Daily Digest

Daily Digest - January 27

Wednesday, January 27, 2010, 11:43 AM
  • Home Depot to Cut 1,000 U.S. Jobs, Close Test Stores
  • Verizon to Cut 13,000 Jobs as Businesses Reduce Lines
  • Japan's debt at risk. Is U.S. next?
  • Figures on government spending and debt
  • Obama's tough spot on debt
  • Officials say stimulus bill to cost $75B more
  • Is L.A.On The Road To Bankruptcy?
  • Nearly one in five U.S. households ran out of money to buy enough food at least once during 2009
  • Welfare rolls up in 2009, more enroll in assistance programs
  • Global supply of rare earth elements could be wiped out by 2012
  • Public Pensions Look at Leverage Strategy
  • Q+A-Cost of Iraq, Afghanistan tops $1 trillion
  • India could be world's 'third largest economy by 2012'

Economy

Home Depot to Cut 1,000 U.S. Jobs, Close Test Stores

Home Depot Inc., the world’s largest home-improvement retailer, will cut 1,000 U.S. jobs as it shrinks its pool of human-resources and construction workers and closes three test stores.

Verizon to Cut 13,000 Jobs as Businesses Reduce Lines

Verizon Communications Inc., coping with subscriber losses at its fixed-line phone business, plans to cut about 13,000 jobs at the division this year after posting fourth-quarter revenue that missed analysts’ estimates.

Japan's debt at risk. Is U.S. next?

But Sean Egan, managing director of Egan-Jones Group, a smaller rating agency, questions whether the U.S. still deserves the highest rating.... "It's inevitable that will happen, given the current trends. The government is backstopping everything that is politically relevant and in any kind of difficulty," Egan said.

Figures on government spending and debt(last six digits are eliminated)

The government's fiscal year runs Oct. 1 through Sept. 30. Total public debt subject to limit Jan. 25 12,247,193 Statutory debt limit 12,394,000 Total public debt outstanding Jan. 25 12,303,736 Operating balance Jan. 25 145,084 Interest fiscal year 2009 383,365 Interest fiscal year 2008 451,154 Deficit fiscal year 2009 1,417,121 Deficit fiscal year 2008 454,798 Receipts fiscal year 2009 2,104,613 Receipts fiscal year 2008 2,523,642 Outlays fiscal year 2009 3,521,734 Outlays fiscal year 2008 2,978,440 Gold assets in September 11,041

Obama's tough spot on debt

A 3% goal would be well below the Congressional Budget Office's projection that annual deficits would be more in the range of 4% to 5.5% between 2015 and 2019. Getting from here to there How Obama would get to 3% is still a question mark. He is set to propose a freeze on non-defense discretionary spending, which is currently $447 billion, or less than 20% of the overall federal budget. The estimated total savings: $250 billion over 10 years. But that's a mere fraction of the $9 trillion in debt the CBO projects the country will incur over the same time period.

Officials say stimulus bill to cost $75B more

Last year’s $787 billion economic stimulus bill is going to be even more expensive – $75 billion more. That’s the finding in Tuesday’s Congressional Budget Office estimate of the costs of the economic stimulus bill, which mixed tax cuts and lots of spending in an effort to jump-start the economy.

Is L.A.On The Road To Bankruptcy? (Video)

Gerry Miller, L.A. City Chief Legislative Analyst says bankruptcy is avoidable, but in his 25 years with the city he has never seen a situation that remotely compares with today. He sometimes views the City as a container ship heading towards the rocks. The audience erupted in loud laughter, when Parks commented, mishearing the final letter of the word "ship" as ... well you get the picture.

Nearly one in five U.S. households ran out of money to buy enough food at least once during 2009

Nationwide polling found 18.2 percent of households reported "food hardship" -- lacking money to buy enough food -- in 2009, according to the group. That is higher than the government's "food insecurity" rating of 14.6 percent of households, or 49 million people, for 2008. Households with children had a "food hardship" rate of 24.1 percent for 2009 compared with 14.9 percent among households without children. Twenty states had rates of 20 percent or higher. Seven Southern states led the list. The figures were based on responses to the question, "Have there been times in the past 12 months when you did not have enough money to buy the food that you or your family needed?"

Welfare rolls up in 2009, more enroll in assistance programs

Welfare rolls rose in 2009 for the first time in 15 years, but the 5% increase was dwarfed by spikes in the number of people receiving food stamps and unemployment insurance. The cash-assistance program that once helped more than 14 million people served an average of 4 million in the 2009 fiscal year, up from 3.8 million in fiscal 2008. By comparison, there were more than 37 million people receiving food stamps in September, an increase of 18% from the year before. The number receiving unemployment benefits more than doubled, to about 9.1 million.

Global supply of rare earth elements could be wiped out by 2012

Global shortage of Rare Earth Elements coming Now, by threatening to cut off the world's supply of rare earth elements, China appears to be attempting to monopolize this extremely important strategic resource. According to information received by The Independent, by 2012 China may cease all exports of rare earth elements, reserving them for its own economic expansion. An article in that paper quotes REE expert Jack Lifton as saying, "A real crunch is coming. In America, Britain and elsewhere we have not yet woken up to the fact that there is an urgent need to secure the supply of rare earths from sources outside China."

Public Pensions Look at Leverage Strategy

Public pension funds needing to boost their returns but frustrated with hedge funds and private-equity investments are turning to one of the oldest investment strategies—using borrowed money to boost performance.

Q+A-Cost of Iraq, Afghanistan tops $1 trillion

The cost to U.S. taxpayers of the wars in Iraq and Afghanistan since 2001 has topped $1 trillion, and President Barack Obama is expected to request another $33 billion to fund more U.S. troops this year.

India could be world's 'third largest economy by 2012'

India could overtake Japan to become the worlds third largest economy behind the United States and China by 2012 when measured by purchasing power parity, according to a new forecast by PricewaterhouseCoopers. The accounting and professional services firm says its projections suggest China could be the largest economy in the world as early as 2020. This is about five to 10 years ahead of the forecasts by investment bank Goldman Sachs in its BRICs (Brazil, Russia, India, China) reports over the past six years, which suggest China will move ahead of the US to be No. 1 some time between 2025 and 2030.

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15 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest - January 27

"While the industry’s worst loss to date was almost $13 billion in 2001 following the Sept. 11 terror attacks, an $80 billion revenue decline last year was “vastly bigger” than anything previously experienced, IATA Chief Economist Brian Pearce said in a telephone interview. "

""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 coverage of state and local governance across the continent.

And the coming fiscal year, experts are predicting, may be almost as grim as the states run out of budget gimmicks, rainy day funds and the infusion of federal stimulus money that helped them, finally, to balance their current budgets. The states’ cumulative 2010 and 2011 budget shortfalls may be about $350 billion — a third of a trillion dollars — estimates the Center on Budget and Policy Priorities.

Why such grim news? Sales and personal tax receipts, which soared in the last decade because of the hot, 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 never do so.” "

"And then there’s the long-term debt that states have incurred–in bonds they’ve sold, in pensions and post-retirement health benefits, in replacement or maintenance of physical infrastructure that can’t be permanently ignored. Governing columnist John E. Petersen comes up with a startling $2.4 trillion of “aggregated indebtedness” the states carry."

"Traders are buying protection against defaults on sovereign debt at more than five times the rate of company bonds as governments fund ballooning deficits.

The net amount of credit-default swaps outstanding on 54 governments from Japan to Italy jumped 14.2 percent since Oct. 9, compared with 2.6 percent for all other contracts, according to Depository Trust & Clearing Corp. data. European countries led the jump, with the amount of protection on Portugal climbing 23 percent, Spain 16 percent and Greece 5 percent. "

"“Greece is bankrupt,” Roubini told CNBC.com at WEF. “Look, they have to ask China to help them out.”

Greece is trying to get trying to entice China to buy 25 billion euros ($35 billion) in bonds, according to published reports Wednesday.

If the situation becomes dire enough the European Union will be forced to help bail Greece out because it’s such a threat to the monetary union, he said."

"It also indicated that with governments including the UK and the US borrowing so much in the next few years, there was an increasing chance of a sovereign debt crisis, something which could trigger chaos for public and private sectors alike."

"The Fitch credit rating agency and the European Central Bank issued strong warnings on Tuesday about the weight of European government debt threatening financial markets and economic recovery this year.

Fitch said that on average nearly one fifth of national output would be absorbed by debt costs, but in some countries such as Italy, France and Ireland it would be about one quarter. "

"And at the ECB in Frankfurt, which is responsible for eurozone monetary policy and interest rates, chief economist Juergen Stark said: "We are seriously concerned about forecasts of strong rises in government deficits and the indebtedness of countries in the eurozone."

He warned in a speech that this trend could lead ratings agencies to further downgrade government debt bonds and to further negative reaction in financial markets. "

"Fitch estimated that 15 of the 27 countries in the European Union, and Switzerland, would have to borrow the equivalent of 19 percent of their annual national production this year to finance budget overspending and roll over existing debt. "

"Russia will become the biggest issuer of sovereign debt in emerging markets during the next decade as its aging society pushes up pension costs, exceeding revenue from oil, Bank of America Merrill Lynch said in an note as part of its predictions for the next 10 years.

Russia will remain reliant on revenue from oil as it will have “limited success in investing the oil windfall,” the bank said. The country will also have another “bust” during the decade ahead and will also increase taxes on income to pay for pensions, it said."

"In the latest PIMCO investor letter, Bill Gross brings up a chart he likes to call "The Ring of Fire."

As you can see, this chart/graph details the amount of debt a country has in relation to their GDP.

Countries in the fire zone are headed for hell in a handbasket.PIMCO predicts these countries, which include the U.S., will increase public debt to greater than 90% over the next few years, which will in turn stall growth."

"Critics are quick to point to sovereign-debt weak spots in a number of member countries and even speculate about a dismantling of the Euro Zone.

The Greek deficit debacle, right on the heels of the ratings downgrades for Ireland last year as well as somewhat similar problems in Portugal and Spain have made the unflattering acronym, PIGS, common parlance in global economic circles, such as that of the World Economic Forum's annual meeting in Davos, Switzerland this week."

"Jan. 27 (Bloomberg) -- The Obama administration’s $300 billion Hope for Homeowners program may be retooled to help the growing number of Americans who owe more than their properties are worth as current anti-foreclosure efforts fail to account for these “underwater” borrowers.

The changes would be at least the third lease on life for the program, which began in October 2008 during the Bush administration and has so far helped just 96 of the 400,000 homeowners originally targeted. "

"Nancy Wentzler, chief economist and deputy comptroller in the Office of the Comptroller of the Currency (OCC), said that while banks started showing slight improvement in their balance sheets in 2009 compared to 2008, the recovery is fraught with risks and commercial real estate is still in the doldrums."

""We are all waiting for commercial real estate to really hit its stride in terms of credit quality problems and that's very likely to come as we make our way through 2010," Wentzler said."

"Kiplinger said commercial real estate is dealing with excess capacity, with too much office space, too much warehouse space and falling rents. The value of commercial real estate, which is based on cash flow from rent, has fallen by 35-40 percent and it is getting worse in many communities.

"It's the shoe that hasn't fallen," Kiplinger said. "It will be just as big as the residential real estate debacle over the last couple of years and it is not really on everybody's radar screen quite yet.""

"The numbers are pretty alarming. This year, about 36% of the $270 billion in commercial real estate loans maturing this year are underwater - a situation where the mortgage balance exceeds the value of the underlying property. And things will get worse before they get better. By 2011, 49% of the maturing loans will be underwater, rising to 63% in 2012 and 61% in 2013, before cresting at 57% in 2014.

Between 2010 and 2014, a whopping $770 billion in maturing commercial real estate loans are expected to be underwater. The situation is so grim that even long-time players in the commercial real estate game are predicting that we are facing something akin to a "lost decade" for the U.S. commercial real estate market. "

"Prices of commercial real estate properties were battered in 2009, and those price declines are likely to continue.

According to Moody's Investors Service, CRE prices rose 1 percent in November. But that trend won't be sustained, Moody's managing director Nick Levidy said."

"The Idaho Department of Health and Welfare is processing 9,000 new food stamp applications each month, said Tom Shanahan, a department spokesman. More than 176,600 people are enrolled in the program - more than double the 2007 level.

"We're setting records every month," Shanahan said. "Food stamps are a good indicator of the number of people living near poverty. We're seeing the effects of layoffs and high unemployment.""

"Debate on Bernanke, the Fed, and Stimulus

Congressman Ron Paul schools Pennsylvania congressman Paul Kanjorski on the "merits" of the Federal Reserve and government bailouts."

"Jan. 26 (Bloomberg) -- Harrisburg, Pennsylvania, the capital of the sixth-largest U.S. state by population, should skip a $2.2 million debt service payment due Feb. 1 and consider bankruptcy, City Controller Dan Miller said.

Harrisburg faces $68 million in payments this year in connection with a waste-to-energy incinerator and should weigh Chapter 9 protection from creditors or state oversight through a program known as Act 47, Miller said today. Chapter 9 bankruptcy allows municipalities to reorganize rather than liquidate. "

"Even as the housing market shows signs of improvement, including in new data released Tuesday, economists warn that it could take up to a decade for many homeowners to regain equity in their homes, while some people in the hardest-hit regions of the country may not see a recovery during their lifetime. "

"The long-awaited Public Policy Forum report on how to restructure and possibly eliminate Milwaukee County government was released Wednesday with a sober warning that the county’s budget problems are only going to get worse in coming years unless drastic measures are implemented."

"The Milwaukee-based Public Policy Forum estimates the county’s structural deficit will increase from $48 million in 2011 to more than $106 million by 2014. The projected deficit is an indication that the county’s finances are crumbling and valued services such as parks, transit, mental health and public safety face severe degradation without prompt action, according to the report."

"Compared to 2009-10, the Spring-Ford school district faces a 72 percent, or $2.1 million, increase in the amount of money it must pay to the PSER for the 2010-11 school year, said Timothy Anspach, the district's business manager.

This year, the district contributed 4.78 percent of what it spends on salaries to PSER. Next year, that amount will jump to 8.22 percent. In 1011-12, it's predicted to rise to 10.59 percent. In 2012-13, it is estimated to be 29.22 percent. In 2013-14, it will be 32.09 percent. And by 2014-15, 33.6 percent ($6.9 million) of salaries will go to PSER."

"The Connecticut General Assembly will convene next Wednesday for a new legislative session, where it will attempt to close a $500 million budget deficit this fiscal year. The state faces a projected $12.5 billion deficit through 2014.

State leaders can no longer defer budgeting to cover long-term commitments, including an expected $40 billion in unfunded pension, health, and other benefits for state employees, State Sen. L. Scott Frantz, R-Greenwich, said."

"For the first time since 1930, Oregon voters approved a general tax increase on Tuesday (Jan. 26), signing off on a plan to raise $727 million by targeting corporations and the wealthy.

By approving two ballot initiatives — known as Measures 66 and 67 — Oregonians showed that they prefer to tax relatively well-off segments of the population instead of making deep budget cuts to education and other state services."

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FDIC Friday Lotto: Another Reason Why Banks Are Not Lending

Another great Mish post

FDIC Friday Lotto: Another Reason Why Banks Are Not Lending  

http://globaleconomicanalysis.blogspot.com/2010/01/fdic-friday-lotto-another-reason-why.html

Here's how the process works: On "bank failure Friday", the FDIC matches banks with sufficient capital to failing banks, taking into consideration size, location, and assets.

By spreading out the number of bank failures over many months, the FDIC gives that small percentage of well capitalized banks a further reason not to lend for as long as the weekly lotto continues. Remember, the reason these banks are not in trouble in the first place is because they had prudent lending standards.

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Head Of Davos Security Suicided As Global Banking Collapse Nears

What the h*ll?

Head Of Davos Security Suicided As Global Banking Collapse Nears

http://beforeitsnews.com/story/13989/Head_Of_Davos_Security_Suicided_As_Global_Banking_Collapse_Nears.html

Markus Reinhardt, 61, had headed the police force in the Swiss canton of Graubünden and protected the Davos summit since 1984 before his death on Tuesday.FSB reports circulating in the Kremlin today are stating that the Swiss Police Commander heading security at the World Economic Forum in Switzerland, Markus Reinhardt, was “suicided” after his discovering that the Davos summit was planning for the “final collapse” of the Global Banking system in preparation for Total War.

 

Upon Reinhardt’s retrieval of the “sensitive conversations” picked up his new listening system, and his presumed listening to them, he was then “suicided” by two bullets to the back of his head and all of the recordings he had made were “disappeared”.

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V
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Re: Daily Digest - January 27 Rare Earth elements

In the 80's GM (remember them) owned the technology for rare earth magnets .These magnets are used in computers , missile guidance systems etc. 

GM sold (gave ) the technology to a company owned by the daughter of Deng Xiao Peng in exchange for the right ot sell vehicles in China. China has over 90% of the worlds reserves of rare earth elements. Hello Tibet.

Of course China will continue to lend us money so we can buy the computers they make with the rare earth elements they have and are buying from Africa..............simply because they like us.

V

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Re: Daily Digest - January 27

And now our government wants to help us invest.  Well, since nobody else will help finance our debt...

http://moneymorning.com/2010/01/27/retirement-plans/

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Re: Daily Digest - January 27

saxplayer00o1

We all appreciate your efforts on this site.

Nate

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Re: Daily Digest - January 27

And in other news, large corporations and rich people leave Oregon in droves. 

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Re: Head Of Davos Security Suicided As Global Banking ...
Johnny Oxygen wrote:

What the h*ll?

Head Of Davos Security Suicided As Global Banking Collapse Nears

http://beforeitsnews.com/story/13989/Head_Of_Davos_Security_Suicided_As_Global_Banking_Collapse_Nears.html

Markus Reinhardt, 61, had headed the police force in the Swiss canton of Graubünden and protected the Davos summit since 1984 before his death on Tuesday.FSB reports circulating in the Kremlin today are stating that the Swiss Police Commander heading security at the World Economic Forum in Switzerland, Markus Reinhardt, was “suicided” after his discovering that the Davos summit was planning for the “final collapse” of the Global Banking system in preparation for Total War.

 

Upon Reinhardt’s retrieval of the “sensitive conversations” picked up his new listening system, and his presumed listening to them, he was then “suicided” by two bullets to the back of his head and all of the recordings he had made were “disappeared”.

Sounds a bit like a spy film,  his death does seem strange though

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Damnthematrix
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The US Senate should not reappoint Ben Bernanke.

Debtwatch No. 42: The economic case against Bernanke

 

The US Senate should not reappoint Ben Bernanke. As Obama’s reaction to the loss of Ted Kennedy’s seat showed, real change in policy only occurs after political scalps have been taken. An economic scalp of this scale might finally shake America from the unsustainable path that reckless and feckless Federal Reserve behavior set it on over 20 years ago.

Some may think this would be an unfair outcome for Bernanke. It is not. There are solid economic reasons why Bernanke should pay the ultimate political price.

Haste is necessary, since Senator Reid’s proposal to hold a cloture vote could result in a decision as early as this Wednesday, and with only 51 votes being needed for his reappointment rather than 60 as at present. This document will therefore consider only the most fundamental reason not to reappoint him, and leave additional reasons for a later update.

Misunderstanding the Great Depression

Bernanke is popularly portrayed as an expert on the Great Depression—the person whose intimate knowledge of what went wrong in the 1930s saved us from a similar fate in 2009.

In fact, his ignorance of the factors that really caused the Great Depression is a major reason why the Global Financial Crisis occurred in the first place.

<MORE>

idoctor's picture
idoctor
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Re: Daily Digest - January 27

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Davos
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Re: Daily Digest - January 27

There is pathetic and there is Geithner.

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Brainless
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Re: Daily Digest - January 27

Some links i found that can help restore freedom.

http://goooh.com/home.aspx

 

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idoctor
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Re: Daily Digest - January 27

idoctor's picture
idoctor
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Re: Daily Digest - January 27

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Jasenica
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Re: Daily Digest - January 27

Listening to Geithner and Paulson makes my skin crawl. They are both clearly lying through their teeth!

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