Daily Digest

Daily Digest - March 29

Monday, March 29, 2010, 9:45 AM
  • A Bold U.S Plan To Help Struggling Homeowners
  • JAL's Job Cuts May Expand To 20,000
  • More Families Depend On School Lunches
  • Our Future And The End Of The Oil Age: Building Resilience In A Resource-Constrained World
  • Drought in Southwest China Bringing About Power Shortage And Chain Effects
  • Washington Considers A Decline Of World Oil Production As Of 2011


A Bold U.S Plan To Help Struggling Homeowners (Christian W.)

They are aimed not only at the seven million households that are behind on their mortgages but, in a significant expansion of aid that proved immediately controversial, the 11 million that simply owe more on their homes than they are worth.

JAL's Job Cuts May Expand To 20,000 (Christian W.)

Japan Airlines Corp is considering expanding its job cuts by fiscal 2012 to around 20,000 from the currently planned 15,700, informed sources said Saturday. The nearly 5,000 further reductions will include additional early retirements, according to the sources.

More Families Depend On School Lunches (Christian W.)

During the 2008-2009 school year, about 19 million students received free and reduced lunches, which is 895,000 more than the previous year — a jump of nearly 5 percent and that greatly outpaced the overall increase in school enrollment, according to the U.S. Department of Agriculture's Food and Nutrition Service. Typically, the increases are about 1 to 2 percent each year.


Our Future And The End Of The Oil Age: Building Resilience In A Resource-Constrained World (Christian W.)

Slideshow on page.

Drought in Southwest China bringing about power shortage and chain effects (Christian W.)

A worst drought has severely cut down hydro power generation in Southwest China, causing a new round electricity supply tightness. It is yielding far reaching effects in the country, including draining coal inventories and rising coal prices due to extra coal demand for more thermal power electricity.

Washington considers a decline of world oil production as of 2011 (Christian W.)

The U.S. Department of Energy admits that “a chance exists that we may experience a decline” of world liquid fuels production between 2011 and 2015 “if the investment is not there”, according to an exclusive interview with Glen Sweetnam, main official expert on oil market in the Obama administration.

Please send article submissions to: [email protected]


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Re: Daily Digest - March 29

"(Reuters) - It's a mystery that has puzzled even Federal Reserve Chairman Ben Bernanke: if the U.S. economy is growing rapidly, why isn't it creating jobs?"

"March 29 (Bloomberg) -- Gold consumption in China may double within the next 10 years, boosting prices as supplies fail to keep pace with booming demand from investors and the jewelry industry, the World Gold Council said.

“China has an insatiable appetite for gold, which looks likely to continue in an environment where domestic mine supply lags behind demand,” the council said in a report today. "

"Investors are braced for a further sell-off in US Treasuries after dramatic moves last week raised fears that the surfeit of US government debt is starting to saturate bond markets. "

"Looming over everything is the worry that markets will not be able to absorb the glut of US debt as the Fed winds down its policy of bond purchases, starting with an exit from mortgage-backed securities. It currently holds a quarter of the $5 trillion of the MBS market.

The rise in US bond yields has set off mayhem in the 10-year US swaps markets. Spreads turned negative last week, touching the lowest level in 20 years. The effect was to drive credit costs for high-grade companies such as Berkshire Hathaway below that of the US government."

"March 29 (Bloomberg) -- European banks may face a 156 billion-euro ($209 billion) shortfall in funds needed to refinance commercial real-estate debt in the next two years, DTZ Holdings Plc estimates.

About 480 billion euros of property loans will mature by the end of 2011, according to research by the London-based broker. Banks won’t be able to refinance all of the debt, particularly when loans exceed the value of the properties backing them. More than half of the shortfall will occur in the U.K. and Spain, DTZ said."

"State lawmakers are again looking to raise the barrel tax on petroleum products to finance food and energy security programs, but this year there is a twist: most of the new revenue could initially help reduce the state's budget deficit.

The state Senate Ways and Means Committee has agreed to raise the tax from 5 cents a barrel to $1.55. Most of the tax increase would go into the state's general fund to help close a $1.2 billion budget deficit through June 2011, while the rest would be divided among food security and alternative energy programs.

The tax increase could raise an estimated $33 million a year, according to the committee, with $22 million going to the general fund. The petroleum industry would likely pass the tax hike on to consumers, who could pay 2 to 5 cents more per gallon of gasoline and a few dollars more on their monthly electricity bills."

"State taxes collected in California dropped 13.94% in 2009 from a year earlier, according to a new report from the U.S. Census Bureau. That compares with an 8.6% drop nationwide.

The report doesn’t include local or federal taxes or state unemployment compensation taxes.

The state collected just over $101 billion in 2009, down $16.4 billion, even though the legislature and governor approved the largest tax increase in state history including hikes in sales, motor vehicle and income taxes.

Among the declines:

Sales and gross receipts – 8.6%

Individual income -20.4%

Corporate -19.5% "

"Michigan, hard hit by automaker bankruptcies, had the largest percentage drop in corporate taxes, down 63.5% followed by Oregon, -45.8%, New Mexico, -42.6% and Utah, -37.7%."

"Dubai Holding, the investment conglomerate owned by the emirate's ruler, is considering restructuring up to $20 billion in debt, the FT reported on Monday, in what would be another blow to the indebted emirate.

Dubai Holding, which spans financial investments, hospitality and real estate, may appoint a financial adviser to explore the rescheduling of loans over the next few months, the paper said, without citing sources."

"The Frankfurter Allgemeine summed up the deal succinctly: "No member of Europe's monetary union should be liable for the debts of another state. Bilateral credit from Berlin for Athens is not the same as German acceptance of responsibility for Greek debt." "

"Far from stemming contagion, the deal leaves Club Med exposed. Underlying default risk has risen for Greece, Portugal, Italy and Spain, as well as for Ireland, Slovakia and Malta even if credit markets keep missing the point. The world's top holder of EU debt does understand. Greece is the "tip of the iceberg", said the deputy-governor of China's central bank. "The main concern today, obviously, is Spain and Italy."

The 'rescue' resolves nothing for Greece, either short-term or long-term. The EU statement said "no decision has been taken to activate the mechanism." Precisely. The joint EU-IMF facility can be activated only ultima ratio – as a last resort – once Greece is shut out of debt markets and not until eurozone stability is threatened. "

"The total amount of the foreign debt of Croatia, Slovenia, Serbia and Bosnia and Herzegovina is EUR 122 billion, while it was USD 22 billion before the dissolution of the Former Yugoslav Republic of Macedonia (FYROM), Sloboda Dalmacia newspaper writes. The countries from the FYROM face financial bankruptcy, publication reads, citied by MIA agency. Croatia has a record foreign debt – EUR 44 billion."

"Earlier this year, Newsom asked all departments to cut budgets by 20 percent to help close The City’s historic $522 million budget deficit. On March 1, each department turned in budgets with money-saving ideas totaling $115 million.

On Friday, the mayor and labor unions tentatively agreed to 12 furlough days for each city employee, which would help save more than $50 million for the general fund. The City also is banking on $20 million in federal stimulus money to help with the budget shortfall, Wagner said.

But all that still leaves San Francisco $195 million in the red, which is why the mayor is again asking departments for more cuts, Wagner said."

"Government-pension problems, widely considered bad, may actually be even worse.

That is the assessment of some experts who maintain that the current rules of number crunching for state and local governments make retirement-benefit obligations seem lower than they really are.

Soon, their view may prevail. The accounting board for governments is likely to move toward changes that would increase the pension liability that local governments display on balance sheets by tens of billions of dollars.

If the modifications are approved, many already cash-strapped states and municipalities would likely have to increase the amount they are supposed to pay annually to their pension funds to help cover the shortfall. "

"According to a recent study by Wilshire Consulting, the average funding level of state public pension plans was at 65% in 2009, compared with 85% in 2008. Experts recommend that public pension funds maintain at least an 80% level of funding to be healthy."

"Another issue: how to calculate the unfunded pension obligation. Currently, the total projected benefits obligation is lowered based on how much the fund is expected to reap in investments, commonly 8%.

Critics argue that rate, which for accounting purposes is known as the discount rate, is inappropriately high. GASB has looked at several alternatives that are currently lower than 8%.

The drop of one percentage point in the discount rate means a 10% to 20% increase in the total pension obligation, according to James Rizzo, senior consultant and actuary at Gabriel, Roeder, Smith & Co., a consulting firm for the public sector. For example, a pension system with a total liability of $100 billion would have an obligation of as much as $120 billion after a decline of one percentage point in the discount rate. "

"Currently the figure used is a maximum of 30 years. The GASB's tentative decision is that pension liabilities should be amortized over the remaining employment years of the worker, which can be closer to 15 to 20 years for some employees.

"This could double or triple the annual contribution needed from governments," Girard Miller, a senior strategist at Public Financial Management Group and former voting member of the GASB board."

"On average, school districts are paying 5.3 percent of payroll costs into the pension system in 2009-11, or about $310 million.

The cost is expected to more than double. In 2011-13, school districts are expected to pay an average of 11.6 percent of payroll costs, or $731 million.

That's an increase of $421 million over a two-year period; for perspective, that's about the cost of employing 2,500 teachers for two years. The average cost of employing a public school teacher in Oregon, including benefits and federal payroll taxes, was $82,788 in 2008-09."

...................12A) PERS contribuition boost will have big fiscal impact

"March 29 (Bloomberg) -- The U.S. Postal Service would cut Saturday mail delivery starting in the first half of 2011 under a plan the agency will present to its regulator tomorrow.

The Postal Service, which forecasts a $238 billion budget deficit by 2020, says it would save about $3.3 billion in the first year by eliminating delivery on one day and $5.1 billion annually by 2020.

“Given the fact that we’re facing such a huge deficit, we’d like to move as quickly as possible,” Postmaster General John Potter told reporters today in Washington."

  •  Other stories and headlines:

S&P keeps negative view on U.K. Triple-A rating or UK's AAA credit rating in danger – S&P

Olive: Hyperinflation fears on the rise globally

Treasuries Find Greenspan's Canary Fainting in Mine

Greek Bonds Decline as Government Starts Seven-Year Note Sale

IMF holds back cash to Pakistan

Canada's Liberals Want Corporate Tax Cuts Canceled Amid Deficit

Bank of Spain denies Spanish banks are delaying losses by acquiring NPAs

State squeezes retailers for overdue sales taxes (Indiana)

Flint cuts trash pickup to every other week or Reduced Flint trash pick-up begins Monday; residents worry about onset of rodents

Sacramento transit agency considers cuts in its security force

Ireland poised for fresh bank bailout, shares fall

NY Legislature, Paterson Looking At Late Budget

Maine fiscal future looks gloom

Zerohedge comments on weak demand for Greece's debt, China's gold, UK's AAA credit rating

China drought hits hydro power...Reuters video (see also in the Daily Digest aboveZ: Drought in Southwest China bringing about power shortage and chain effects (Christian W.)

My Boss asked me to Stop Vloging (Youtube video...banks, silver market)


tabletop's picture
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Re: Daily Digest - March 29

More "Boom and Bust" Cycles Coming: The Real Reason Buy and Hold Is Dead

Lakshman Achuthan starts with some facts we could all agree on.  He then goes into a lesson on how to gamble better. Ugh.



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Mike Pilat
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Re: Daily Digest - March 29

Has anyone heard about the Hutaree group arrest? Any comments or more news on this?



targetbuster's picture
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Re: Daily Digest - March 29

This is such gobbledygoop.....I've lost all faith in "the market"

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Re: Daily Digest - March 29

The AP is reporting "World stocks, euro rise as debt worries ease". Greece has a plan - hooray!!  Always nice to know we have nothing to worry about. (Shares in big Irish banks fall, Portugal's debt downgraded... oops...)

The welter of information, much of it conflicting, at least superficially, seems guaranteed to confuse 90% of the public (referring to the portion that pays any attention) and make cogent, insightful analysis extremely difficult and meaningful prediction impossible. Any analysis that proves correct after the fact can easily be countered at the time it is put forward by pointing to contrary evidence and and array of experts who disagree. No wonder dithering while the house burns seems the order of the day...

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Re: Daily Digest - March 29

The 'Boomers' are to blame.....BBC News magazine

Hold up a mirror... what are you going to tell your children and grand-children?


targetbuster's picture
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Re: Daily Digest - March 29

Uh, what am I supposed to tell them? That our political and financial system has failed us? Or should we help create another class of victims here. Heck, someone else is always at fault so I guess it may as well be me this time.

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Non Member
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what are you going to tell your children

It all started about 97 years ago..... (the Fed, Income Tax, etc...)   when the elites began to ignore the Constitution of the United States and the citizens became too trusting and selfish and drunk on government entitlements.  

Pretty soon, they will annul the Constitution and anyone who objects will be crushed like a bug.

Then we are back where we started.  TYRANNY !!!!


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