"BEIJING (Dow Jones)--The head of China's pension fund said Tuesday reform of the world financial system ought to focus on reducing the system's reliance on one nation's currency as the reserve currency, state-run Xinhua News Agency reported.
"The core of the reform should be to change the monopoly one nation's currency has in terms of reserve currencies," the report cited National Social Security Fund Chairman Dai Xianglong as saying at a conference.
Dai, who was once a central bank governor, also said China should improve the composition of its foreign-exchange reserves and increase the investment returns on those reserves.
He said the country should also improve its external payments situation, according to the report."
"Analysts said that the forex agency's global hiring campaign was part of its drive to diversify China's currency reserves, a long-standing official goal.
"With our foreign exchange reserves growing, the team of staff that manages the reserve assets should also be strengthened," said Ding Zhijie, a professor with the University of International Business and Economics.
The composition of the reserves is a state secret, but analysts estimate that at least two-thirds are invested in dollar-denominated securities, which means China stands to lose a lot from any decline in the dollar's value."
- 3) NIA's 10 Most Interesting New NIAnswers (National Inflation Association)
"Do you think investing 20% of my cash assets into gold is an intelligent amount and can gold become a bubble and need to deflate at some point?
There is no such thing as owning too much gold. We are at a point where you shouldn't be holding any dollar denominated assets at all. If you must own cash, let it be a foreign currency like the Yen.
Yes, gold can become a bubble and have to deflate at some point. At this time, the average American thinks gold is expensive and they are selling their old gold jewelry in order to get dollars. Therefore, we are nowhere close to having a gold bubble, we still have a dollar bubble."
"Contracts betting the franc will rise against the dollar totaled 25,333 on Nov. 10, more than 10 times the number betting on a drop by the franc, according to the Commodity Futures Trading Commission."
"Yale finance professor Jeffrey Garten sees the dollar dropping more than just against the franc. Thanks to the U.S. debt burden and Asian economic strength, he wrote in the Financial Times, “a permanently and greatly weakened dollar” is coming."
"“Gold has made all-time highs versus major currencies like the euro, Swiss franc and pound,” said Mario Innecco, a broker at MF Global Ltd. in London. “People want to get rid of paper and buy a currency that can’t be deflated. That’s gold.”"
"“With interest rates so low and a climbing deficit, there’s real fear that inflation will be a salient problem,” said Michael Pento, chief economist at Delta Global Advisors. In January, when gold dipped below $850, Pento predicted gold would reach $1,200 by year-end. “It’s hard to make a bearish case for gold right now,” he said Nov. 25."
"In an unusual foray into political comment, investing guru Jim Rogers says Treasury Secretary Timothy Geithner is about to join the ranks of the unemployed – as well he should.
"Geithner should never have been appointed to anything," Rogers told Business Week. "He's been wrong about just about everything for 15 years."
"As Mr. Obama realizes that Geithner doesn't know what he's doing, he's going to look for somebody else because he doesn't want to take the heat himself."
"So he's going to look to blame somebody, and the obvious person is Geithner."
Rogers, a commodity bull, attributes gold’s recent price surge to budget deficits.
“Deficits are going berserk nearly everywhere,” Rogers notes. “Throughout history, printing money has led to weaker currencies and higher prices for real assets.”"
- 7) Fed reduces AIG's debt by $25 billion (CNN Money)
"NEW YORK (CNNMoney.com) -- AIG announced Tuesday that it completed a deal wiping out $25 billion of its debt to taxpayers by selling stakes in two subsidiaries to the Federal Reserve Bank of New York.
The troubled insurer gave the New York Fed preferred shares of two of its international life insurance companies, including $16 billion of American International Assurance Co. and $9 billion of American Life Insurance Co."
.......7A) AIG gives Fed equity stakes for $25 bln in debt
"RALEIGH, N.C. (AP) — North Carolina owes nearly $1.5 billion to the federal government to pay unemployment claims and that number continues to rise.
The News & Observer of Raleigh reported Tuesday that the state has borrowed money for the claims since February, sometimes as much as $20 million a day.
David Clegg with the North Carolina Employment Security Commission says the debt will rise to at least $2 billion by the end of the year.
During the last recession, the state borrowed just $270 million for its unemployment insurance trust fund.
The debt is interest-free through the end of next year, thanks to the federal stimulus package. The interest gets tacked on beginning in 2011."
"LONDON, Dec 1 (Reuters) - Ratings agency Moody's said on Tuesday it estimates the Dubai government and its related entities have debt of $100 billion -- higher than the market estimate of around $80 billion. Moody's also said ports operator DP World (DPW.DI) and Jebel Ali Free Zone have approximately $10 billion in debt.
"Dubai's corporate landscape is now effectively a high-yield market," said Philip Lotter, senior vice president of EMEA corporate finance group at Moody's."
"Dec. 1 (Bloomberg) -- The commercial mortgage default rate on loans held by U.S. banks more than doubled to 3.4 percent in the third quarter as vacancies rose and rents declined, Real Estate Econometrics LLC said.
Defaults climbed from 1.37 percent a year earlier and from 2.88 percent in the second quarter, the New York-based property research firm said today in a report."
"WASHINGTON, Nov 30 (Reuters) - U.S. banks continue to face significant challenges, particularly from rising delinquencies in commercial real estate and commercial loans, a Federal Reserve official said on Monday.
"Credit losses at banking organizations continue to rise, and banks face risks of sizable additional credit losses given the outlook for production and employment," said Jon Greenlee, associate director of the division of bank supervision and regulation."
"Because of the recession, health plans are treading a fine line between trying to keep membership numbers healthy and ensuring that the members they keep continue to generate a profit.
Most insurers have seen substantial membership losses due to recession-driven layoffs, and much of the decline has been in the more profitable commercial sector, while Medicaid and Medicare membership has grown."
- 13) K-12 funding on table as cuts loom (Virginia)
"The state is facing a possible budget gap of at least $3.6 billion over the last six months of the current fiscal year and the following two years, Kaine said in an interview Monday in Martinsville.
That will be the gap if he takes the entire 2010 budget, which includes $6 billion he already has cut, and does not increase any spending except what is required for rising Medicaid enrollments, debt payments and other necessities, or account for inflation, he said."
"Contagion effects for Abu Dhabi from the restructuring of Dubai World debt will be "unavoidable", ratings agency Moody's said on Monday, and the restructuring could lead to downgrades for United Arab Emirates bank ratings.
"The contagion effect for Abu Dhabi will be unavoidable, as doubts will be raised as to how Dubai is going to finance its growth," Moody's analysts said in a weekly note."
"NEW YORK, Dec. 1 (UPI) -- It has become increasingly hard to find a country without a debt crisis looming, economists said.
In the wake of Dubai's $59 billion debt crisis announcement Wednesday, Harvard economics Professor Kenneth Rogoff said he expects a new flurry of defaults to occur in about two years, The New York Times reported Tuesday.
Pierre Cailleteau, managing director of sovereign risk at Moody's said, "I see very good reasons to be worried … because governments realize they can't afford to guarantee the debts" of companies that are now enjoying the largess of government protection."
- 16) Card Firms Add Inactivity Fees to Slow Default Losses (Bloomberg)
"Amy Schiffman has had a Fifth Third Bancorp credit card for eight years to guard against unexpected overdrafts on her checking account. Now the bank wants to charge her $19 for not using it.
“If you’re not thinking about the card, you might forget to pay the fee, and then you’ll be facing another late fee on top of it,” said Schiffman, 26, a Web designer in Lansing, Michigan.
Credit card issuers, facing the highest level of delinquencies since April, according to Moody’s Investors Service, are reviving inactivity charges and reworking other fees in an effort to stem declining revenue."
"More than 40 years ago, David Allen's parents bought an 800-square-foot log cabin on a piney slope overlooking the Little Colorado River in Arizona's Apache-Sitgreaves National Forests.
Under a U.S. Forest Service permit program, the Allens paid about $130 per year to have their small summer retreat on public land. As decades passed, that price didn't go up much. By the 1990s, they were still paying just $300 annually for a half-acre of real estate. As recently as 2008, he says, the fee was $1,677.
Now, because a new Forest Service appraisal values Allen's half-acre lot at $200,000 — cabin owners pay annual fees set at 5% of each lot's appraised value — he faces a yearly charge of $10,000 for a place that can't be used much of the year."
"Montgomery County officials are estimating that their budget deficit for the next fiscal year is $608.3 million, nearly $240 million more than officials had projected in September."
"ALBANY _ Gov. David Paterson said Monday night his office will delay payments to local governments, hospitals and schools -- and ultimately seek to cut the money entirely -- because the Legislature refuses to make enough spending reductions to state programs.
The move came after a day of negotiations with legislative leaders, who met Paterson at the governor's mansion and sought to reach a deal that eliminated school cuts.
Paterson said he is done negotiating and said legislators have been unable to recognize the need to cut spending."
- 20) Is California the Next Dubai? (Opinion)
"Dan Walters today argues that California has over $500 billion in debt, a sum that might further the comparisons to Dubai - until we look at the details:
Lockyer's warning pertained to the state's "general obligation debt," which currently stands at $59 billion, and there are an additional $50-plus billion in general obligation bonds that have not yet been sold. The biggest chunks of debt, however, are the unfunded obligations for pensions and health care of retired public employees...state and local pension funds have lost at least $150 billion on investments, so a reasonable estimate of today's unfunded liability is $200-plus billion. A state commission, meanwhile, says the state-local liability for retiree health care is about $100 billion.
No one keeps complete data on local government general obligation debt, but it appears to be roughly the same as the state's, perhaps $50 billion, plus several billion dollars in debt incurred by local redevelopment agencies."
"This longstanding deficit of rental homes that are affordable for the poorest households is getting worse because the number of extremely low income households is increasing, while the number of rental homes they can afford dwindles."
- 22) Job Cuts Loom as Stimulus Fades (Wall Street Journal)
"Highway-construction companies around the country, having completed the mostly small projects paid for by the federal economic-stimulus package, are starting to see their business run aground, an ominous sign for the nation's weak employment picture.
Tim Word, vice president of Dean Word Co., a heavy-construction company in New Braunfels, Texas, said his income is now coming mostly from projects that are winding up. He said that in normal times he has about $100 million of signed contracts in hand. But that number has fallen to $30 million, and the pipeline is empty. In the past two years, his work force has shrunk nearly 40% to 260 from 420.
"Having something to bid on is the lifeblood of the industry, and it's running out," said Mr. Word. He isn't sure what will happen next year without new projects. "There's no pavement fairy that's going to help.""
"PITTSBURGH -- Facing big unfunded pension liabilities for city workers, Pittsburgh is proposing what appears to be a one-of-a-kind 1% tuition tax on local university and college students, who claim the tax is illegal and unfair.
More than 100 students filled Pittsburgh City Council chambers Monday morning, many bearing signs like "No Taxation Without Representation" to protest the tax, which, if passed this week, could become effective next year.
"This is going to be a double taxation of students in the city," said Daniel Jimenez, 27 years old, a Ph.D. student in neuroscience at the University of Pittsburgh, who pays property taxes on a home he bought in 2004.
The tuition tax, which would raise an estimated $16 million, threatens to drive a wedge between the city and its universities, which have been credited with fueling much of Pittsburgh's economic transformation from an industrial city to an education and medical-services center.
The cash-strapped city, which has 85,000 students at its 10 universities and colleges, including top-ranked engineering school Carnegie Mellon University, says it needs the tax to help cover a $600 million pension-fund shortfall and keep several branches of the Carnegie Library system open."
- 24) The town's retirement costs to go up in 2012 (New Hampshire)
"NORTH HAMPTON — Towns and cities all across New Hampshire are getting some bad news from the state concerning the already stressed public employees retirement system.
The amounts communities are going to have to pay into the system are going up again for Fiscal Year 2012.
"The New Hampshire Retirement System has released their proposed rate increases for FY 2012, and it is not good," North Hampton Town Administrator Steve Fournier told members of the Select Board recently. "Overall, they are proposing an increase of 22.68 percent."
That represents an increase of approximately $106,700 between the 2010 and 2012. It means North Hampton taxpayers will be paying over half a million dollars just in retirement costs for town employees, and Fire and Police department members in 2012.
Of those three units, the highest rate increase will be for Police Department employees. Their rate will be going up by more than 31 percent, or more than $44,500 a year"
"AUGUSTA, Maine — Maine employers will see a $54 million increase in the taxes they pay to fund the unemployment insurance system starting in January. It’s an increase business groups say could cost jobs.
“The rate increase is the result of the greater usage of the fund we have seen in this recession,” said Labor Commissioner Laura Fortman in an interview. “The rates are adjusted every year and this is the first increase in several years.”
By the end of 2009, the unemployment insurance trust fund will have paid out nearly $254 million in benefits, she said, while the tax that fuels the trust fund will have brought in just $83 million."
Shopping season, Marc Faber video, AIG and the Federal Reserve.
"LA-SEYNE-SUR-MER, France, Dec 1 (Reuters) - European industry cannot continue with a euro at such weak levels to the dollar, pointing to the need for changes to the global monetary system, French President Nicolas Sarkozy said on Tuesday.
In a speech on the French economy, Sarkozy called for a system which would diminish the dominant role of the dollar on world markets and said France would seek progress on the issue when it presides over the Group of 20 major developed and developing nations in 2011.
"I see myself as a friend of the Americans but we cannot continue like this, with a euro which has risen by 50 percent of its value in relation to the dollar," he said.
"How do you want us to continue to produce in the euro zone and sell in the dollar zone with a 50 percent deficit in productivity based on the simple value of money? How will our industries be able to cope? This requires a new international monetary system," said Sarkozy."
"Gold has finally surpassed the $1200/oz mark.
But it may be going much higher. China is going to increase its holdings signficantly, according to Breakfast With Dave, Gluskin Sheff's analyst newsletter with David Rosenberg."
"Many critics argue that the pace of modifications under the federal Making Home Affordable (MHA) program isn’t keeping stride with the nation’s raging foreclosure problem, so the Obama administration announced Monday that it is taking a new approach to pressure servicers into converting more trial modifications to “permanent” status.
The government says that from now on, servicers failing to meet performance obligations under the federal program will face punishment, “subject to consequences which could include monetary penalties and sanctions.”"
........All this going on and the Dow Jones is up 140 points? Something just isn't right.
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