Daily Digest

Daily Digest - February 3

Wednesday, February 3, 2010, 10:49 AM
  • Unemployment Rises in 82% of Metro Areas As Jobs Remain Scarce During Recovery
  • Debt Study Finds Little Room for North Carolina to Borrow
  • Record White House Budget Deficit Omits Trillions in Fannie and Freddie Liabilities
  • No Aid or Rebound in Sight, More Homeowners Just Walk Away
  • Housing Crisis Getting Uglier in 2010
  • Michigan Continues Turning Paved Roads To Gravel
  • New York's Hungry Children
  • Study: Thousands of Utahns Must Choose Between Food Or Paying Rent
  • More People Struggling To Stay Warm, Taxing Agencies (Detroit)
  • U.S. Can't Make Quick, Deep, Budget Cuts: Geithner
  • Moody's: US Rating Could Be Pressured by Deficit
  • Schools Chancellor: State Budget Cuts Would Force 8,500 Layoffs
  • Mass Layoffs By Year From 1996 Through 2009
  • Phoenix OKs 2% Sales Tax On Food Items
  • The Chickens Come Home To Roost
  • Rare Earth Demand Rises, No Supply Increase Seen Outside China

Economy

Unemployment Rises in 82% of Metro Areas As Jobs Remain Scarce During Recovery

The unemployment rate rose in 306 of 372 metro areas, the Labor Department said Tuesday. The rate fell in 41 and was unchanged in 25. That's worse than November, when the rate fell in 170 areas, rose in only 154 and was unchanged in 48.

Debt Study Finds Little Room for North Carolina to Borrow

North Carolina state government has essentially exhausted its ability to borrow money for state buildings and roads if it wants to protect its top credit rating, according to a report released Tuesday by State Treasurer Janet Cowell. The annual Debt Affordability Study penned by a panel led by Cowell said state officials can approve no more than $9.1 million in additional debt backed by general tax revenues for each of the next five years to remain within self-imposed guidelines.

Record White House Budget Deficit Omits Trillions in Fannie and Freddie Liabilities

The record budget deficits announced by the White House on Monday fail to include the federal government’s share of Fannie Mae and Freddie Mac’s $6.3 trillion in liabilities — though the Director of the Office of Management and Budget once thought it should.

No Aid or Rebound in Sight, More Homeowners Just Walk Away

The number of Americans who owed more than their homes were worth was virtually nil when the real estate collapse began in mid-2006, but by the third quarter of 2009, an estimated 4.5 million homeowners had reached the critical threshold, with their home’s value dropping below 75 percent of the mortgage balance. They are stretched, aggrieved and restless. With figures released last week showing that the real estate market was stalling again, their numbers are now projected to climb to a peak of 5.1 million by June — about 10 percent of all Americans with mortgages.

Housing Crisis Getting Uglier in 2010

Nearly 6 Million Foreclosures in Past 3 years - 3 Million More Expected in 2010 CBS News correspondent Ben Tracy report the American Dream is now a nightmare for many of the 75 million Americans who own a home. The housing report card is ugly. In the past two years, the housing market has lost an estimated $4.9 trillion dollars, as 59 million homes have declined in value. Nearly 1 in 4 homeowners -- 10.7 million households nationwide -- are underwater on their mortgages. They owe more than their home is now worth.

Michigan Continues Turning Paved Roads To Gravel

More Michigan counties are returning stretches of previously paved roads back to gravel to save money. The County Road Association of Michigan said Tuesday that 35 miles were returned to gravel in 2009. Thirty-eight counties have combined to pulverize about 100 miles of pavement and lay down gravel in the past few years. The main reason is because counties lack money to reconstruct or repave deteriorating roads.

New York's Hungry Children

One in eight Americans needed emergency food help in 2009-----one of five children in New York City are relying on emergency food. These sad statistics come from Feeding America and the Food Bank for New York City. "Food insecure" is the bureaucratic term for hungry people -- and New York is, unfortunately, a textbook case in food insecurity. Our food pantries and soup kitchens are overloaded.

Study: Thousands of Utahns Must Choose Between Food Or Paying Rent

More than half of the quarter-million Utahns who got help from local food pantries last year had to choose between buying food and paying their rent or mortgage. And 42 percent of those receiving emergency food supplies are children, according to the most detailed survey ever completed on Utah Food Bank clients.

More People Struggling To Stay Warm, Taxing Agencies (Detroit)

State and local agencies estimate an unprecedented 150,000 metro Detroiters are at risk of having their heat shut off if they don't receive help paying their bills. The number of people seeking state assistance so far this winter jumped 30% over last year at this time, according to the state Department of Human Services. Officials blame the rise on metro Detroit's miserable economy that continues to cost people their jobs. Since last winter, unemployment rose 33% -- to 288,000 people -- for the tri-county area, according to state employment data.

U.S. Can't Make Quick, Deep, Budget Cuts: Geithner

Treasury Secretary Timothy Geithner said Tuesday that the U.S. can't make deep and immediate budget cuts because it would damage the recovery and only exacerbate fiscal challenges.

Moody's: US Rating Could Be Pressured by Deficit

Moody's Investors Service said Tuesday that unless the U.S. government makes more moves to decrease the budget deficit or the economy improves more than anticipated, the government's "Aaa" bond rating will eventually be put under pressure.

Schools Chancellor: State Budget Cuts Would Force 8,500 Layoffs (New York)

The city now claims the total budget gap to schools for the 2010-2011 year would be $1.2 billion under Paterson's proposed budget. That includes a cut in state funding of more than $400 million, plus an additional $80 million expense the city has to pay because the state is now paying for mandated summer school for special education students. The city says it's also been shortchanged because enrollment grew. And the rising labor and contractual costs contribute to another $600 million expense.

Mass Layoffs By Year From 1996 Through 2009 (Chart)

In 2009, the total number of mass layoff events, at 28,030, reached its highest annual level since 1996, the first year for which these data are available. This is according to new data released by the U.S. Department of Labor's Bureau of Labor Statistics. The total number of initial claims for unemployment insurance benefits due to mass layoffs, at 2,796,456, was also the highest level on record. Among the 19 major industry sectors in the private economy, manufacturing had the most initial claims in 2009 (1,137,106), followed by administrative and waste services (294,709) and construction (205,765).

Phoenix OKs 2% Sales Tax On Food Items

Desperate to avert layoffs to police officers, firefighters and other city workers, Phoenix City Council members today approved a 2 percent sales tax on grocery items that will generate tens of millions of dollars in new revenue for city services.

The Chickens Come Home To Roost (Video)

Pensions expert Alexander Rublacava told an Emergency BudgetLA meeting on Saturday that without pension reform Los Angeles is headed for bankruptcy. Rublacava was ahead of his time in 2006 when he called for pension reform. His dire predictions were dismissed by the City's then CAO Fujioka, Rob Wilcox, Deputy City Controller and others. LA pensions are of the defined benefit type. That means that the taxpayers have to dig into their pockets to an unlimited extent to literally guarantee the retirement benefits of pensioners.

Energy

Rare Earth Demand Rises, No Supply Increase Seen Outside China

Demand for rare-earth metals was increasing "exponentially", primarily driven by demand for new technology, independent consultant and commentator Jack Lifton said on Monday. Significantly, Lifton predicted that there would be no increase in rare-earth metal production outside China. The Asian giant currently accounted for 95% of rare earth-metal production.

20 Comments

Woodman's picture
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Re: Daily Digest - February 3

 

Deficit problem seems to be getting more attention in mainstream media...

http://finance.yahoo.com/banking-budgeting/article/108736/deficit-balloons-into-national-security-threat

 

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Re: Daily Digest - February 3

 

Deficit problem seems to be getting more attention in mainstream media...

http://finance.yahoo.com/banking-budgeting/article/108736/deficit-balloons-into-national-security-threat

 

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Re: Daily Digest - February 3

"International investors bought a record amount of sovereign debt from emerging markets in January, despite the destabilizing impact of the debt crisis in Greece on sovereign-bond markets.

The value of sovereign debt emerging markets sold to international investors hit $15.9 billion between the start of the year and January 29, according to Dealogic. That's more than double the $7.2 billion issued a year earlier and up 29% from the previous record high of 2004."

"HONG KONG, Feb 3 - Ratings agency Standard & Poor's said on Wednesday a number of Asian countries face fiscal challenges this year and their ratings may come under pressure unless measures were taken to rectify them.

The credit rating agency identified Japan, India, Sri Lanka, Taiwan and to some extent, Vietnam and Malaysia among the leading candidates with fiscal problems as they had relatively higher government debt to GDP ratios.

"Their ratings may come under pressure unless policymakers overcome structural fiscal issues and take tough measures in consolidating finances in the medium term while not stifling economic growth," S&P said in a note.

Japan's outstanding debt to GDP ratio is expected to hit 200 percent this year and S&P said it faced a number of daunting challenges, including deflation, an aging population and a high government debt burden."

"The association said the top ten gold companies mined 148.55 tonnes of gold for 47.31% of China's total production.

It also was the third consecutive year for China to rank first in global gold production. "

"Feb. 3 (Bloomberg) -- Donations to U.S. colleges and universities fell by 12 percent, the most in at least four decades, as a result of the recession, the Council for Aid to Education said.

Contributions totaled $27.9 billion in the year ended June 30, down from $31.6 billion the year before, according to the report released today. The survey used data from 1,027 colleges.

The nationwide drop in donation revenue, the largest since at least 1969, hurt colleges already suffering from investment losses and pressure to moderate tuition increases, said Ann E. Kaplan, the survey director. Companies, foundations and alumni had less capacity to give, she said. "

"NEW YORK -(Dow Jones)- Hotels, which for more than a year have been struggling with a drastic drop in bookings, now lead all other classes of commercial real estate in delinquencies, data provider Trepp said Tuesday.

Payments on loans to hotel properties that were 30 days late or more hit a high of 15.32% in January. That matches Fitch Ratings' estimates that nearly 15% of the $51 billion in hotel loans that are securitized into commercial mortgage bonds will turn delinquent over the course of this year."

"Feb. 3 (Bloomberg) -- Connecticut may raise as much as $1.3 billion by selling bonds backed by assets such as electric-bill surcharges or lottery revenue, according to a proposal Governor Jodi Rell plans to release today.

The governor, a Republican who declined to seek re-election this November, will unveil the bond plan as part of her annual state of the state address, according to a person familiar with the proposal. The state would use the money to help close a deficit in the budget year beginning July 1 that the Center on Budget Policies and Priorities estimates at $4.7 billion. "

"State revenues in January once again came in below budget projections and Pennsylvania is now running at a $374 million shortfall for the 2009-10 fiscal year, according to the Department of Revenue."

"NEW YORK (Reuters) - Movie Gallery Inc, the operator of Hollywood Video stores, has filed for Chapter 11 bankruptcy and plans to close a "significant number" of its roughly 2,600 stores in the United States and Canada."

"Governor Granholm will give her final State of the State address tomorrow night at the state Capitol, and she is expected to be met by hundreds of protesters. Officials at the Capitol say they expect up to one-thousand could be on hand to protest against possible tax hikes and cuts to education funding. Several groups are planning to demonstrate the governor, and say they could get high turnout due to anger over the state's economy and budget problems. On CNN's "State of the Union" program Sunday, Granholm acknowledged she is not surprised by the protests. "

"Sacramento County's declining credit rating is costing the county big bucks.

On Tuesday, the county learned it will be paying as much as $2.7 million more a year to Bayerische Landesbank.

The Board of Supervisors approved a new Letter of Credit with that bank, which has been backing $134 million in Pension Obligation Bonds from 1995. Because credit is tight and the economically challenged county's credit ratings have plummeted, the interest rate Sacramento County will pay could go up almost 10-fold from about 0.21 percent to as much as 2 percent.

"Due to a lack of competition in the Letter of Credit market (and) our own credit ratings, there are very few banks out there that are even willing to talk to use about this," said Chris Marx, the county's debt officer."

"High-tech workers in the Bay Area were slammed with a 12 percent drop in wages in the first nine years of the past decade, reflecting the volatile nature of pay in the valley and the collapse that followed the dot-com bubble, the Bureau of Labor Statistics reported Tuesday.

Wages in 11 high-tech industries averaged $120,000 in 2000, when investors' money was raining on the valley and competition for workers was fierce. By 2002, in the depths of the crash, average wages sank to $87,300, but by mid-2009, they had recovered to $105,500. The figures are adjusted for inflation."

"The current limit on the public debt of the United States is 12.374 trillion dollars.

The US debt exceeded 12.349 trillion dollars on Monday, according to Treasury data.

The US House of Representatives will vote Thursday on whether to raise the US debt limit to a historic 14.3 trillion dollars, allowing the United States to borrow another 1.9 trillion dollars."

 

...........Gotta love being able to edit these posts (In response to comment #5).

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Johnny Oxygen
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And GATA Battles On

And GATA Battles On

http://seekingalpha.com/article/185907-and-gata-battles-on

Therefore, maintaining the bankers' fiat currency scam revolves around doing everything possible to discredit the legitimate alternative to their un-backed, banker paper – and the only true “money” our species has ever known: precious metals. The central principle in the scheme to discredit precious metals is to be especially ruthless in their price-fixing during times of high inflation, in order to attempt to sever the natural link between rising inflation, and an acceleration in the rising price of gold.

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Re: Daily Digest - February 3

That Jim Rogers CNBC video is WAY, WAY old. It has the DOW at 12,000+

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Backdoor Taxes - White House pulls Story - the rest of the story

Backdoor Taxes - White House Withdraws Story

I was in the midst of posting this story when it was withdrawn

One1776

 

Here is a link to the Tyler, Texas TV Station where I found a copy of the story that had been saved, prior to the White House requesting Ruters to pull the story. I have also posted the complete story below to keep it alive.

 

http://www.ketknbc.com/news/backdoor-taxes-hit-middle-class

 

Backdoor taxes to hit middle class

 

Reuters

February 2, 2010 - 10:39am

**Reuters has pulled this story

The Obama administration's plan to cut more than $1 trillion from the deficit over the next decade relies heavily on so-called backdoor tax increases that will result in a bigger tax bill for middle-class families.

In the 2010 budget tabled by President Barack Obama on Monday, the White House wants to let billions of dollars in tax breaks expire by the end of the year — effectively a tax hike by stealth.

While the administration is focusing its proposal on eliminating tax breaks for individuals who earn $250,000 a year or more, middle-class families will face a slew of these backdoor increases.

The targeted tax provisions were enacted under the Bush administration's Economic Growth and Tax Relief Reconciliation Act of 2001. Among other things, the law lowered individual tax rates, slashed taxes on capital gains and dividends, and steadily scaled back the estate tax to zero in 2010.

If the provisions are allowed to expire on December 31, the top-tier personal income tax rate will rise to 39.6 percent from 35 percent. But lower-income families will pay more as well: the 25 percent tax bracket will revert back to 28 percent; the 28 percent bracket will increase to 31 percent; and the 33 percent bracket will increase to 36 percent. The special 10 percent bracket is eliminated.

Investors will pay more on their earnings next year as well, with the tax on dividends jumping to 39.6 percent from 15 percent and the capital-gains tax increasing to 20 percent from 15 percent. The estate tax is eliminated this year, but it will return in 2011 — though there has been talk about reinstating the death tax sooner.

Millions of middle-class households already may be facing higher taxes in 2010 because Congress has failed to extend tax breaks that expired on January 1, most notably a "patch" that limited the impact of the alternative minimum tax. The AMT, initially designed to prevent the very rich from avoiding income taxes, was never indexed for inflation. Now the tax is affecting millions of middle-income households, but lawmakers have been reluctant to repeal it because it has become a key source of revenue.

Without annual legislation to renew the patch this year, the AMT could affect an estimated 25 million taxpayers with incomes as low as $33,750 (or $45,000 for joint filers). Even if the patch is extended to last year's levels, the tax will hit American families that can hardly be considered wealthy — the AMT exemption for 2009 was $46,700 for singles and $70,950 for married couples filing jointly.

Middle-class families also will find fewer tax breaks available to them in 2010 if other popular tax provisions are allowed to expire. Among them:

* Taxpayers who itemize will lose the option to deduct state sales-tax payments instead of state and local income taxes;

* The $250 teacher tax credit for classroom supplies;

* The tax deduction for up to $4,000 of college tuition and expenses;

* Individuals who don't itemize will no longer be able to increase their standard deduction by up to $1,000 for property taxes paid;

* The first $2,400 of unemployment benefits are taxable, in 2009 that amount was tax-free.

 

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Re: Backdoor Taxes - White House pulls Story - the rest of ...

I knew things would go-south in Bush's third term.

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Lahood- Stop Driving recalled Toyota's now
Quote:

LaHood's warning came Wednesday in testimony before a House Appropriations subcommittee on transportation. LaHood says his advice to owners is to "stop driving it. Take it to a Toyota dealer because they believe they have a fix for it."

Is it me, or doesn't it seem the administration and the government controlled corporate media have really jumped on the Toyota story? I doubt an American car company, in the hands of the government, would be treated this way. Maybe there is more to this story, like, "don't buy foreign cars, they are not safe". This bad news is certainly killing sales of Toyota's vehicles. I wonder if GM/Ford/Chrysler will benefit from this? Maybe that is the game.

http://www.cnbc.com/id/35218308

Woodman's picture
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Re: Lahood- Stop Driving recalled Toyota's now

joemanc, I was thinking the same thing, the media blitz seems unusually harsh on Toyota. 

 I'm a long time Toyota truck owner and am giving Toyota the benifit of a doubt so far and assuming  Toyota is admitting to a potential problem and showing a committment to quality by taking care of it.  In 2008 there was the big Toyota truck buyback for potentially rusty frames that must have cost Toyota millions, but there was almost nothing about it in the news.

In contrast, is the US Government or the Federal Reserve admitting to any flaws in their system?

Tom

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Re: Lahood- Stop Driving recalled Toyota's now

Remember the sticky accelerator that is causing the problem was made in the USA.

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Lahood- Stop Driving recalled Toyota's now

I agree here also.  What a lousy way to try to boost sales of domestic cars.  We own two Hondas and  a Toyota, and they are all great cars.  We have owned a number of US cars over the years and their quality and dependability has been much lower.

 

Dean

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Re: Lahood- Stop Driving recalled Toyota's now
joemanc wrote:

Is it me, or doesn't it seem the administration and the government controlled corporate media have really jumped on the Toyota story? I doubt an American car company, in the hands of the government, would be treated this way. Maybe there is more to this story, like, "don't buy foreign cars, they are not safe". This bad news is certainly killing sales of Toyota's vehicles. I wonder if GM/Ford/Chrysler will benefit from this? Maybe that is the game.

I thought the exact same thing.  Years ago, Audi was the unfortunate recipient of  The Unintended Acceleration Boogyman Award and it hurt their sales for years.  I wouldn't be at all surprised if the same modus operandi is at work here.

 

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U.S. May Lose 824,000 Jobs as Employment Data Revised

Feb. 3 (Bloomberg) -- The U.S. may lose 824,000 jobs when the government releases its annual revision to employment data on Feb. 5, showing the labor market was in worse shape during the recession than known at the time.

Source : http://www.bloomberg.com/apps/news?pid=20601109&sid=aNSc0oQ0vb4M&pos=10

Hmm, didn't CM warn us about this a while ago?

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Damnthematrix
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Re: Daily Digest - February 3
Quadrennial Defense Review 2010
 
The word "oil" does not occur in the report.
 
Page 85:
Assessments conducted by the intelligence community indicate that climate change could have
significant geopolitical impacts around the  world, contributing to poverty, environmental
degradation, and the further weakening of fragile governments. Climate change will contribute to
food and water scarcity, will increase the spread of disease, and may spur or exacerbate mass
migration. 
Johnny Oxygen's picture
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Re: U.S. May Lose 824,000 Jobs as Employment Data Revised

...showing the labor market was in worse shape during the recession than known at the time.

I love that part. There sure are a lot of "Oops" and "Surprising and unexpected" reactions lately. The best and brightest sure miss a lot of things.

Johnny Oxygen's picture
Johnny Oxygen
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Re: Lahood- Stop Driving recalled Toyota's now

 

US Tries To Maximize Its Equity Return In Bankrupt Automakers, Tells Americans Not To Drive Recalled Toyotas

http://www.zerohedge.com/article/us-tries-maximize-its-equity-return-bankrupt-automakers-tell-americans-not-drive-recalled-to

The just released announcement from the US Government, in which the government is telling Toyota Owners to "stop driving the recalled vehicles" (can Congress quickly make this into a law please?) which is a defacto endorsement of buy American, and not just any American, but cars made by bankrupt and spun off automakers, in which the country has a major equity stake in via TARP and loan facilities, could be a big clue as to what the behind the scenes play here is.

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Damnthematrix
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Re: Lahood- Stop Driving recalled Toyota's now

Toyota investigates Prius brake failures

By North Asia correspondent Mark Willacy for AM

http://www.abc.net.au/news/stories/2010/02/04/2809804.htm?section=justin

Having announced the recall of 8 million vehicles around the globe because of faulty accelerators, the world's biggest car-maker Toyota has hit more pot-holes.

The Japanese government is ordering the company to investigate dozens of complaints about brake failures involving its pioneering Prius hybrid.

More than 100 people in Japan and the US have reported experiencing temporary brake failure in the Prius, mainly at low speed on bumpy or slippery roads.

There have been several reported accidents. One left two people slightly injured.

"It was a pile up involving four cars" a witness said after one incident in Japan. "The Prius slammed into the back of the other cars."

The driver reported that he hit the brakes but that the car did not respond.

The latest model Prius is Toyota's biggest-selling car in Japan. It is seen as the company's flagship, the key to its future, but now Toyota faces the very real threat that its pioneering hybrid could also be recalled.

"The ministry will launch its own investigation into this brake problem" Japan's Transport Minister, Seiji Maehara, said.

"We will then decide whether to order a recall."

The popularity of the Prius has been the one bright spot in an otherwise difficult 12 months for Toyota.

The last thing the company needs now is the reputation of its revolutionary hybrid sullied by a recall.

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Re: Daily Digest - February 3

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Re: Daily Digest - February 3

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Re: Daily Digest - February 3

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