spanish regions had declined by 3.6% on the year and that they had a combined budget deficit equal to 1.2% of gross domestic product. The finance ministry also said most of the country's 17 regions were not on track to meet their year-end deficit targets. "

  • Other news, headlines and opinion:

 

Spanish banks' ECB borrowing up sharply in August

ECB Lends Dollars to Two Euro-Area Banks as Markets Tighten

Wen Says World Must Get ‘Houses in Order,’ Not Rely on China

Japan mulls 4th extra budget of 1-2 trillion yen: report

Detroit Pension Funds Hit BNY Mellon With $1 Billion Class Action Suit

Releasing 70,000 Psychiatric Patients Shows Japan Debt Task

Dutch investigating fall-out of Greek bankruptcy ("The Dutch finance ministry regards the bankruptcy of Greece as inevitable")

1.2 Trillion Budget Cuts Still Leaves Debt At Record Proportion Of GDP

France wants Greek guarantees, no debrief after call

Teachers to strike in Madrid over staffing cuts

China Must Avoid Lending to ‘Troubled’ Nations, Yu Yongding Says

Belarus ruble loses 40% amid crisis

Denver's New Mayor Announces Plan To Cut $100M From Budget

Wholesale prices flat, as inflation pressures ease ("In the past 12 months, the index has increased 6.5 percent")

Milliman Analysis: Corporate Pension Funded Status Drops for Second Consecutive Month

Huge Surge in Bank of America Foreclosures

BNP Paribas plans $96 billion of asset sales
 

Handing Over the Keynes to Kingdom: European Discipline Destroyed (McAlvany audio)

Swiss 1970s Inflation Specter Seen in Central Bank’s Unlimited Franc Sales

Spain Faces ‘Downside’ Ratings Risk as Economy, Regions Lag, Fitch Reports

Retail Sales in U.S. Unexpectedly Stagnate

Russia Unexpectedly Lowers Repurchase Rate on Ruble Liquidity Risk

Posen Steps Up Push for Stimulus at BOE

Asia Currencies Weaken on Europe Debt Crisis, ADB Growth-Outlook Downgrade

Indian Inflation Quickens to 13-Month High, Adds to Interest-Rate Pressure

Greece Should ‘Default Big,’ Says Man Who Managed Argentina’s 2001 Crisis

More Than One-Fifth of Mortgages Underwater: Report

Investors get a eurobond boost (Reuters video)

Greece puts lid on Irish bond progress

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4240
30 year bonds..."guaranteed to lose money"

 

"How's this for an investment opportunity: a guaranteed yield of 3.2 percent, with an enormous potential downside. As risky as that sounds, millions of investors are moving money into Treasury bonds as a "safe haven." In early September, the yield on the 30-year Treasury bond sank to a new low of 3.2 percent, while the 10-year note fell to 1.9 percent. If the inflation rate stays anywhere close to its current modest 3.6 percent pace, long-term investors will be guaranteed to lose money after factoring in inflation's toll."

 

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