Daily Digest

Daily Digest - January 25

Monday, January 25, 2010, 10:56 AM
  • Obama Endorses Deficit Task Force
  • The $700 Billion U.S. Funding Hole; Desperately Seeking A Very Indiscriminate Treasury Buyer
  • Thoughts on the End Game
  • Wal-Mart to Cut 11,200 Sam’s Club Jobs, Outsource Demonstrations
  • Why are 86% of the NY Fed’s MBS Purchases Occurring During Option Expiration Weeks?
  • Suicides Inside France Telecom Prompting Sarkozy Stress Testing
  • Toyota Secures Lithium Supply in Argentina
  • Appalachian States Should Look Beyond Coal
  • Colorado Coal Miners Fear Losing Jobs if Access to Federal Lands Curbed
  • Zoning Commission Takes Wind Moratorium Under Advisory
  • Governor Aims to Revive Wind Tax Proposal
  • North Dakota Coal-to-Fuel Plant is Still on Hold
  • U.S. Refinery Rate Drop Shows Crisis in Downstream
  • Imported from Asia: Ozone
  • Water Pipeline Idea Interests Irrigation Districts

Economy

Obama Endorses Deficit Task Force (nncita)

President Barack Obama Saturday endorsed a bipartisan plan to name a special task force charged with coming up with a plan to curb the spiraling budget deficit, though the idea has lots of opposition from both his allies and rivals on Capitol Hill.

The $700 Billion U.S. Funding Hole; Desperately Seeking A Very Indiscriminate Treasury Buyer (nncita/pinecarr)

While near end supply will likely not be as difficult to satisfy, the back-end will face increasing yield pressure in order to stimulate demand. This means that long yields will begin a slow trickle higher to attract the missing demand that currently is unaccounted for. Should this happen, and should the likes of Morgan Stanley be correct in expecting even further steepening, the implications on mortgages will likely be severe.

Thoughts on the End Game (JRB)

I have written in depth about the problems we face all across the developed world. We have no good choices left, so making the correct unpleasant choice is now our most hopeful option. As I wrote in my 2010 forecast, this year is a waiting game. There are so many choices we must make, and the paths we will take from those choices vary wildly. But make no mistake, we are coming close to the end game. Some countries and economies are closer to that point than others, but the entire developed world is lurching, in almost drunken fashion, towards our economic denouement.

Walmart to Cut 11,200 Sam’s Club Jobs, Outsource Demonstrations (Nickbert)

Wal-Mart Stores Inc.'s Sam’s Club chain, the second-largest U.S. warehouse club, will cut about 11,200 jobs in the next month after hiring an outside company to take over in-store product demonstrations.

Why are 86% of the NY Fed’s MBS Purchases Occurring During Option Expiration Weeks? (pinecarr)

This data suggests that the Fed's purchases of Market Backed Securities serves not only to artificially depress mortgage rates and the longer end of the yield curves. The purchases occur, with a remarkably high correlation of 86%, during monthly stock market options expiration.

Suicides Inside France Telecom Prompting Sarkozy Stress Testing (VeganD)

Since January 2008, 34 France Telecom employees have committed suicide, the company says. They killed themselves because of work-related stress, according to labor unions and relatives.

Energy

Toyota Secures Lithium Supply in Argentina (mooselick7)

A key supplier of Toyota Motor Corp. has formed a partnership to mine lithium in Argentina, securing greater access to a metal critical to the production of future hybrids and electric cars.

Appalachian States Should Look Beyond Coal (mooselick7)

Coal production in Central Appalachia is likely to continue its 12-year decline, and an environmental consulting firm said Tuesday it's time policy makers and legislators in four states work to diversify the region's economy.

Colorado Coal Miners Fear Losing Jobs if Access to Federal Lands Curbed (mooselick7)

Two miles deep in their latest tunnel, coal miner Steve Baker and his cohorts barely blink at underground hazards: a cavern collapsing behind them, explosive gas around their boots, roiling clouds of black dust. But they dread the above-ground parrying of state and federal politicians over protection of the nation's forests. Decisions expected soon by Gov. Bill Ritter and the Obama administration may threaten the miners' livelihoods — and the future of a traditional industry in western Colorado.

Zoning Commission Takes Wind Moratorium Under Advisory (mooselick7)

The Converse County planning and zoning commission will take under advisement a petition for a 90-day moratorium on industrial development meant to stave off wind development in the Northern Laramie Range.

Governor Aims to Revive Wind Tax Proposal (mooselick7)

Wyoming Gov. Dave Freudenthal said he's working with lawmakers on a proposal for the upcoming Legislature to tax wind energy production.

North Dakota Coal-to-Fuel Plant is Still on Hold (mooselick7)

Developers of a coal-to-liquid fuel factory proposed for western North Dakota say a decision on whether to build the $4 billion plant depends on a change in political climate. And backers are asking for a second extension of state aid to study the project. "We still see the project as viable with great payback," said David Straley, a North American Coal Corp. spokesman. "But until we get a read on the next Congress, we're still in a holding pattern."

U.S. Refinery Rate Drop Shows Crisis in Downstream (joemanc)

U.S. crude processing plants cut activity last week to the lowest utilization rate since the 1980s, excluding hurricanes, the latest sign of crisis in the world’s top oil consumer. U.S. refinery utilization dropped to 78.4 per cent of total capacity 17.6 million barrels per day, down 2.9 percentage points from the previous week, Energy Information Administration data released Thursday showed. The last time utilization of U.S. refining capacity fell to these levels was in the 1980s, excluding 2005 and 2008 when activity cratered due to hurricane-related refinery outages.

Environment

Imported from Asia: Ozone (mooselick7)

Ever wonder how the western US has high ozone levels when the winds usually blow in off the Pacific Ocean? Did you think it was all from the cars clogging the freeways? Turns out, it is caused in part from emissions of ozone generating air pollutants from Asia.

Water Pipeline Idea Interests Irrigation Districts (mooselick7)

Representatives of some of the Colorado municipalities and irrigation districts interested in drawing water from a proposed pipeline from Wyoming say they need more water regardless of the source.

Please send article submissions to: [email protected]

8 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4062
Re: Daily Digest - January 25

"In an interview with CNBC-TV18, Martin W Hennecke of Tyche Group spoke about his reading of the global markets and his outlook."

"For US, I don’t necessarily say that we might see another stock crash that we have seen in 2008 simply because through this next sovereign debt or budget deficit crisis, we might see the currencies go into very high or hyper inflation.

We might see the stock markets in the US actually surge in a type of Zimbabwe style hyperinflation scenario where the stock market likewise went through the roof. "

"THIS may be the most calamitous fiscal year states have known in decades,” reports Rob Gurwitt in Governing magazine, the 23-year-old bible on state and local governance.

The coming fiscal year, experts are predicting, may be almost as grim as states run out of budget gimmicks, rainy-day funds and infusion of federal stimulus money. The states’ cumulative 2010 and 2011 budget shortfalls may be about $350 billion, estimates the Center on Budget and Policy Priorities.

Why? Sales and income tax receipts, which soared in the last decade because of the credit-driven consumer economy, cratered with the recession. The pre-recession revenue levels, Governing reports, “will either take an unusually long time to recover or may never do so.”"

"Jan. 25 (Bloomberg) -- Ratings for 279 state and local- government tax-backed bonds were reduced in 2009, up from 81 the previous year, as the recession cut tax collections and strained budgets, Moody’s Investors Service said."

"Jan. 25 (Bloomberg) -- Japan’s national debt is set to rise to 973 trillion yen ($10.8 trillion) by the end of fiscal 2010, according to the Finance Ministry.

The total is 8 percent more than the projected 900 trillion yen for the period ending March 31, when debt grew 6.3 percent from a year earlier, the ministry said today. It was the first time it released estimates for the year beginning April. "

"Japan, with a shrinking population and entrenched deflation, may see its debt burden jump to 246 percent of gross domestic product by 2014, according to the International Monetary Fund.

“Our fiscal state is more than very severe -- it’s bad beyond explanation,” Yoshito Sengoku, a minister in charge of national strategy, said in Tokyo today."

"January 25, 2010 /24-7PressRelease/ -- According to a recent research study by ThinkingMoney, UK Household debt has reached a staggering GBP1.35 trillion in June, more than the country's Gross Domestic Product, which is estimated at GBP1.33 trillion. This means the UK's 60 million people currently owe more than the entire country can produce in one year. With the UK having the seventh largest GDP in the world, this is deeply concerning."

"Because of the recession and increased spending to stimulate the economy and help the financial, housing and automotive industries, the deficit is now about 11 percent of the Gross Domestic Product. Even after the recession ends, the deficit isn't projected to fall below 3 percent of GDP, a level economists say is sustainable. Unless the deficit is controlled, the public debt could grow to 68 percent of GDP by 2019 and be twice as large as the economy by 2038."

"Ottawa's budgetary deficit ballooned to more than $36 billion two-thirds of the way into the fiscal year as the recession and its aftermath took a heavy toll on spending and revenue, the federal Finance Department said Friday.

The department's latest accounting shows the government experienced a $4.4-billion shortfall in November, bringing the deficit to $36.3 billion - a sharp contrast from where it stood last year, when it clung to a $39-million surplus. "

"Tishman Speyer and a unit of BlackRock Inc (BLK.N) created the PCV ST venture to buy Stuyvesant Town/Peter Cooper Village from MetLife Inc (MET.N) for $5.4 billion in 2006, as the real estate market and availability of credit were cresting.

The venture defaulted on its mortgage this month, and the value of the complex is believed to have fallen to $2 billion or less."

"With jobs disappearing and incomes sinking, Floridians are increasingly turning to the government-run Medicaid program for health care -- driving up costs and playing a major role in a potential $3 billion state budget shortfall next year.

The shortfall could lead to cuts in Medicaid, which serves low-income, elderly and disabled people, while also forcing lawmakers to make tough election-year spending choices among health and education programs."

"Michigan is facing a loss of physicians as cuts in Medicaid and Medicare reimbursement continue.

Several thousand physicians have left the state after their residency programs or during their practices, according to Gregory Forzley, board chair of the Michigan State Medical Society (MSMS). The situation may get worse since an 8 percent cut in Medicaid and Medicare reimbursement rates was approved on Sept. 30, 2009, he said."

"San Jose's public employee pension systems have become dangerously underfunded. The Federated City Employees Retirement System fund has lost more than $694 million, over 27 percent, and today can cover only 60 percent of projected liabilities. Taxpayers are on the hook to make up the difference."

""It doesn't take much of a change in the PERS rate to have a big impact, since 87 percent of our budget is salaries, wages and benefits," said Rich Goward, chief financial officer for the Salem-Keizer School District. "And when you're balancing a budget like that, any sort of fix you have is going to be employee-based."

The coming PERS employer rate hike is prompted by the economic downturn, which caused the pension system's investment portfolio to plummet."

"The upshot is that employer rates that currently average about 5.2 percent of payroll will increase to an estimated average of 12.9 percent of payroll. Employer contributions of $880 million during the 2009-2011 biennium would balloon to $2.3 billion during the 2011-2013 biennium."

"Sales of previously occupied homes took the largest monthly drop in more than 40 years last month, plunging far deeper than expected after lawmakers gave buyers extended time to use a tax credit.

The National Association of Realtors says sales fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million in December, from an unchanged pace of 6.54 million in November. Sales had been expected to fall by about 10 percent, according to economists surveyed by Thomson Reuters."

(Move your mouse over each city to see the debt and then click on next. Here are the first three):

"New York, N.Y.Unfunded pension liability: $59.5 billion

Moody's bond rating: Aa3

America's biggest city flirted with bankruptcy in 1975. Today it has the biggest debt load at $64.8 billion or $7,760 per resident. Debt as a percentage of personal income is at the highest level since 1980."

"Los Angeles, Calif.Unfunded pension liability: $2.3 billion

Moody's bond rating: A2

California's economic problems continue to affect its biggest cities. The latest figures for the 2011 Los Angeles budget show a shortfall of $408 million, 10% of the total budget."

"Chicago, Ill.Unfunded pension liability: $1.8 billion

Moody's bond rating: Aa3

Last year the Windy City brought in private debt collectors to go after residents who owe money to the cash-strapped city. Unpaid water bills alone were $95 million in 2008."

"BattleBornBroadcast and George4title explore the economic reality of Las Vegas. From the 9.8 billion dollar City Center to doubling our homeless population, Las Vegas is juggling both ends of the economic coin. George4title and BattleBornBroadcast hit the streets to make sense of a real estate market gone wild, commercial real estate collapse and billion dollar bust."

mobius's picture
mobius
Status: Silver Member (Offline)
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Posts: 160
Re: Daily Digest - January 25

from the BBC NEWS.....Economic growth 'cannot continue'

http://news.bbc.co.uk/2/hi/science/nature/8478770.stm

But the question that beggs to be asked is....why is this story filed under  "Science and Nature" instead of "Business/Economy"?

 

One1776's picture
One1776
Status: Bronze Member (Offline)
Joined: Jan 24 2009
Posts: 52
Bernanke is Part of the Problem, Not the Solution!

Bernanke needs to go!!!

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
SagerXX's picture
SagerXX
Status: Diamond Member (Offline)
Joined: Feb 11 2009
Posts: 2219
the MSM breaks yet another YUGE story!!!

Heyyy...the MSM is onto a mind-blowing story:  the possibility that the USGov's cheap money policy might have fueled the stock market rally!  Holy Guacamole!  What JOURNALISM!!!

viz:  http://www.youtube.com/watch?v=cQyFxBG6dhY

(better go drink a cup of sarcasm...think I'm running low now...)

Viva -- Sager

horstfam's picture
horstfam
Status: Bronze Member (Offline)
Joined: Sep 6 2008
Posts: 71
Re: Recall Congress Website

A friend just emailed this to me. I apologize if this has been listed before. It seems they may be gathering some steam with this. A good alternative, in my opinion.

http://recallcongressnow.org/

 

guardia's picture
guardia
Status: Platinum Member (Offline)
Joined: Jul 26 2009
Posts: 592
Re: Daily Digest - January 25
mobius wrote:

http://news.bbc.co.uk/2/hi/science/nature/8478770.stm

But the question that beggs to be asked is....why is this story filed under  "Science and Nature" instead of "Business/Economy"?

Because it was written by a science reporter, not a business or economy reporter..? Of course no businessmen or economist would agree to speak such things... "see Wall Street money? want Wall Street money? Well, say what we want you to say"

Samuel

Farmer Brown's picture
Farmer Brown
Status: Martenson Brigade Member (Offline)
Joined: Nov 23 2008
Posts: 1503
S&P Cuts Japan Rating

WOW!

http://www.ft.com/cms/s/0/f24b0b52-0a33-11df-8b23-00144feabdc0.html

S&P cuts Japan outlook to ‘negative’

By Robin Harding in Tokyo and Reuters

Published: January 26 2010 05:15 | Last updated: January 26 2010 12:05

Japan’s sovereign credit rating outlook was on Tuesday cut to “negative” by Standard & Poor’s over the dimming prospects for reducing the country’s swelling debt load.

The decision came as the Bank of Japan kept rates on hold at 0.1 per cent for the 13th consecutive month and forecast that deflation in 2010 and 2011 would be less severe than it previously thought.

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