Daily Digest

Daily Digest - February 28

Sunday, February 28, 2010, 11:47 AM
  • California is a greater risk than Greece, warns JP Morgan chief
  • Back To The Crash
  • Georgia Republican To Leave House
  • Bernanke Defends Fed’s Ability to Supervise Banks
  • China Inserts New Perspective Into IMF Monetary Strategies
  • Proposed power line would run from New England through New York
  • Home Sweet Passive Home
  • Large Iceberg breaks off the Mertz Glacier in the Australian Antarctic Territory

Economy

California is a greater risk than Greece, warns JP Morgan chief (mhoop)

Earlier this week, the state's legislature passed bills that will cut the deficit by $2.8bn through budget cuts and other measures. However the former Hollywood film star turned politician is looking for $8.9bn of cuts over the next 16 months, and is also hoping for as much as $7bn of handouts from the federal government.

Back To The Crash (jdargis)

Taking the decade between 2000 and 2009 as a whole, growth was slower than in previous decades. These figures ... provide stark reminders of various aspects of the poor performance the American economy demonstrated during the “noughties”.

Georgia Republican To Leave House (jdargis)

Republicans continue to lead Democrats in the number of vacancies they will have to defend in November. Currently, Democrats have 14.

Bernanke Defends Fed’s Ability to Supervise Banks (jdargis)

“It’s hard for me to understand why, in the face of a crisis that was so complex and covered so many markets and institutions, you would want to take out of the regulatory system the one institution that has the full breadth and range of those skills to address those issues,” Mr. Bernanke told Richard C. Shelby of Alabama, the senior Republican on the Senate Banking Committee.

China Inserts New Perspective Into IMF Monetary Strategies (Claire H.)

The appointment of Zhu Min, deputy governor of the Chinese central bank, as a special adviser to the head of the International Monetary Fund (IMF), highlights China's increasing influence in the global financial system.

Energy

Proposed power line would run from New England through New York (joemanc)

An Ontario-based company has announced plans for a major $3.8 billion, 355-mile transmission line that would link New York City and southern New England with Canadian hydroelectric and wind power sources. The line would be installed mostly under major bodies of water, including Lake Champlain, the Hudson River and Long Island Sound, terminating in Bridgeport.

Home Sweet Passive Home (jdargis)

A study done in Florida a decade ago looked at the energy consumption of ten identical houses fitted with the same electrical appliances and equipment. Despite the similarities, there was a huge variation in consumption—with the most energy-intensive home consuming 2.6 times more than the least. In other words, the occupant’s behaviour is a crucial factor governing the use of energy. So, anything that changes the way users behave should reap appreciable savings—for utilities as well as consumers.

Environment

Large Iceberg breaks off the Mertz Glacier in the Australian Antarctic Territory

A joint Australian - French study has discovered the calving of a large iceberg from the Mertz Glacier in the Australian Antarctic Territory. The iceberg, 78 kilometres long with a surface area of 2,500 square kilometres, broke off the Mertz Glacier after being rammed by another iceberg, 97 kilometres long.

Please send article submissions to: [email protected]

6 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4163
Re: Daily Digest - February 28

"Schwarzenegger was right when he told the Sacramento Press Club last month that no single issue threatens the fiscal health of this state more than our exploding pension obligations.

He explained that over the last 10 years, our pension costs have gone up by 2,000 percent over the past 10 years from $150 million per year to $3 billion a year for state government workers, and that does not include health care costs.

The governor warned that the $3 billion we are spending on pensions alone will go up to $10 billion or $12 billion over the next decade unless there is significant reform.

The number of public employees in California collecting $100,000-plus pensions has skyrocketed from about 2,500 in 2004 to 15,000 now, and that number will continue to soar."

"If it was difficult for Medicare patients to find a primary care physician in Grand Junction before, it may become next to impossible now.

Without action in Congress, Medicare reimbursement rates for physicians will be cut by 21 percent, a cut that is to go into effect Monday.

The U.S. House of Representatives voted late last week to delay it until April 1, but the U.S. Senate broke early for the weekend Friday without acting on it. Senators may take it up again early this week.

Those cuts, if they occur, would create even less incentive for doctors to take on new Medicare patients, as reimbursement rates for Medicare patients are at least 20 percent to 40 percent lower than private insurances."

Germans and Greeks get nasty over debt (swastikas and middle fingers)

Colorado Springs Removes Street Lights To Meet Budget Gap

=======================================

A couple of minor details from last week's news:

"Continuing problems with Fannie Mae's mortgage portfolio are still straining its finances. Some 5.38% of its single-family loans were more than 90 days delinquent, up from 2.42% a year earlier.

Total nonperforming loans were $216.5 billion at year-end, compared with $198.3 billion in the prior quarter and $119.2 billion in the prior year-end."

 

(Unemployment extension)

"According to the Congressional Budget Office, Reid's plans for a 12-month extension through the end of December will cost $100 billion. The 30-day extension alone will cost $7 billion."

Eye's picture
Eye
Status: Bronze Member (Offline)
Joined: Mar 7 2009
Posts: 88
Re: Daily Digest - February 28

Hey Sax,

I very much appreciate your sharing your survey of news and articles here on CM.com.

Eye

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: Daily Digest - February 28

http://georgewashington2.blogspot.com/2010/02/bernanke-warned-congress-on-wednesday.html

Friday, February 26, 2010

"Bernanke Warned Congress On Wednesday That The United States Could Soon Face A Debt Crisis Like The One In Greece"

Bernanke is now joining Rosenberg, Ferguson and Faber, Edwards, Grice and many others in warning that the debt crisis rearing its head in Greece may spread to America, causing U.S. interest rates to climb.

As the Washington Times wrote yesterday:

With uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress on Wednesday that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt.

Recent events in Europe, where Greece and other nations with large, unsustainable deficits like the United States are having increasing trouble selling their debt to investors, show that the U.S. is vulnerable to a sudden reversal of fortunes that would force taxpayers to pay higher interest rates on the debt, Mr. Bernanke said.

"It's not something that is 10 years away. It affects the markets currently," he told the House Financial Services Committee. "It is possible that bond markets will become worried about the sustainability [of yearly deficits over $1 trillion], and we may find ourselves facing higher interest rates even today."

Yes, massive debt overhangs do matter.

Erik T.'s picture
Erik T.
Status: Diamond Member (Offline)
Joined: Aug 5 2008
Posts: 1234
Re: Daily Digest - February 28

Holy cow!!!

Mike, at first I was convinced that this was a joke and that you had written this tongue-in-cheek, since we all know that these statements are way too responsible-sounding and intelligent to have come from Benanke's mouth.

But then I followed the link and saw it was a legit story. This happened last Wednesday??? I can't believe I missed it until now. Could it be that financial commentators are so shocked by these words of reason that they just didn't know how to react?

I don't believe Bernanke - I think he will continue to monetize the debt and that this tough talk is intended for eastern ears as reassurance than he's not really going to do what he really is going to do. But words like these are encouraging, even if insincere.

Now I REALLY don't understand why long bond prices moved considerably higher on Thursday, the day after Bernanke made these statements.

Erik

 

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - February 28

If they don't monetize it like the Anticurrency said he won't then the interest rate ramifications associated with the 8 trillion + GAAP deficit will be a show stopper, unless they plan on stealing everyones 401K's and IRA's.

In other words: No monetization ='s sovereign default. Without monetization the revenues to pay the deficit aren't there. We all know it is default, stick it to the older population or print or steal 2-7 trillion worth of 401's and IRA's.

Also interest rates for business borrowing will be a cold shower for the economy.

If they don't move to grand theft 401K then IMHO this is akin to his last "rate-hike" - smoke and mirrors.

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
Re: Daily Digest - February 28

+1 Davos

Erik wrote:

I don't believe Bernanke - I think he will continue to monetize the debt and that this tough talk is intended for eastern ears as reassurance than he's not really going to do what he really is going to do. But words like these are encouraging, even if insincere.

Man I want a job like Bernankes. Tell everyone that its all OK and you are taking care of things while they are clearly falling apart then come out and say "Yeah...things are gonna fall apart" AND STILL KEEP YOUR JOB!

What a great gig. Win win, at least for Bernanke.

Erik. Yep. There is no alternative once you go down the 'quantitive easing' road. Its like a tractor pull the further you go the more you have to pour it on. I think words are only encouraging when they are backed by action.

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