Daily Digest

Daily Digest - February 13

Saturday, February 13, 2010, 11:57 AM
  • Text of New Jersey Governor Christie's Speech On The State Budget
  • China Surprises With Further Rise In Banks' Reserves
  • Bank Tries To Take Wrong House
  • St. Vincent's Hospital Laying Off Doctors

Economy

Text of New Jersey Governor Christie's speech on the state budget (griffin)

New Jersey is in a state of financial crisis. Our state’s budget has been left in a shambles and requires immediate action to achieve balance. For the current fiscal year 2010, which has only four and one-half months left to go, the budget we have inherited has a two billion dollar gap. The budget passed less than eight months ago, in June of last year, contained all of the same worn out tricks of the trade that have become common place in Trenton, that have driven our citizens to anger and frustration and our wonderful state to the edge of bankruptcy.

China surprises with further rise in banks' reserves (Nickbert)

China raised the level of reserves banks must hold for the second time this year on Friday, spooking financial markets on the eve of its New Year holiday by showing it was intent to curb lending and inflation.

Bank Tries To Take Wrong House (Nickbert)

You’d think that one sure-fire way to avoid foreclosure would be to pay cash for your house. But Charlie and Maria Cardoso of New Bedford, Mass., who paid $139,000 in cash for a retirement home in Florida in 2005, experienced the embarrassment and expense of a foreclosure anyway, they say, when Bank of America tried to take their house by mistake.

St. Vincent's Hospital laying off doctors (Manhattan) (VeganD)

In a cost-cutting move designed to help save the hospital from closure, Saint Vincent Catholic Medical Centers will lay off 32 doctors at the end of the month. The money-losing St. Vincent's Hospital also has asked its largest union, 1199 SEIU United Healthcare Workers East, to consider taking a temporary 15% wage cut.

Please send article submissions to: [email protected]

9 Comments

VeganDB12's picture
VeganDB12
Status: Platinum Member (Offline)
Joined: Jul 18 2008
Posts: 740
Re: Daily Digest - February 13

While St. Vincent's Hosptial, a community service oriented,  not for profit, large, and historic training hospital in New York City faces closure due to financial hardships the health insurers are still going strong...

Top five health insurers posted 56 percent profit gains in 2009

According to a study by a pro-health reform group published Thursday, the nation's largest five health insurance companies posted a 56 percent gain in 2009 profits over 2008. The insurers including Wellpoint, UnitedHealth, Cigna, Aetna and Humana, which cover the majority of Americans with insurance.

 

http://rawstory.com/2010/02/top-health-insurers-posted-57-percent-profit...

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
Re: Daily Digest - February 13

Credit Suisse Declares the U.S. a Riskier Investment Than Indonesia  - Amid fears that Switzerland might come to an agreement with the United States on banking privacy and tax evasion disclosures, Credit Suisse issued a report identifying those countries it determined to have the highest risks of default on their sovereign debts. Number 16 on the list was the United States, based primarily on its 2009 budget deficits and government debt. Countries ranked less likely to default include corruptocracy Kazakhstan, less-than-reform-minded Indonesia, the debt-ridden Philippines and violence-ridden Colombia. By comparison, U.S. Treasuries prices are up today despite a new issuance this week.

China January Power Use Gains 40% as Economy Recovers  (Bloomberg) -- China’s January electricity consumption jumped 40.1 percent from a year earlier as an economic recovery in the world’s second-biggest power producer spurred demand from factories.  Power use reached 353.1 billion kilowatt-hours last month, 2.7 percent higher than in December, the Beijing-based National Energy Administration said on its Web site today. Consumption by secondary industries, which includes manufacturing and construction, grew 46 percent to 262.4 billion kilowatt-hours.

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4147
Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Truthout in AUS - The great reckoning begins

The great reckoning begins

Alan Kohler is my favorite economic commentator. He works for a few MSM outlets, not least the National Broadcaster the ABC....  where of course he is not allowed to come out with this stuff we all recognise as "the truth"!   DTM.

Ken Henry and David Gruen of Treasury should spend less time sneering at Barnaby Joyce and more time contemplating the unfolding calamity in Europe, and coming to grips with what’s really going on in Australia.

As I explain below, Australia’s debt-funded fiscal stimulus is double what was announced and is only half-spent. In other words, the government is still in stimulus mode while interest rates are going up and unemployment is falling.

In general, what we are seeing is not just a Mediterranean muddle – it is the beginning of the great global fiscal stimulus reckoning.

It’s true that Greece is both horribly, irretrievably insolvent and too important to fail, so that Germany and France last night had to cobble together a debt underwriting.

Despite last night's agreement, the outlook for Greece and the EU remains grim indeed because France and Germany are adding to their own liabilities while not reducing Greece’s, and Greece will be quite unable to do what’s required – that is cut its deficit by 10 percentage points of GDP (from 13 to 3 per cent).

The mob is already baying and unions are already striking: the idea that the Greeks will allow themselves to be pushed around by the Germans again and told to eat gruel, 66 years after their liberation from the invading German army, is fanciful.

But it’s not just about Greece: the entire western world is now in fiscal crisis as a result of the wild economic stimulus measures announced between September 2008 and June 2009.

And unfortunately for the taxpayers who must now foot the bills, nobody knows whether that’s what saved their bacon, or whether it was the monetary policy and liquidity actions of the central banks.

In fact it was probably just the central banks. It was certainly liquidity that turned the markets last March and zero interest rates that saved the banks and restored their profits – but nowhere, except Australia perhaps, has government spending actually brought down unemployment.

Unlike virtually every other western country, Australia is not facing a fiscal crisis – partly because the government entered the financial system meltdown with budget surpluses and partly because of the incredible performance of the labour market, as evidenced by yesterday’s revelation that another 52,700 jobs were added in January and the unemployment rate has fallen to 5.3 per cent.

The problem for Australian taxpayers is that the stimulus is still going flat out even though there was no recession here, unemployment is falling and interest rates are on the rise.

The OECD puts the Australian stimulus package at 4.6 per cent of GDP in total – third largest behind the US and China.

In fact that seems to be a colossal underestimate of what the Rudd government is actually doing – it looks like the actual stimulus is double that figure, and what’s more there is at least a third of it still to be spent, possibly half.

The forward estimates surpluses in the 2008-09 budget brought down in May 2008 totalled $79.3 billion, spread over four years to 2011-12.

The 2009 Mid Year Economic and Fiscal Outlook last November contains deficits for the same years of $162.5 billion – a turnaround of $241.8 billion.

Of that figure, $143.1 billion is due to non-discretionary automatic stabilisers (mainly lower tax revenue), which leaves $95.7 billion in the discretionary fiscal stimulus bucket.

So whereas Kevin Rudd’s fiscal stimulus announcements in December 2008 ($10 billion) and February 2009 ($41 billion) do add up to 4.6 per cent of GDP, there is $44.7 billion of discretionary spending unaccounted for, taking the actual stimulus to 9 per cent – easily the world’s largest.

Moreover, the OECD’s interim report says that 31 per cent of the Australian stimulus is to be spent in 2010. That refers only to the “official” stimulus announcements; the unofficial stimulus would have been less than half spent in 2009.

That suggests the Rudd government will be pouring something like $40 billion of stimulus into an economy this year that the Reserve Bank is trying to hold back with higher interest rates.

And since this is an election year, there is no way Treasurer Wayne Swan is going to bring down a “spending cuts” budget in May: the spending is locked in. The saving grace is that Treasury has been too pessimistic about unemployment and tax receipts so the non-discretionary part of the forward deficits will be lower.

As for the rest of the world, it is far worse than it looks.

Last night the Societe Generale economics research team put out a frightening estimate of the real liabilities of western governments – including off balance sheet debts.

In every case the off-balance sheet numbers – including unfunded pension fund liabilities – dwarf the official debt position.

Greece is by far the worst because of what Otmar Issing, the German former chief economist of the European Central Bank, described yesterday as “one of the most luxurious pension systems in the world”. Its total net liabilities are about 800 per cent of GDP – eight times the official position.

Here are Soc Gen’s figures for the others (per cent of GDP): US 550, UK 400, Germany 400, France 550, Italy 350 and Spain 250.

In other words, the entire western world is insolvent and each country is facing its own day of reckoning – starting, appropriately enough, in Greece, the place where western civilization itself began.

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest - February 13

The U.S.: Land of the Free and Home of a Nearly Failed Treasury Auction of Its Own

On Wednesday, the US offered $16 billion worth of 30-year Treasuries (US debt that will mature in 30 years). Before we get into the details of how much of a disaster the auction was, we’re going to do a brief review of how US debt issuances work.

On Wednesday, February 10, 2010, the US Treasury issued $16 billion in 30-year Treasuries. Here are the buyer data points:

Buyer

Purchase Amount (%)

Primary Dealers

47%

Direct Buyers

24% (A RECORD)

Indirect Buyers

28%

First of all, we see Direct Buyers hit a RECORD percentage of purchases. This is extremely bizarre and somewhat disconcerting given that we have no way of knowing who these buyers are. For all we know, they could be the Federal Reserve itself or other US Government entities buying “off the radar.”

http://seekingalpha.com/article/188380-the-u-s-land-of-the-free-and-home-of-a-nearly-failed-treasury-auction-of-its-own?source=email

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: Daily Digest - February 13

Call to slash long working hours

http://www.abc.net.au/news/stories/2010/02/14/2818970.htm?section=justin

An economic research institute in Britain has suggested reducing the working week to 21 hours.

The New Economics Foundation says the cut in hours would help tens of thousands of people find jobs, and give a break to those suffering from work-related stress.

One of the authors of the report, Anna Coote, says the long-hours culture should be tackled.

"If people spend less time at work and more time at home and doing other things ... being better parents, better carers, better citizens, it would be good for all of us," she said.

"We are sort of locked into this long hours culture, which means we work to earn and we earn to consume and we consume more than we need on the whole. We need to get out of that pattern."

- BBC

turtle1663's picture
turtle1663
Status: Member (Offline)
Joined: Jan 6 2010
Posts: 13
Re: Daily Digest - February 13

There is no mystery to projecting the pattern of failure engendered by any purported economy subject to interest.
As interest multiplies debt in proportion to a circulation, ever more of every existing dollar is dedicated to servicing multiplying debt, and ever less of every existing dollar can be dedicated to sustaining the commerce which is obligated to service the multiplying debt. Everything around you can be understood from the obvious consequences.

We advocate the only real solution.

Mathematically Perfected Economy (MPE)

http://www.perfecteconomy.org/pg-amendment.html

http://endtheecb.ning.com/video/mathematically-perfected

pjc's picture
pjc
Status: Bronze Member (Offline)
Joined: Sep 26 2008
Posts: 30
Re: Daily Digest - February 13

My Florida tag went from 48.70 to 72.35. A special name tag, Luve God. A big increase.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - February 13
turtle1663 wrote:

 

We advocate the only real solution.

Before I take the time to go to this link I'd like to know if it addresses all problems? (Energy depletion, Resource Depletion as well as the obvious - our jacked dollar). Fixing the currency alone won't work - it will make things worse as it will exacerbate both depletions. It needs to be done, it is a good thing, but it needs to be done in conjunction with sustainable living.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments