Daily Digest

Daily Digest - March 10

Wednesday, March 10, 2010, 10:45 AM
  • New Jersey’s Christie Says Layoffs Out for Cutting Budget
  • Bill to Extend Jobless Benefits Clears Senate Procedural Hurdle
  • Buy Gold While Supplies Last, Says Fund Manager
  • Judge denies payment to Prichard pensioners; 'People are not going to like it,' lawyer for city says
  • Bowles Says Deficits Will Make U.S. ‘Second-Rate’
  • Treasuries, sovereign debt "dangerous": Fuss
  • Astorino spending cuts: Lay off up to 1,600, close Croton pool, cut NYC buses, delay Playland opening
  • Michigan Lost 80,000 Manufacturing Jobs Over Past Year
  • Sen. Joan Bray on budget: “We’re in a very deep hole”
  • Fitch Warns Default in Euro Zone Is Possible
  • Massachusetts Senate Seeking Stronger Oversight As It Considers Lawrence Bailout
  • Cash-Strapped Los Angeles Wary of Scaring Off Business
  • Public Pension Funds Are Adding Risk to Raise Returns
  • Many retired government employees will see smaller pension checks
  • New York State Debt In Red Zone, Should Cut $20 Billion: Study
  • Lists for retired workers receiving more than $100,000 from CalPers/CalStrs
  • U.S. Sitting on Mother Lode of Rare Tech-Crucial Minerals

Economy

New Jersey’s Christie Says Layoffs Out for Cutting Budget

New Jersey Governor Chris Christie said he’s unable to lay off or furlough unionized state workers to help close an $11 billion budget gap. Christie, speaking at a town hall meeting in Haddon Heights, said job cuts would trigger more than $300 million in contractually obligated raises for remaining state workers under a 2009 wage freeze agreement secured by former Governor Jon Corzine. “I cannot lay off one state worker, I cannot furlough one state worker,” Christie, 47, said. “It’s an exquisite set of handcuffs.”

Bill to Extend Jobless Benefits Clears Senate Procedural Hurdle ($138 billion)

A $138 billion plan to extend unemployment benefits through the rest of this year cleared a procedural hurdle in the U.S. Senate as lawmakers moved closer to putting the measure to a final vote. The vote today was 66-34, with 60 needed to advance the measure. It also would provide $25 billion to help states balance their budgets and continue more than 50 tax cuts for businesses and individuals. The bill would prevent a 21 percent cut in Medicare reimbursements to doctors and temporarily ease corporate pension-funding requirements. The measure, partly financed by offsetting savings, would add $97 billion to the deficit, according to the nonpartisan Congressional Budget Office.

Buy Gold While Supplies Last, Says Fund Manager (Tech Ticker video)

Peak Gold? Gold production from mines is not adequate to meet demand. Production is dropping around the world. Holmes notes worldwide production ell 10% in 2008 and is especially dramatic in South Africa - the world's largest producer.

Judge denies payment to Prichard pensioners; 'People are not going to like it,' lawyer for city says

A bankruptcy court judge this morning denied a motion to force the city of Prichard to pay pensioners, saying they were not a part of the administrative claims -- or day-to-day obligations -- of the city. A group of pensioners, who have a civil lawsuit pending against Prichard, asked U.S. Bankruptcy Court Judge William Shulman to include the pensioners, who have not been paid in 6 months, in the city's regular expenses. "Without some relief, each month goes by they are unable to pay for their basic life essentials," Alexandra Garrett, a lawyer for the pensioners argued.

Bowles Says Deficits Will Make U.S. ‘Second-Rate’

Erskine Bowles, co-chairman of the commission on U.S. deficit reduction, said entitlement programs such as Social Security will turn the nation into a “second- rate power” if their costs aren’t reduced. “All of our revenue is completely consumed by entitlements,” Bowles said. “This is today, not some forecast into the future. Every dollar we spend on the military, homeland security, transportation, education and research is borrowed,” and half of that comes from foreign sources, he said. “That is a recipe for disaster.”

Treasuries, sovereign debt "dangerous": Fuss

Investors should avoid government securities, including U.S. Treasuries and the debt of other nations, because of the risks associated with excessive borrowing, a leading U.S. fund manager said on Tuesday. "The most dangerous market there is national government debt because the borrowing doesn't seem to be ending soon -- and it's not just a U.S. phenomenon," Dan Fuss, vice chairman of investment manager Loomis Sayles, told Reuters.

Astorino spending cuts: Lay off up to 1,600, close Croton pool, cut NYC buses, delay Playland opening

Westchester County Executive Rob Astorino said today that a "staggering" fiscal crisis will force the county to shutter the Croton Point Park pool, delay the daily opening of the Rye Playland amusement park and end bus service to New York City.....Astorino said the cuts are necessary due to a projected $166 million budget gap next year, far above the $60 million deficit he was told he inherited when he took office in January.

Michigan Lost 80,000 Manufacturing Jobs Over Past Year

Industrial employment in Michigan fell 10.9% over the past twelve months according to the 2010 Michigan Manufacturers Directory, an industrial directory published annually by Manufacturers' News, Inc. (MNI) Evanston, IL. MNI reports Michigan lost 80,101 industrial jobs and 913 manufacturers between January 2009 and January 2010, the sharpest decline MNI has ever reported for the state. Coupled with the 42,874 jobs lost between 2008 and 2009, industrial employment in Michigan has declined by 122,975 jobs or nearly 16% since the start of the recession, according to MNI.

Sen. Joan Bray on budget: “We’re in a very deep hole”

Sen. Joan Bray and two education representatives held a conference call with reporters today to underscore the state’s dire need for more federal stimulus money. “The economy in Missouri is not improving at this point, and we’re looking not just months out but years out for it to come around,” said Bray, D-University City. “We are in a very deep hole at this point.”

Fitch Warns Default in Euro Zone Is Possible

A sovereign default within the euro zone is possible, Fitch Ratings said on Tuesday. Brian Coulton, managing director and head of Europe, Middle East and Africa sovereigns at Fitch Ratings, said it was possible to have a sovereign default within the euro currency bloc, but that would not necessarily mean the break up of the euro zone.

Massachusetts Senate Seeking Stronger Oversight As It Considers Lawrence Bailout

The Massachusetts Senate on Tuesday considers a measure that would allow the City of Lawrence to borrow up to $35 million to avoid bankruptcy, nearly a week after House lawmakers approved their version of the proposal. While both bills would authorize Lawrence to go to bond agencies for loans to address a $25 million budget shortfall, state senators are taking a tougher line on the bailout plan.

Cash-Strapped Los Angeles Wary of Scaring Off Business

Los Angeles is struggling to raise money and cut costs to fill a $200 million budget gap that could force thousands of layoffs and drive the city into bankruptcy. But last week, the city decided to forgo $3.4 million in revenue as it slashed taxes for Internet companies. Officials say the tax break for the fast-growing industry is vital to Los Angeles's future, even though it puts the city in a deeper hole. They worried that without the cut, more businesses and jobs would flee the city, which has a 12.5% unemployment rate. The decision highlights the quandary of local governments across the country as they confront dueling crises of deficits and jobs. Raising fees on businesses can help close a budget hole in the short term, but it can also scare off employers and ultimately shrink a city's tax base.

Public Pension Funds Are Adding Risk to Raise Returns

States and companies have started investing very differently when it comes to the billions of dollars they are safeguarding for workers’ retirement. Companies are quietly and gradually moving their pension funds out of stocks. They want to reduce their investment risk and are buying more long-term bonds. But states and other bodies of government are seeking higher returns for their pension funds, to make up for ground lost in the last couple of years and to pay all the benefits promised to present and future retirees. Higher returns come with more risk. “In effect, they’re going to Las Vegas,” said Frederick E. Rowe, a Dallas investor and the former chairman of the Texas Pension Review Board, which oversees public plans in that state. “Double up to catch up.”

Many retired government employees will see smaller pension checks (Wisconsin)

Retired government employees with money in the Wisconsin Retirement System will see their pensions shrink for the second year in a row, if all of their money is in the Core Fund. Pension checks based on the Core Fund will be reduced 1.3 percent, effective May 1, the Department of Employee Trust Funds said Tuesday. Last year, Core Fund payments declined 2.1 percent, the first ever drop for that account. Both decreases are based on the huge stock market declines in 2008; the Core Fund lost 26.2 percent of its value that year. Core Fund returns are smoothed over a five-year period to avoid the possibility of sharp declines in a volatile market.

New York state debt in red zone, should cut $20 billion: study

The $120 billion that New York state owes in debt, health and pension benefits for public workers puts it in the danger zone, and getting down to the safety zone requires a $20 billion cut, a study said Tuesday. By this measure, California has more outstanding long-term obligations -- over $159 billion -- but can better afford them than New York, according to the analysis by the Citizens Budget Commission. New York's ability to pay its bills was estimated at a ratio of 1.099, meaning that for every dollar of resources it has, there are $1.099 worth of obligations. Although California has some of the nation's worst budget problems, its ratio works out to a more affordable 0.599, according to the study by the nonpartisan research group. Only three other states have higher debt burdens than New York: New Jersey, whose ratio is the highest at 1.473; Hawaii, at 1.472; and West Virginia, at 1.127.

Lists for retired workers receiving more than $100,000 from CalPers/CalStrs

6,133 retired California government workers receive pensionsin excess of $100,000 from CalPERS. They're all listed here. The information below was obtained under the Freedom of Information Act from the California Public Employees Retirement System (CalPERS). This list may be be updated periodically with more pensioners as more data is obtained.

Energy

U.S. Sitting on Mother Lode of Rare Tech-Crucial Minerals

Averting disaster If developed, such deposits could help the U.S. avoid a possibly crippling rare earth shortage in the next decade. China has warned that its own industrial demands could compel it to stop exporting rare earths within the next five or 10 years. "There is already a shortage, because there are companies that already can't get enough material," said Jim Hedrick, a former USGS rare earth specialist who recently retired. "No one's trying to expand their use of rare earths because they know there's not more available."

Please send article submissions to: [email protected]

13 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4066
Re: Daily Digest - March 10

"Harrisburg city council chose not to override Mayor Linda Thompson's veto of the city budget Tuesday night.

But this decision could put the city in a bigger financial hole than it is in now. Instead of operating under the budget approved by council in February, the city is forced to work with the budget submitted by former Mayor Stephen Reed."

""I think it really questions the stability of the city. We are headed towards either Act 47 or bankruptcy," said city council member Susan Brown-Wilson.

Brown-Wilson said that's because the city is forced to work under the budget submitted by Reed last year, which has a $3.8 million financial gap."

"A federal judge approved the first municipal bankruptcy filing in state history, reducing the burden of a $20 million lawsuit judgment looming over Westfall Twp., Pike County.

Last year the township, with a population of about 2,800, sought Chapter 9 protection in U.S. Bankruptcy Court for the Middle District of Pennsylvania, a rarely used section of federal bankruptcy law designed for municipalities."

"Economists believe that the federal budget deficit through the first five months of the budget year is running at a record-breaking pace, with the February imbalance likely to climb to the highest level this fiscal year.

Economists surveyed by Thomson Reuters expect the deficit for February will hit $222 billion, up by $28.1 billion from the imbalance in February 2009. The Treasury Department is scheduled to release the February budget figures at 2 p.m. EST Wednesday.

If economists are correct about the big shortfall in February, it will push the deficit total since the budget year began last October to $653.14 billion, an increase of 10.7 percent from the deficit total for the first five months of the 2009 budget year."

"SPRINGFIELD — - Gov. Pat Quinn on Tuesday unveiled a caustic budget plan that would borrow billions of dollars to stay afloat and push even more debt down the road, hoping to persuade leery lawmakers to instead raise taxes in an election year.

Quinn aides warned the plan would cost some 13,000 teachers and staff their jobs, cut off poor seniors from help in paying for costly prescriptions and shut down some health care programs for the indigent. But even after about $2 billion in cuts, the state would still be $11 billion in the hole."

"New York's financial situation will worsen over the next five years because spending is expected to rise 7.5 percent but revenues will only climb 3 percent, Paterson told reporters.

"That would put us at $65 billion in the hole," he said.

Lieutenant Governor Richard Ravitch has been charged with finding a long-term solution to the state's fiscal crisis, and Paterson said one possibility was creating an independent board to review whether a "past budget is in compliance with the state's fiscal situation."

New York's deficit in the new budget that starts on April 1 tops $9 billion, but Paterson would need the legislature to approve the extra budget powers he is considering.

"If the budget was not in compliance, the governor would be granted powers that no governor in New York has ever had before in the sense, to have an executive authority, which I was looking for in the deficit reduction plan, to make a final decision," Paterson said."

"But according to administrators, the district's $4.5 million deficit may pale in comparison to what they fear is coming.

"We look at the state facing up to a $2 billion deficit in 2011. The state has about a $14.5 billion budget. Schools are about 50 percent of that," said HSE Superintendent Dr. Brian Smith. "You don't have to be a mathematician to see that we're probably going to shoulder a significant portion of that."

Those fears are real.

For the 17th straight month, state revenue has fallen short of forecast. As of last month, revenue is down 10 percent from last year. That, coupled with over $825 million in federal stimulus money used to support the current budget going away in two years, has schools worried that the budget axe will fall on them."

"National office vacancy rates will probably top 18% in 2010, reaching their highest levels ever and forcing landlords to negotiate more concessions with tenants than in the past. Robert Bach, chief economist of commercial real estate firm Grubb & Ellis, says high unemployment and employers' reluctance to hire workers will keep leasing markets deteriorating before they start a slow, multi-year recovery in 2011."

"DETROIT — Emergency financial manager Robert Bobb's pledge to curb overspending in Detroit Public Schools has resulted in nearly $100 million in additional red ink.

The Detroit News' review of budget documents indicates the district faces a $98 million deficit for the budget year ending June 30, instead of the $17 million surplus Bobb had projected. A projected $317 million deficit would be largest year-end deficit the district has ever recorded."

"Detroit is becoming the prototype for a dying American city. As the Mayor enacts radical plans to bulldoze whole neighborhoods in a desperate attempt to save others, the city is reaching a critical point in its history, and no precedent exists for how to save it. Caught in the center of this turmoil and plan for destruction-in-hopes-of-recreation is a key landmark: Michigan Central Station. Abandoned for decades — the last train pulled out of it more than 20 years ago –this once-stunning building has become just another of the scores of abandoned structures. But despite the corrosion and dilapidation that have plagued the station, it remains a unique and stunning reminder of a once-thriving city.

Still, like so many buildings, the station was slated for demolition, and according to a report from the New York Times, exists only because of a lawsuit to have it preserved as a historic landmark (not to mention the city’s $400 million budget deficit)."

"The latest report on the property market in China is truly frightening. Despite measures taken by authorities to reign in the price explosion in Chinese real estate, prices rose at the fastest clip in nearly two years in February.

Unless you have faith in the ability of China's central planners to perfectly negotiate a soft landing, you should be preparing for a rough crash.

From the official Chinese news agency:

China's property market grew at the fastest pace in 20 months in February, with housing prices rising at a double digit rate, despite the government's cooling-down moves, according to data released Wednesday by the National Bureau of Statistics (NBS).

Housing prices in China's 70 large and medium-sized cities increased 10.7 percent in February from a year earlier, and were up 0.9 percent compared to the previous month, said the NBS."

"NEW YORK, March 9 (Reuters) - Home prices continued to weaken in many U.S. markets during January as the impact of government tax credits on housing demand lost momentum, real estate Website Zillow.com said on Tuesday.

Nationally, while the annualized appreciation rate continued to rise, increasing from negative 5.5 percent in December to negative 4.8 percent in January, home values fell 0.33 percent from the prior month, a slightly larger monthly depreciation than the 0.27 percent recorded in December, according to Stan Humphries, chief economist at Zillow."

Christie: Budget will be 'unlike any budget you've seen in the past 20 years' (New Jersey)

Boulder Valley schools projects as many as 380 teachers could be laid off (Colorado)

Anaheim elementary schools to cut 157 teachers

New York's industrial development agencies angered by first state tax bills

Municipalities Losing Revenue in FY 2011 Budget (Illinois)

Parking fees to nearly double at St. Charles high schools

322 Capo Unified educators face job losses (SAN JUAN CAPISTRANO)

Broward Schools May Lose Arts & Phys. Ed. Classes (Florida...$100 million deficit)

Greeks set to be crippled by Thursday's strike

District to take layoff vote for 127 (Redwood City)

Fontana schools brace for massive budget cuts (Go from 25 to 30 students per teacher, 257 layoffs)

President's approval rating matches record low

Europe cries foul over US defence tender

Spence Says U.S. Recovery Will Take ‘Several Years’

GDP seen slowing, tying Fed hands on rates

Race to the bottom with G4 currency rhetoric (" no government wants an overvalued exchange rate to slay recovery")

Greece warns of worse downturn as strikes loom ("The Greek economy is set to shrink by more than expected this year")

VeganDB12's picture
VeganDB12
Status: Platinum Member (Offline)
Joined: Jul 18 2008
Posts: 731
Re: Daily Digest - March 10

Thank you all, thank you Saxplayer, this is a great digest. So much happening. Boy has the S ever HTF!
I especially appreciate the healthcare related news and the stories on ny and pa. Much appreciated.

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest - March 10

Jobless Rate Rose in 30 States In January, Five Hit Records

http://www.cnbc.com/id/35795142

pinecarr's picture
pinecarr
Status: Diamond Member (Online)
Joined: Apr 13 2008
Posts: 2237
Re: Daily Digest - March 10

SaxPlayer, you kick butt! You open the windows and show us what's really out there!

mesaboogieman's picture
mesaboogieman
Status: Bronze Member (Offline)
Joined: Jan 16 2009
Posts: 42
Re: Daily Digest - March 10
pinecarr wrote:

SaxPlayer, you kick butt! You open the windows and show us what's really out there!

But do you ever get time to play the sax? Smile

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

Climate change is a fact, says China

http://www.abc.net.au/news/stories/2010/03/11/2842415.htm?section=justin

The Chinese Government says the view that climate change is not man-made is a marginal and "extreme" outlook.

According to Xie Zhenhua, a deputy director at China's powerful National Development and Reform Commission, climate change is a fact based on long-term observation in many countries.

At the annual session of China's National People's Congress, he said that those who advocate that climate change is not man-made are holding an extreme and marginal view.

He said that the majority of the world's scientists believed that climate change has been caused by burning fossil fuels.

He and other officials said that more work needed to be done to ensure that scientific data on climate change was watertight, but the world had no choice but to reduce its reliance on fossil fuels.

Mr Xie said climate change is not only something that ordinary Chinese people can feel and experience every day, but that it may soon have a huge impact on China's food security and even its economic stability.

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest - March 10

Mortgage Insurers Won't Pay on Bad Loans

 "[Mortgage insurers] claim rescission rates have shot up from a historic rate of around 7 percent to as much as 25 percent over the last few quarters." -- Moody's Resi Landscape

AP

When I saw that, I thought, well here is the mortgage insurance industry, faced with an historic number of claims, trying to save itself at the cost of the big banks.

I mean, if you buy insurance for a product, and something bad happens to that product, then you should make a claim and get paid back by the insurer.

That's the definition of insurance.

But just like everything else in today's housing/mortgage market, nothing is as it should be.

Mortgage insurers are rescinding (denying) claims, claiming themselves that the loans were fraudulent and misrepresented to them.

http://www.cnbc.com/id/35800892

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest - March 10

Who needs a job anymore when you can just draw unemployment for years LOL.....Let's just tax the foreigners (sell them our priceless paper & never pay them back) & pay for our population to just sit around get even fatter & play video games. 

Yanky ingenuity in overdrive LOL.

What a great country we have.

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest - March 10

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest - March 10

'It's Going to Be Inflation Everywhere:' Deputy 'Doom'

Arun Motianey, director of fixed income strategy at Roubini's RBG Capital, said the supercycles feature periods of commodity booms followed by busts, and the US economy is on the verge of an inflationary period that will generate a sharp rise in prices.

"We're heading into a world of inflation because we are highly indebted and we are indebted here in the US economy in the household sector and in the financial sector," said Motianey, author of the book "SuperCycles."

 http://www.cnbc.com/id/35795076

Hummmm....

ditchner's picture
ditchner
Status: Member (Offline)
Joined: Mar 15 2009
Posts: 14
Treasury Department Falsifies Budget Report

"The Treasury Department has finally released its report: for the fiscal year 2009...and we now know why it is three months late – courtesy of John Williams of Shadowstats.com. According to Mr. Williams, the Treasury Department has invented an entirely new “methodology” for “calculating” the U.S. budget."

 

http://tiny.cc/Srexn

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Treasury Department Falsifies Budget Report
ditchner wrote:

"The Treasury Department has finally released its report: for the fiscal year 2009...and we now know why it is three months late – courtesy of John Williams of Shadowstats.com. According to Mr. Williams, the Treasury Department has invented an entirely new “methodology” for “calculating” the U.S. budget."

 

http://tiny.cc/Srexn

Jeff did a super and very in-depth write. Good read, thanks. I did a much shorter piece that ran on FSN. FASB now stands for Fantasy Accounting Standards Board. GAAP now stands for Geithner Acceptable Accounting Procedures and Arthur Anderson has become Treasury Anderson and the USA is now the United States of Enron.

What a joke - and it is on us!  

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Daily Digest - March 10

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments