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    Daily Digest 1/5 – Catalonia Missed Budget-Deficit Target, Unemployment Rises in Metro Areas, Fed: Economy Too Weak

    by saxplayer00o1

    Wednesday, January 5, 2011, 4:00 PM

  • Currency Intervention by Chile Central Bank
  • Harrisburg Workers Again At Risk Of Not Getting Paid
  • Spain’s Catalonia Region Says Missed 2010 Budget-Deficit Target
  • Kansas Delays School Aid Payments
  • VAT Increased To 20 Per Cent (UK)
  • Berkeley Heights School Facing Harsh Budget Reality (NJ)
  • Unemployment Rises In Two-Thirds Of Metro Areas
  • Fed Minutes: Economy Still Too Weak To Cut Off Stimulus
  • Unemployment Health Fee Rises (Massachusetts)
  • Christie Says He Is Preparing To Reduce Health Benefits For Public Employees (New Jersey)
  • Rogoff Says EU Debt Crisis Will Take Years to Clear, Members Face Default

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Economy

Currency Intervention by Chile Central Bank

Central Bank of Chile plans to buy $12 billion in the foreign exchange market tomorrow in order to depreciate the peso against the US dollar.
Jose De Gregorio, Central Bank President disclosed a plan yesterday to buy $50 million a day from January 5 until February 9, the second times in less than three years.
Chile’s peso appreciated 17 percent against the US dollar since the end of June 2010, and also against the Australian dollar due to rise in copper prices that boosted the trade prospects in the country, the world’s biggest producer of copper.
”This is the biggest exchange rate intervention that has been announced in our country,” Finance Minister Felipe Larrain told reporters in Santiago. “It seems to us to be a measure that is on the right track and that will have an impact on the exchange rate.”

Harrisburg Workers Again At Risk Of Not Getting Paid

Employees in the distressed capital city Harrisburg, Pa., once again find their paychecks this week in jeopardy–this time because of a disagreement over protocol. 
City Controller Dan Miller is barring the release of paychecks due Thursday for the city’s 543 workers because the 2011 budget hasn’t been enacted. 
”Without a budget, we can’t pay bills,” said Miller…. Harrisburg last month was accepted into the state’s oversight program for distressed municipalities known as Act 47. City administration officials hope the program will lead to fiscal recovery. Meanwhile, New York law firm Cravath, Swaine & Moore LLP has started work on advising the city council on a possible bankruptcy filing; the mayor opposes bankruptcy.p>

Spain’s Catalonia Region Says Missed 2010 Budget-Deficit Target

Catalonia, Spain’s biggest region, missed its budget-deficit target last year, as it struggles with a slump in tax revenue and rising borrowing costs. 
The regional government elected in November expects the 2010 deficit to “significantly” exceed the overall target set for the regional administration of 2.4 percent of gross domestic product, said an official in the Catalan government, citing the region’s new president, Artur Mas.

Kansas Delays School Aid Payments

Kansas delayed half of the aid payments due to its public school districts at the start of the new year for a few days because of concerns about a short-term cash crunch, an official confirmed Tuesday.
Elaine Frisbie, deputy state budget director, told The Associated Press that $98 million in funds that normally would have reached school districts Monday won’t get to them until the end of this week. The state paid the other half of the aid on time.
She said the state decided to be cautious after its tax collections in December were about $22 million short of expectations.

VAT Increased To 20 Per Cent (UK)

The rate of VAT has risen from 17.5 to 20 per cent as the government attempts to cut the UK’s debt.
Analysts believe retailers will be significantly affected by the change. Opponents of the increase fear the poorest will suffer the most from the change.
The rise was announced in the June budget. The government says boosting tax revenues is necessary to cut the country’s debt levels.


Berkeley Heights School Facing Harsh Budget Reality (NJ)

Although the current budget is more than $1 million less than last years, the unexpected loss of $2.1 million in state aid plus an additional $700,000 in state aid that was to be paid in the 2009/2010 budget had severe repercussions that will last into the next budget.
In order to “make up” for the loss of $2.8 million, the district had to use almost all of its available surplus to close the gap and that means there is almost no surplus left to use as tax relief for the 2011 budget. Board Vice President John Sincaglia put the surplus figure around $400,000 and said it was “dangerously low.”

Unemployment Rises In Two-Thirds Of Metro Areas

Unemployment rates rose in more than two-thirds of the nation’s largest metro areas in November, a sharp reversal from the previous month and the most since June.
The Labor Department said Tuesday that unemployment rates rose in 258 of the 372 largest cities, fell in 88 and remained the same in 26. That’s worse than the previous month, when rates fell in 200 areas and rose in 108.


Fed Minutes: Economy Still Too Weak To Cut Off Stimulus

The economy remains sluggish and the jobs situation too bleak for the Federal Reserve to consider halting the $600 billion asset purchase plan announced in November, the minutes of the last Federal Open Market Committee meeting said Tuesday.
Although participants saw incoming info “pointing to some improvement in near-term outlook,” policy makers remained deeply concerned about unemployment hovering near 10 percent.
With the Fed suggesting the risk of deflation is receding and that core inflation has bottomed out, the benefits of the bond purchase program outweigh any possible negative consequences, according to Fed officials.


 

Unemployment Health Fee Rises (Massachusetts)

The Unemployment Health Insurance Rate Review Board voted to raise the rate on employers from $33.60 per employee in 2010 to $50.40 this year, according to the Statehouse News Service.
The increase will help the state address a $95 million deficit in the fund projected for June 30, 2011. Enrollment in the program rose from 8,396 in November 2008 to more than 23,700 in November 2010….According to the news service, Gov. Deval Patrick has not yet decided whether to freeze unemployment insurance rates for employers in 2011. The rates are scheduled to rise by $259 per employee this year.

Christie Says He Is Preparing To Reduce Health Benefits For Public Employees (New Jersey)

Christie said the state public employees’ pension system is underfunded by $54 million and that he is attempting to cut benefits, raise the retirement age and the amount of public employee contributions. “If our plan gets put into place, we can cut that deficit in half in 15 years,” he said.
Christie reiterated his opposition to President Obama‘s fledgling health care program. He described the plan as “insane” and said it will bankrupt the states. 
”What the (now Republican-controlled) House needs to do is to stop shoveling money to the states,” the governor said. “It’s like giving more drugs to addicts. Let everybody (the states) buck up and make the tough (financial) decisions. We are doing that in New Jersey and the public is responding extremely well.”

Rogoff Says EU Debt Crisis Will Take Years to Clear, Members Face Default

Harvard University professor Kenneth Rogoff said the fallout from Europe’s debt crisis will linger for years as the region faces the possibility of default amongst some of its fiscally weakest members…. “The unsustainable public debt and public expenditure is a question Europe and the United States will be confronted with big time over the next decade,” Rogoff said.

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