Daily Digest

Daily Digest - February 24

Wednesday, February 24, 2010, 10:48 AM
  • U.S. ‘Problem’ Banks Soar, Lending Drops, FDIC Says
  • Treasury Announces Expansion Of Borrowing Program
  • County Ready To Publish List Of Delinquent Taxpayers
  • IRS Employees Face Rising Threats
  • More Say It's OK to Cheat on Taxes
  • State Tax Revenues Fall Fifth Straight Quarter
  • McCann: 1,500 layoffs If Christie Cuts School Aid
  • Jordan District Teachers plan to protest layoffs at Tuesday night rally
  • Richland County Cuts Half Of Sheriff's Budget
  • Washington State Senate Democrats Want Sales Tax Hike
  • Arizona Non-Profits Struggle As Donations Keep Falling
  • Mexico Economy Shrank 6.5% in 2009 Amid Global Crisis
  • FHA Changes Rules For Loans
  • Applications for Help on Heat Bills Rise by 15%
  • ABC News Prepares Major Restructuring; Between 300 and 400 Staffers Could Be Cut
  • South Carolina Board To Allow Prison System To Run Up To $29m Budget Deficit


U.S. ‘Problem’ Banks Soar, Lending Drops, FDIC Says

Feb. 23 (Bloomberg) -- U.S. “problem” banks climbed to the highest level in 17 years, signaling failures may accelerate in 2010, the Federal Deposit Insurance Corp. said. Bank lending had the biggest retreat in more than six decades. The FDIC included 702 banks with $402.8 billion in assets on the confidential list as of Dec. 31, a 27 percent increase from 552 banks with $345.9 billion in assets at the end of the third quarter, the regulator said today in a quarterly report. “Problem” banks account for 8.7 percent of all U.S. lenders.

Treasury Announces Expansion Of Borrowing Program

Now that the government's debt ceiling has been increased, the Treasury Department said Tuesday it will once again expand an emergency program created at the height of the financial crisis to help the Federal Reserve manage its books. The Treasury said it will expand borrowing in the Supplementary Financing Program from $5 billion to $200 billion........The increase planned over the next two months will be accomplished by selling $25 billion in 56-day bills at weekly auctions which will be held every Wednesday.

County Ready To Publish List Of Delinquent Taxpayers

Delinquent taxpayers in Gaston County have less than a week to fork over what they owe before the shame factor kicks in. Property owners who fail to pay their real estate taxes by Feb. 28 each year can expect to see their names advertised in a public listing.....As of Feb. 1, a total of $15.1 million in countywide real estate taxes had not been collected.

IRS Employees Face Rising Threats

Armed Escorts for Employees Amid Fear of Copy-Cat Attacks .... J. Russell George, the Treasury inspector general for tax administration, said threats that once averaged 170 or so a year are now up to about 900.

More Say It's OK to Cheat on Taxes

The fear of being audited on their income taxes is rising, one poll shows, even as more Americans say it's OK to cheat on a return. The IRS Oversight Board, which guides the Internal Revenue Service, reported that 13 percent of those polled last year said it was acceptable to cheat, up from 9 percent in 2008.

State Tax Revenues Fall Fifth Straight Quarter

State tax revenues declined 4.1% nationwide in fourth-quarter 2009, marking the fifth consecutive quarter of reduced collections, the Rockefeller Institute of Government said Tuesday. The five straight quarters of year-over-year decline in overall tax collections represent a record length of such decreases, the institute said. Collections from each of the two major revenue sources--income and sales taxes--also fell for a fifth straight quarter. "States will likely face further revenue weakness in the first quarter of 2010," said Lucy Dadayan, senior policy analyst at the institute and author of the latest report. Overall, the tax revenues collected by the 46 states fell from $140.2 billion during fourth-quarter 2008 to $134.5 billion in the comparable 2009 period. Data were not available for Louisiana, Nevada, New Mexico or North Dakota.

McCann: 1,500 layoffs If Christie Cuts School Aid (New Jersey)

The Jersey City Board of Education at their Feb. 18 meeting saw school board member and former Jersey City Mayor Gerald McCann announce a doomsday scenario for the Jersey City school district: 1,500 school employees would have to be laid off before the next school year. He was referring to Gov. Chris Christie’s recent announcement that school districts across New Jersey should brace themselves for cuts, as much as 15 percent, in school aid for the 2010-2011 school year to tackle a $11 billion budget deficit in the next fiscal year.

Jordan District Teachers plan to protest layoffs at Tuesday night rally (Utah)

"Teachers want to change the board's mind about laying off 500 employees and have them switch to an alternative such as furlough days and raising taxes," JEA President Robin Frodge said. The district aims to slice $30 million from its budget. Of the 500 positions to be eliminated, 250 will be teaching positions. High school teachers would also lose their prep period and teach an additional class in order to mitigate class size increases, which could be four children per class.

Richland County Cuts Half Of Sheriff's Budget (Ohio)

When Sheriff Steve Sheldon learned Tuesday that commissioners had approved cutting his budget in half for 2010, he was something more than speechless, bordering on apoplectic. “That’s just crazy, ludicrous,” Sheldon said. “That’s devastating to me.”

Washington State Senate Democrats Want Sales Tax Hike

One-time fixes, such as draining the Rainy Day Fund, would account for about $500 million of the budget-balancing solution. Senators also count on additional bailouts from the federal government, led by roughly $480 million in extra money for the Medicaid program. Senate Majority Leader Lisa Brown, D-Spokane, said Senate Democrats wanted a plan that was "balanced and responsible," particularly after bridging a $9 billion deficit last year without tax hikes.

Arizona Non-Profits Struggle As Donations Keep Falling

Six out of 10 non-profits in Arizona reported steep reductions in revenue in 2009, and officials expect the declines to continue in 2010. Revenue decreased more than 22 percent while demand for services increased by 85 percent, according to new survey results from the Arizona Alliance of Nonprofits. "We're worried that government cuts are going to decimate many non-profits," said Patrick McWhortor, president and CEO of the Phoenix-based alliance. He added that some organizations have lost 50 percent or more of their funding....Many non-profits are dealing with reduced resources by laying off employees, cutting raises, reducing hours and implementing furlough days. Last year, 3,500 people working at non-profits lost their jobs.

Mexico Economy Shrank 6.5% in 2009 Amid Global Crisis

Mexico’s economy contracted 6.5 percent last year, the country’s worst annual slump since 1932, as the global financial crisis sapped demand for its exports.

FHA Changes Rules For Loans

With the changing economy there will be new guidelines regarding FHA loans. The FHA’s tightened lending requirements will no doubt have an effect on the housing market considering that an estimated 40% of all loans are FHA. One of the biggest changes is the increase in the upfront mortgage insurance premium from 1.75% to 2.25%. This will increase closing costs by ½ a percent. Another significant change will be the minimum down payment. The traditional down payment of 3% has been raised to 3.5% and for those whose credit FICO scores are below 580, the amount will jump to 10% down.

Applications for Help on Heat Bills Rise by 15%

The number of households applying for home heating assistance has climbed to record levels for the third straight year, rising by 15 percent to a projected 8.8 million this winter, state energy officials said Monday. This compares with almost 7.7 million recipients last year and 5.7 million in 2008.

ABC News Prepares Major Restructuring; Between 300 and 400 Staffers Could Be Cut

ABC News is poised to make a major round of cuts that will reduce the size of the news division by as much as 20% and radically reorder the network’s traditional approach to news gathering. Forced to belt-tighten by the weak advertising market, network executives have opted to restructure the labor-heavy newsroom from top to bottom in favor of a leaner, more nimble operation, according to multiple sources.

South Carolina Board To Allow Prison System To Run Up To $29m Budget Deficit

South Carolina Gov. Mark Sanford balked Tuesday at ordering the early release of nonviolent inmates to ease a $29 million deficit at the Department of Corrections. Instead, he said there needed to be consensus among all three branches of state government before any prisoners are set free early. ... The $29 million prisons deficit doesn't mean offenders should be released early, said Laura Hudson, executive director of the South Carolina Crime Victims Council. "I suggest they find a cheaper way to incarcerate them — like they do in Arizona. They put up a hurricane fence and they put them in pink jump suits in tents," Hudson said. "I think that'd be a good idea."


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Re: Daily Digest - February 24

"The economies in the West are not actually recovering, Martin Hennecke, associate director at investment and financial advice firm Tyche, said Tuesday. He foresees high or even hyper inflation going forward in the West and a potential crisis in the bonds market.

"We are not seeing any growth in the United States, let alone any sustainable growth," Hennecke told CNBC. "The U.S. economy has never really recovered. They have just been throwing money at the problems, been bailing out the banks." "

"Greek government bond remained under pressure Wednesday as Greek workers kicked off a 24-hour strike to protest against government austerity measures, possibly complicating Greek government hopes of placing a new 10-year bond as early as this week to cover funding gaps.

Greek 10-year yield spreads over euro-zone benchmark German bunds rose to 340 basis points by 1035 GMT from 335 basis points late Tuesday, and are up by some 20 basis points since Monday's close. In market terms this means that Greek 10-year bonds yield at around 6.54%, more than twice the 3.13% level of 10-year German bunds.

On Tuesday Fitch Ratings lowered its long-term issuer default ratings on the four biggest banks in Greece to BBB, with a negative outlook, saying that the Greek government's fiscal tightening will "have a significant effect on the real economy."

The timing of Greece's planned 10-year bond is still uncertain and could slip to next week, thus extending the uncertainty ahead of a key test of the government's credibility with investors."

...................2A) Cash-strapped Greece grinds to strike halt

"ATHENS, Greece, Feb. 24 (UPI) -- A national strike in Greece Wednesday all but shut down the country completely in protest of proposed austerity measures to fight a record deficit.

All flights were canceled along with trains, buses and trucking services. Schools were closed, and banks and hospitals had only skeleton staff as an estimated 2 million workers from the public and private sectors walked off the job."

...................2B) Flights to and from Greece, cancelled on Wednesday due to air staff strike

"Britain's authorities may have to intervene in order to prevent a potentially damaging glut of debt issuance by major banks in the coming years, the Bank of England's deputy governor said."

"Feb. 24 (Bloomberg) -- The default rate for commercial property mortgages held by U.S. banks more than doubled in the fourth quarter and may reach a peak of 5.4 percent at the end of next year, according to Real Capital Analytics Inc.

The default rate for loans on office, retail, hotel and industrial properties surged to 3.8 percent from 1.6 percent a year earlier, the New York-based real estate research firm said yesterday in a report. The default rate for loans on apartment buildings climbed to 4.4 percent from 1.8 percent."

"World trade fell by 12 per cent last year — the biggest drop since the Second World War — according to the World Trade Organisation (WTO).

The level of trade between nations had been expected to decline by 10 per cent in 2009. "

"A Wall Street rating agency on Tuesday downgraded Los Angeles' credit rating, a move that will cost the city millions of extra dollars down the road.

Standard & Poor's Corp. notified city officials by telephone that it was lowering the city's general fund credit rating from AA to AA-, and reducing the rating on its Municipal Improvement Corporation from AA to A+, the local Daily News said on its Web."

""It will mean we will have to spend millions more (in interest payments) to get credit," City Administrative Officer Miguel Santana told the City Council."

"CalPERS says it has lost $475 million on an investment that yielded controversial placement agent and former CalPERS board member Alfred Villalobos his biggest single payday.

The loss is based on June 30 figures and appears to have shrunk somewhat in the months since. Because the loss is still on paper, it could rebound some more before CalPERS chooses to sell it. Nevertheless, the deal remains deeply in the red, according to figures released Tuesday by the California Public Employees' Retirement System.

The pension fund said its equity investment in New York financial giant Apollo Global Management had fallen to an estimated $124.6 million as of last June, the latest figures available. Cal-PERS paid $600 million for the investment in mid-2007, gaining a 9 percent equity stake in the firm. "

"The individual investor has been more or less abandoning stocks" and buying bond funds, Prechter concedes. "I think that is going from the frying pan into the fire. The bond market is the biggest bubble in the history of the world. "

"While the Governor's budget estimates the deficit at $8.2 billion, both chambers think that number is far too optimistic"

(from $403 million to $1.2 billion off)

"Feb. 24 (Bloomberg) -- A “wall” of junk debt maturing in the next four years will increase the risk of corporate defaults in the U.S., according to Bank of America Merrill Lynch.

More than $600 billion of high-yield bonds and loans are due to be repaid between 2012 and 2014, New York-based analysts Oleg Melentyev and Mike Cho wrote in a note to clients. Almost 90 percent of loans outstanding mature in the next five years, compared with an average of 36 percent between 2005 and 2009, according to the report. "

"The Commerce Department said sales dropped 11.2 percent to a 309,000 unit annual rate, the lowest level since records started in January 1963, from an upwardly revised 348,000 in December."

"One significant expense looming for both the University and the state is a massive hike beginning this year in pension payments to the State Employees' Retirement System, which currently has nearly $4 billion in underfunded liabilities. Those liabilities will continue to grow. Spanier called the SERS financial issue "significant for the coming year and potentially catastrophic for the future.""

"The Senate bill’s centerpiece is a $13 billion plan to fight unemployment by offering companies a one-year holiday from paying a 6.2 percent Social Security payroll tax for each of the new workers they add who meet the 60-day unemployed criteria.

Other provisions would increase aid to state governments by expanding federal subsidies for bonds they issue to pay for construction projects, allow small businesses to immediately write off more of the cost of equipment purchases and raise infrastructure spending. The cost to the Treasury would be offset in part by cracking down on offshore tax evasion."

"Reversing a long historic trend, mortgage default risk for consumers with high FICO(R) scores now exceeds their credit card default risk, even though most credit cards are unsecured credit and mortgages are secured by real estate. The company observed a parallel rise in mortgage delinquencies for higher-scoring U.S. consumers."

(Here's the news link he refers to)

"More than 11.3 million, or 24 percent, of all residential properties with mortgages, were in negative equity at the end of the fourth quarter of 2009, up from 10.7 million and 23 percent at the end of the third quarter of 2009.

An additional 2.3 million mortgages were approaching negative equity at the end of last year, meaning they had less than five percent equity. Together, negative equity and near-negative equity mortgages accounted for nearly 29 percent of all residential properties with a mortgage nationwide, according to the latest report from First American CoreLogic.

Negative equity, or “underwater” or “upside down,” means that borrowers owe more on their mortgage than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both."

  • Headlines

Georgia May Cut 5000 Jobs

Debt a serious threat for South Africa: DA

India seen as potential buyer for IMF gold

India's borrowings to touch record level

Brits work 50 days to pay off interest on debts

Thousands protest in Spain against pension reform plan

Germany violates EU deficit rules for first time since 2005

200 SUSD teachers to get layoff notices (Stockton)

Temecula district eliminates nearly 150 jobs (CA)

BCSD approves cutting 120 jobs (Bakersfield)

126 Santa Ana teachers face layoffs (CA)

Nevada schools chief expects 1000 teacher layoffs

Republican leaders are asking legislative budgeters to swallow “a bitter pill” of 1,500 layoffs (Maryland)

Greek Bank Downgrade Triggers Rise in Sovereign Default Swaps

Freddie Mac Posts $6.5 Billion Loss, Writes Down Tax Credits

Bernanke: Record-low rates still needed

Nearly a quarter of US airline jobs vanished in decade, data show

3000 SC prisoners may be set loose

Fight over retiree pension benefit expected Wednesday (Kern County, CA)

Ford Motor Credit Says It Will Cut 1,000 Jobs This Year

Mike Pilat's picture
Mike Pilat
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Re: Daily Digest - February 24

Turbo Timmy: "Without growth, we cannot begin working towards fiscal responsibility"


Water continues to rise in the Titanic.

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On the Brink of a Bond Market Apocalypse

On the Brink of a Bond Market Apocalypse


The bottom line: In less than one decade, investors who trusted Washington and Wall Street were fleeced to the tune of $22.1 TRILLION!

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Re: Daily Digest - February 24
Mike Pilat wrote:

Turbo Timmy: "Without growth, we cannot begin working towards fiscal responsibility"

What he meant to say was, "Without fiscal responsibility, we cannot begin working towards growth."

Nah, that would require a responsible leader, not a puppet.

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Re: Daily Digest - February 24
Mike Pilat wrote:

Turbo Timmy: "Without growth, we cannot begin working towards fiscal responsibility"


Water continues to rise in the Titanic.


Its just amazing. How many people out there right now are listening to him and saying:

 "Yep. He's right we need to work toward being more fiscally responsible"

Does anyone believe anything they are saying? Are people even listening anymore?

Holy Criboltry Crickets!

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Re: Daily Digest - February 24

Come to Papa..............


Muhahaha..... Mu..hahahahaha!

Why is the big R suddenly offering much much higher interest rates than any other UK bank for our cash? what do they want with it?

anyone know?

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Re: Daily Digest - February 24

Turbo Timmy: "Without growth, we cannot begin working towards fiscal responsibility

cart before the horse

he's insane, a Goldman criminal, or both

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Mike Pilat
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Re: Daily Digest - February 24

Baked into Timmy's "analysis" is a complete misunderstanding of why we're not growing. He would seem to imply that fiscal irresponsibility is actually a requirement for growth. Of course there's no mention of the impact that resource scarcity, continuous warfare, and bureaucratic misallocation of capital have on our financial health. Looks like we are heading for more icebergs. We can be certain that there are consequences to the path that we are pursuing.

Unfortunately, history suggests that financial crises and resource readjustment periods are often highly correlated with wars. And given the way we calculate our GDP and measure our "jobs" (by quantity, and not by quality) war would be an incredible boon to our statistics as a nation. We certainly have no shortage of enemies to take the fight to. Faber and Celente seem to concur on this concern.

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Re: Daily Digest - February 24




What if somebody expects superhigh Inflation? Buy commodities know, payback cheap paper later?

Would that make sense?

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Re: Daily Digest - February 24
Mike Pilat wrote:

Baked into Timmy's "analysis" is a complete misunderstanding of why we're not growing....

Then there's the whole premise that growth is a desirable, or even possible thing at this point.

As far as war is concerned, I'm not so sure that ity would be such a "good" thing for the economy.  After all, we're currently in two, and it doesn't seem to be helping the numbers too much.

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Re: Daily Digest - February 24

If this keeps up you will be able to buy all the "fiat" currncy in the world for a pound of gold or a bushel of corn.

dr gizmo

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Re: Daily Digest - February 24

Partial solution:

1.  Vote at every election....like it or not...even if you have to hold your nose while you  vote....but do it...vote!!!

2.  Vote every Senator and Representative out of office unless they have an outstanding record of responding to their constituents ....not their special interests groups.

3.  Pay off your debts.....Grab on to a spirit of SELF-DENIAL.

4.  Push for a fair balance of payments, i.e., if we buy 5 billion $ from a foreign country they in turn should buy 5 billion $ worth of our goods / services.  Demand a fair playing field  for our products.  That will go a long way to creating more jobs.

5.  Work hard at your job.  Be innovative, creative, cooperative and efficient.  Respect your boss...be a team player.

6.  Be ethical in your everyday dealings...don't be a slimy sleazey me-first and screw-you type.

7.  Put God back into your life all week long not just  on Sundays and don't pay attention to those who would try to corrupt you.  Be tough enough to resist corruption.   Live your life at a high moral standard.  Bottom line is  .... God is the real boss!!!!

8.  Save your money for a rainy day.

9.  Demand a high standard of education for your children...get involved in their education....turn off the TV.

10.  Be extremely productive because that is where wealth is created.  Don't believe the jerks who want you to believe that you can transfer wealth from one person to another and become wealthy doing it.  Productivity is how wealth is created.

11.  Support the farmer because agriculture is the basis of all wealth.

12.  Love your neighbor and lend a helping hand where it is needed.

13.  Think twice and ask why we have to go to war before you fall in line to support another war.  Ask questions.  Find out why we are going to war.  What is the real reason?  Don't just accept media BS.  Find out what the hidden agenda is.  Find out who really benefits.  Be a responsible citizen.  Get involved.  Don't just  accept it because they appear to be smarter or more educated than you - they could be misguided.  Most wars are unnecessary and could have been avoided if the politicans knew that they had to answer to demanding and caring citizens.

14.  Support the efforts to move rapidly to other sources of energy.  Use energy efficiently...don't waste energy.

15.  Grow your own food in your back yard.

16.  Listen to the media critically.  Don't believe all of the BS they want brain wash you with.  Think critically and logically. 

17.  Look for and implement solutions....don't be satisfied with a never ending process that goes nowhere.

18.  Get rid of all of your lazy habits.

19.  Do not support abortion for the unborn are innocent.  Don't support negligence of the old  folks for they have paid their dues to society.

20.  Be a responsible  family member...don't be selfish....and be a responsible citizen.


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Re: Daily Digest - February 24


The War on Toyota: It's All Politics

By Mike Whitney

February 24, 2010 "Information Clearing House" -- Does anyone really believe that Toyota is being pilloried in the media for a few highway fatalities?

Nonsense. If Congress is so worried about innocent people getting killed, then why haven't they indicted US commander Stanley McChrystal for blowing up another 27 Afghan civilians on Sunday?

But this isn't about bloodshed and it's certainly not "safety regulations". It's about politics--bare-knuckle Machiavellian politics. An attack on Toyota is an attack on Japan's leading export. It is an act of war. Here's a excerpt from the New York Times which explains what is really going on:

"The Japanese economy has emerged from its worst recession since World War II, but is still reeling. Japan must do more to lift its economy out of deflation and boost long-term growth, S.&P. said.


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Re: Daily Digest - February 24

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Re: Daily Digest - February 24

Johnny Oxygen's picture
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Re: Daily Digest - February 24

Hi Loub!

Welcome to CM.

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Re: Daily Digest - February 24

The Pretcher watch was good. I agree with about everything he says but I have a disconnect where he doesn't. Cash, if I recall is about 2% of the money that is "out" there. I think even good banks will go on holiday. Also cash and Treasuries/bonds are to me one and the same. I can't see how one could crater (bonds (and I'm confident the bonds will crater)) and cash would be worth something. When the bonds go bah bye Uncle Buck's value and hello massive price increases.

But his point in the video I took to be "Bonds are in a massive bubble." And that I agree on.

Sure we will see soon enough.

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