- 1) Adjusted for Inflation, Dow's Gains Are Puny (Wall Street Journal)
"Despite its 2009 rebound, the Dow Jones Industrial Average today stands at just 10520.10, no higher than in 1999. And that is without counting consumer-price inflation. In 1999 dollars, the Dow is only at about 8200 and would have to rise another 28% or so to return to 1999 levels. Using today's dollars and starting at 10520.10, the Dow would have to surpass 13460 to get back to its 1999 level in real, inflation-adjusted terms."
"If Morgan Stanley is right, the best sale of U.S. Treasuries for 2010 may be the short sale.
Yields on benchmark 10-year notes will climb about 40 percent to 5.5 percent, the biggest annual increase since 1999, according to David Greenlaw, chief fixed-income economist at Morgan Stanley in New York. The surge will push interest rates on 30-year fixed mortgages to 7.5 percent to 8 percent, almost the highest in a decade, Greenlaw said.
Investors are demanding higher returns on government debt, boosting rates this month by the most since January, on concern President Barack Obama’s attempt to revive economic growth with record spending will keep the deficit at $1 trillion. Rising borrowing costs risk jeopardizing a recovery from a plunge in the residential mortgage market that led to the worst global recession in six decades. "
"It wasn't long ago that the US government had never even sold $100 billion worth of debt in a single week.
Now, in the final week of the year (and a shortened, holiday one at that), the Treasury is set to auction off a record-tying $118 billion"
"Overall, municipal borrowers sold $374 billion through the week of Dec. 14, 11 percent more than the $338 billion during the entire previous record year of 2007, based on weekly data, excluding variable-rate offerings, compiled by Bloomberg."
"HARRISBURG - Pennsylvania's budget woes resemble a neverending story.
State government enters a new year having major fiscal challenges with shortfalls in monthly revenue forecasts, a drop in federal stimulus aid and the Rainy Day Fund tapped out.
The national recession is taking its toll on Pennsylvanians. About one-half million state residents are jobless while 1.3 million depend on food stamps to tide them over."
"Nonetheless, occupancy has dropped an average of 10 percent, and hotel loans have begun falling into delinquency more rapidly than any other kind of commercial real estate debt.
At the same time, more hotels are opening, leading to an oversupply that is likely to keep room rates low for at least a year.
Five times more hotel loans are behind on payments this year than in 2008, according to mortgage data firm Trepp LLC.
In October, 8.7 percent were distressed, compared with 1.5 percent last year. The rate for commercial property is 4.8 percent, and for stores it is 4.5 percent."
"The New Jersey Transportation Trust Fund Authority has new-money bonding capacity this fiscal year and next, but by July 2011, the start of fiscal 2012, its entire $895 million annual appropriation will be needed to cover principal and interest payments on the TTFA's nearly $11 billion of existing debt."
- 8) Seeing red: Thompson's first priority is getting out of debt (Harrisburg, PA)
"The city would then be eligible for a no-interest state loan so its basic services could continue.
When the city begins operating in the black again, the loan would be repaid.
The report indicates the city’s total financial deficit during the next five years will be about $160.5 million, of which $144.8 million is debt service and $15.7 million is general fund operations. "
"A New York speculator convinced ten different banks to give him 20 separate mortgages to buy 10 homes with no money down and he defaulted on every one.
Lloyd Varma stuck ten banks with loans for $6.4 million on houses across southern Queens, according to the New York Daily News. By the end of 2007, eight of the homes were in foreclosure. Today, banks own four of the houses, while the others are in the process of being foreclosed.
“There weren’t any checks on whether mortgages were affordable or viable, so subprime lenders were writing these mortgages because they could sell them to Wall Street,” said Josh Zinner of the nonprofit Neighborhood Economic Development Advocacy Project."
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