- Fed Downgrades US Economic Projections
- Ireland Said to Require 85 Billion Euros for Rescue
- Spain Forced to Double Rates at Bond Sale
- Michigan to Curb Road Projects as Gas Tax Revenue Shrinks
- Cleveland Schools Face $58 Million Budget Deficit in 2012
- Spain and Portugal Under Fire as Bond Spreads Hit Record
- NC Governor Perdue Contemplating Massive State Budget Cuts
- IMF’s Lipsky Says Portugal Hasn’t Sought Financial Aid, Facilities Exist
- Euro at Stake, German Finance Chief Warns
- S&P Downgrades Additional $8.05 Billion Of CDOs On Subprime Woes
- Euro in `Exceptionally Serious’ Situation Amid Irish Bailout, Merkel Says
- Bailout for Spain Would Empty European Coffers, Analysts Warn
- Report: City’s Food Pantries, Soup Kitchens Cope With Higher Demands
- San Diego County Expanding Food Aid But Still Covers Less Than Half Of Those Eligible
- Time-Lapse Video Shows Food Stamp Usage (News video)
- Putin: More Trade with China in Local Currencies
- Home Sales Fell 2.2% in October
U.S. gross domestic product, the broadest measure of economic activity, is projected to rise at an annual rate of between 3.0% and 3.6% in 2011 after growing by around 2.5% this year. That compares with a previous June forecast that GDP would increase between 3.5% and 4.2% next year. The economy grew at an annualized rate of just 2.5% in the third quarter, government data showed Tuesday, after rising by 1.7% in April to June. Since the recession ended in June 2009, the economy has been expanding at an average quarterly rate of less than 3.0%. That’s too low to make a dent on unemployment and compares with a growth rate of nearly 8.0% that followed the previous deep U.S. recession in the early 1980s. In fact, several Fed officials believed unemployment was more likely to rise than fall if the economy continues to grow so softly. “Participants agreed that progress in reducing unemployment was disappointing,” the minutes showed.
European Union officials estimate that a rescue package for Ireland may amount to about 85 billion euros ($114 billion), according to two officials familiar with the talks. The European Commission cited the figure as a preliminary estimate on a conference call of euro-region finance ministers on Nov. 21, said the people, who spoke on condition of anonymity because the talks were private. Of the total, 35 billion euros would be earmarked for banks and 50 billion euros to help finance the Irish government.
But the rates offered were sharply higher than at the last similar auction on October 26, at 1.743 per cent for the three-month bonds, up from 0.951 per cent previously. The yield on the six-month paper jumped to 2.111 per cent from 1.285 per cent. Rates or yields on bonds issued by Ireland, now the subject of an EU orchestrated rescue, and by Portugal, Greece, and Spain and to a lesser extent Italy, have risen as their public finances come under increasing strain. The difference, or spread, between the rate that Spain must pay to attract funds for 10 years, and the rate paid by Germany which represents the benchmark rate in the eurozone, also rose on Tuesday to a new historic high of 236.1 basis points or 2.361 percentage points. It is now at a wider level than at the peak of the Greek debt crisis.
Michigan could see half of its road construction budget disappear by 2012, taking with it scores of repair projects and thousands of jobs in a state that relies heavily on its freeways. A freefall in gas tax revenue over the last decade has the Michigan Department of Transportation projecting its repair budget for 2012 to be $626 million, a slice of the $1.4 billion spent in 2010. And Michigan barely escaped the same fate for 2011, said Bill Shreck, MDOT director of communications, when it faced an $84 million shortfall in its effort to qualify for federal matching funds.
The impending shortfall is due to state funding cuts, declining tax dollars, and rising costs for staff salaries and benefits. By law, the district is required to balance its budget every year, and Sanders said he and his staff are brainstorming long term solutions to the shortfall.
Yields on 10-year Portuguese bonds jumped to 6.9pc, replicating the pattern seen in Greece and Ireland just before they capitulated and turned to the EU and the International Monetary Fund. Spreads on 10-year Spanish bonds rose to a post-EMU record of 233 basis points over Bunds, pushing the yield to 4.87pc. Spain’s central bank governor, Miguel Angel Fenrandez Ordonez, said the contagion had spread rapidly to the eurozone periphery and “made itself felt” in the Spanish debt markets. He called on Madrid to accelerate fiscal reforms to persuade the markets the country really means to put its house in order. “Spain is a bit too big to be bailed out,” said Antonia Garcia Pascual, of Barclays Capital. “The size of rescue required would use up all the funds available and then you have Italy with contagion as well.”
Gov. Bev Perdue’s administration is weighing sharp and painful budget cuts next year that would include state park closures, tuition hikes at community colleges and major state layoffs. Faced with a projected $3.5 billion budget shortfall next year, Perdue asked the heads of state departments, agencies and colleges to develop plans for cuts ranging from 5 percent to 15 percent.
John Lipsky, the second-ranking official at the International Monetary Fund, said facilities exist to help Portugal in case it seeks aid. “Portugal has not requested any such support but the facilities exist if it were to be needed,” Lipsky said today in an interview on Bloomberg Television’s “Surveillance Midday” with Tom Keene. He said the IMF is in regular contact with Portugal as with other members.
German Finance Minister Wolfgang Schaeuble has warned that the euro itself is at stake in the currency bloc’s sovereign debt crisis, knocking about a third of a cent off its value. ”We’re surrounded by a difficult environment in Europe,” Schaeuble said yesterday, referring to a debt crisis that has now engulfed Ireland as well as Greece and threatens to spread further. “I’d like to make clear that our joint currency is at stake. If we can’t lastingly defend it jointly as a stable currency, the economic and social consequences would be incalculable,” he said.
Standard & Poor’s Ratings Services downgraded $8.05 billion of collateralized debt obligations, citing credit deterioration and recent downgrades in underlying U.S. subprime residential mortgage-backed securities. The ratings agency has lowered ratings on hundreds of billions of dollars worth of RMBS and CDOs in the past year as estimates for the amount of losses in them continue to rise.
“I don’t want to paint a dramatic picture, but I just want to say that a year ago we couldn’t imagine the debate we had in the spring and the measures we had to take” over Greece, Merkel said in a speech to Germany’s BDA employers’ group in Berlin today. “We are facing an exceptionally serious situation as far as the euro’s situation is concerned.”
Bailout for Spain would require ‘whopping €420bn’, say analysts, amid fears that as yet undeclared debts could bring the country to its knees The cost of providing an Irish-style bailout for Spain would almost empty the emergency fund that was set up by the European Union and the International Monetary Fund to deal with the crisis affecting weak members of monetary union, a leading team of analysts warned tonight
According to a new study by the New York City Coalition Against Hunger, demand at New York City’s more than 1,000 food pantries and soup kitchens increased about 7 percent this year, on top of the 20-percent increase in 2009. “There’s been no recovery for hungry New Yorkers,” said New York City Coalition Against Hunger Director Joel Berg.
It’s not easy to estimate the number of people who are eligible, but more than 480,000 San Diegans are living at or below the federal poverty level. That means the number of people enrolled in “CalFresh” has increased from below 30 percent to about 40 percent of people who are eligible. Fleming says 10,000 San Diegans are now applying for food stamps every month, up from 4,000 a month before the economic downturn.
A new time-lapse video illustrates the depressing rise of food stamp usage throughout the United States since 2007. The video’s creator, an online blogger, points to the alarming levels. Food stamps now feed a record 43 million. According to a recent Wall Street Journal report, food stamp usage has increased almost 60 percent since 2007.
China has just allowed the yuan to start trading against the Russian ruble in its interbank market. Until now, the two nations have mostly traded in U.S. dollars. China has encouraged the yuan’s use for cross-border trade to reduce its reliance on the dollar.
Sales of previously owned homes fell in October amid weak demand and concerns about the foreclosure process, putting sales for 2010 on pace to close at their lowest level in 13 years.
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