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    Daily Digest 12/29 – Poverty & Homelessness Increase, Tax Hikes Looming, Rare Earth in China

    by saxplayer00o1

    Wednesday, December 29, 2010, 4:00 PM

  • Sovereign Debt Levels ‘Unsustainable’, Double Dip A Possibility
  • Pleas For Food Jump As Poverty Increases (Arizona)
  • Number Of Homeless Students In State Climbs To 21,000 (Washington)
  • Illinois Default Insurance Cost at Five-Month High: Muni Credit
  • Treasurys Sink After Poor 5-Year Auction
  • Oil Industry’s Spending to Rise in Hunt for Energy
  • Ambulance Fees Increasing Across USA
  • Minnesota Tax Hikes Looming
  • Three-Quarters Of U.S. Uninsured Employed
  • US `Very Concerned’ About China Rare-Earth Quotas -USTR Spokeswoman
  • China To Establish Rare Earth Group

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Economy

 

Sovereign Debt Levels ‘Unsustainable’, Double Dip A Possibility

Too many countries have levels of debt they will not be able to finance, which could cause further economic turmoil in 2011, Gulf economic expert Eckart Woertz has said.
Speaking to Arabian Business, Woertz, who is a visiting Fellow at Princeton university in America, said GCC economies would not be insulated from another downturn on international markets.
He said: “Debt levels are still at historic and unsustainable peaks compared to GDPs. There was only a certain shift from private to public sector debt issuance and the latter has faced increasing problems in 2010, be it in California or Greece. 
“People who uncritically hail the growth potential of China and other emerging markets may think twice: their growth model has relied on exports and deficit spending in the US and other OECD countries – if the latter crumbles, they will face problems as well.”

 

Pleas For Food Jump As Poverty Increases (Arizona)

Arizona’s sharply rising poverty rate has spurred a run on food banks statewide, including Rim Country where food banks continue to push a food drive through the holiday season.
Arizona now suffers the second highest poverty rate in the nation and food banks this year reported a 27 percent jump in demand, according to a just-released survey by Arizona State University’s Morrison Institute for Public Policy.
The long lines at many food banks mirror a 33 percent increase in applications for Supplemental Nutritional Assistance Program — formerly called food stamps. 
Nearly 1 million Arizonans now need extra food, including one out of four children, according to the survey.

 

Number Of Homeless Students In State Climbs To 21,000 (Washington)

OLYMPIA — They sleep in cars. In parks. In shelters. On the sofas of generous relatives or friends. 
They are the more than 1.3 million homeless children nationwide. 
Of that total, more than 21,000 live in Washington state, according to numbers submitted to the federal government this past week. 
According to the Office of Superintendent of Public Instruction, the numbers show that during the 2009-10, the state reported 21,826 homeless students, up 5.0 percent from the previous year and up 56.5 percent from 2005-06. 


Illinois Default Insurance Cost at Five-Month High: Muni Credit

The cost of insuring Illinois’s bonds against default rose to the highest level in five months as the state headed for the new year without a plan to finance a $3.7 billion pension-fund contribution…..Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co. in Newport Beach, California, said Illinois’s budget may be only 55 percent-funded.”That means the other 45 percent they can’t pay or have to borrow,” Gross said today in an interview on CNBC. “How a state like that can get in that type of position, I’m not quite sure.”He said he would avoid buying any Illinois debt.

 

Treasurys Sink After Poor 5-Year Auction

Treasury prices sank Tuesday after lukewarm demand on a $35 billion sale in five-year notes. 
The bond market extended its losses after the auction, pushing prices to fresh session lows, as the result raised concern about the outlook for Wednesday’s scheduled sale of seven-year notes. 
Higher yields failed to lure enough buyers to underwrite the auction, a sharp contrast to the two-year notes sale Monday. 
The Treasury Department sold the five-year notes at a yield of 2.149%, much higher than 2.103% traded right before the auction. Higher yields suggested bidding prices were weaker than many dealers had anticipated. 
The auction was 2.61 oversubscribed, down from the average of 2.82 from the past four auctions.

Oil Industry’s Spending to Rise in Hunt for Energy

The global oil industry—far from chastened by the catastrophic U.S. Gulf of Mexico spill—is planning record spending next year, including a large amount for deep-water development. From giants Saudi Aramco and Exxon Mobil Corp. to five-person wildcat outfits, the industry plans to spend nearly a half-trillion dollars next year to find and extract oil and natural gas, according to a new survey by investment bank Barclays Capital.

 

Ambulance Fees Increasing Across USA

When a Gig Harbor, Wash., Fire & Medic One ambulance speeds toward a hospital, medics are focused on saving lives, not money, says Medical Division Chief Paul Berlin. 
But the service — and thousands like it across the USA — can’t ignore the bottom line — not when the fire district is projecting a $1.5 million drop in property tax revenue next year.So on Sept. 1, the tax-funded district raised its ambulance fees, hiking its basic service from $375 to $550…..Ambulance providers nationwide are coping with rising costs, decreased support from local government, low Medicare reimbursement rates and a jump in the number of uninsured Americans, says Stephen Williamson, president of the American Ambulance Association.
A 2007 report by the Government Accountability Office showed providers were paid a Medicare reimbursement rate 6% below cost, and the gap widened to 17% in remote areas. Williamson says the disparity has grown since then.

Minnesota Tax Hikes Looming

The Minnesota legislature is facing a six-billion dollar deficit. It could mean higher taxes.
The budget’s of most small Minnesota cities rely heavily on Local Government Aid payments from the state. If the Legislature cuts those payments, local leaders say it could mean a cut in services and more taxes.
For instance: A complete loss of L.G.A. payments to the City of Crookston would require a 300-percent increase in property taxes to make up the difference.
Dave Genereux, Crookston Mayor: “We really don’t have a lot of choices. We’d raise taxes a little… some. But, we’ll have to cut services, raise fees on things to try to make up for it.”

Three-Quarters Of U.S. Uninsured Employed

Seventy-five percent of the some 50 million of the U.S. population with no health insurance come from working families, researchers say. 
The report by the Kaiser Family Foundation says 57 percent of people in the U.S. under age 65 receive health insurance coverage as an employer benefit. Medicare covers virtually all those who are age 65 years and older, but the non-elderly who do not have access to or cannot afford private insurance now go without health coverage unless they qualify for insurance through the Medicaid program, Children’s Health Insurance Program or a state-subsidized program. 
The report says the recession has resulted in many losing their health insurance because they have become unemployed, but it has become increasingly difficult for many of the employed to afford coverage.

Environment

US `Very Concerned’ About China Rare-Earth Quotas -USTR Spokeswoman

The U.S. sharply criticized China’s decision Tuesday to cut its rare-earth export quotas, raising the stakes for potential retaliation over the sensitive trade issue.
”We are very concerned about China’s export restraints on rare-earth materials,” said a spokeswoman from the U.S. Trade Representative’s office.
”We have raised our concerns with China and we are continuing to work closely on the issue with stakeholders,” the spokeswoman said.
China’s decision to cut first-half 2011 export quotas by about 35% from the year-earlier period is stoking tense bilateral trade tensions less than a month before President Hu Jintao arrives for a visit with President Barack Obama.


China To Establish Rare Earth Group

China, which supplies more than 90 percent of the world’s rare earth minerals, is close to establishing an association that will, under government oversight, work to “guide” the domestic industry. The China Association for Rare Earth will be organized under the authority of the Chinese Ministry of Industry and Information Technology and include the 93 largest domestic producers, Wang Caifeng (王彩鳳), a member of the committee overseeing the group’s formation, told reporters at a press conference in Beijing yesterday…..The US said last week it may file a WTO complaint against China over restraints on supplies of rare earths….(Page 2)-China will also raise export taxes for some rare earth elements to 25 percent next year, the Ministry of Finance said this month. The move is an increase from the 15 percent temporary export tax on neodymium, used in batteries for hybrid cars, including Toyota Motor Corp’s Prius.

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the “3 Es.”

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