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    Daily Digest 12/30 – Pension Bailout Plan, Home Prices Teeter, Gas Prices Up

    by DailyDigest

    Thursday, December 30, 2010, 4:00 PM

  • Council Unveils Latest Pension Bailout Plan (Pittsburgh)
  • Pensions Issue Overshadows USPS Outlook For 2011
  • Home Prices Teeter on a Double Dip
  • Retirement Plans Put State In Financial Bind (North Carolina)
  • Gas Prices Heading Up From 3 Dollars
  • Blackouts, Petrol Shortage And Cash Woes As New Year’s Approaches (Argentina)
  • Gramley Says Plosser, Fisher May Dissent From Fed Ease Plan

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Economy

Council Unveils Latest Pension Bailout Plan (Pittsburgh)

Council President Darlene Harris and members Patrick Dowd, Bill Peduto, Natalia Rudiak and Doug Shields said they’ve received the state’s go-ahead to shore up the pension fund not with cash but a different kind of asset — 30 years of dedicated revenue from parking rate increases….The pension fund, now 29.3 percent funded, must be 50 percent funded by Dec. 31 to avoid a takeover by the state. For months, Mr. Ravenstahl and council have skirmished over how to raise the $220 million in cash that would boost the fund to 50 percent. With time running out, council members last week consulted the state about dedicating future revenue streams to the fund instead.

Pensions Issue Overshadows USPS Outlook For 2011

Ruth Goldway, the Commission’s chairman, said that the improving economy was now strengthening the mail market, but that the Postal Service faced “potential financial insolvency” in 2011 because of its rising debt and the legally-imposed cap on its borrowing. In particular, she highlighted the pension obligations issue as a key problem area, noting that her Commission had found that pay requirements for the USPS, compared to other federal organizations, may have been overstated by as much as $55 billion.

Home Prices Teeter on a Double Dip

A 20-city composite of home prices through October as measured by the S&P/Case-Shiller Indices is teetering on the brink of falling below recent lows in 2009 to create a price new low and achieve the “double dip” in prices long feared by the real estate industry.
Data released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show a deceleration in the annual growth rates in 18 of the 20 MSAs and the 10- and 20-City Composites in October compared to what was reported for September 2010.  The 10-City Composite was up only 0.2 percent and the 20-City Composite fell 0.8 percent from their levels in October 2009. Home prices decreased in all 20 MSAs and both Composites in October from their September levels.
October was the fifth consecutive month where the annual growth rates moderated from their prior month’s pace, confirming a clear deceleration in home price returns.

Retirement Plans Put State In Financial Bind (North Carolina)

Democratic Gov. Bev Perdue and the new Republican-controlled General Assembly appear pained trying to close a projected $3 billion-plus state budget deficit in 2011.
How about finding another $32.8 billion?
That’s how much an actuary has told Perdue’s budget director that legislators will need to allocate – but have yet to do so – in order to provide all the medical benefits that have been promised so far to state workers when they retire.
When pledges to beneficiaries aren’t backed up by adequate appropriations, the difference is called an unfunded liability.
”Our retiree health plan is totally unfunded,” said Robert L. Clark, a professor in North Carolina State University’s Department of Management, Innovation and Entrepreneurship.

Gas Prices Heading Up From 3 Dollars

For the first time since October 2008 the average gas price has crossed the three dollar per gallon mark.
According to AAA, gas prices have climbed four weeks in a row. The average gas price is now $3.03 per gallon in Massachusetts. That is about 44 cents more than you were paying at this time last year.
Area drivers told 22News that they are new having a harder time finding gas stations selling gas below the three dollar price mark. One Springfield driver said that he prefers to stick with his favorite station.
Don’t expect prices to go down anytime soon, either. Predictions for 2011 run as high as four and five dollars per gallon.

Blackouts, Petrol Shortage And Cash Woes As New Year’s Approaches (Argentina)

Rolling blackouts, a shortage of petrol and a union conflict at the Banco Nación are some of the problems that the City and the Greater Buenos Aires areas are expected to be facing in the next few days, which could potentially threaten New Year’s celebrations.
As the high temperatures continue, at least 25,000 citizens in the City and the Greater Buenos Aires suburbs registered blackouts for a few days due to the high energy demands.
Rolling blackouts will continue to take place in the area for as long as the red alert remains in effect.
City government officials also confirmed that close to a 100 traffic lights remained unresponsive today due to the blackouts.

Gramley Says Plosser, Fisher May Dissent From Fed Ease Plan

Federal Reserve Bank of Philadelphia President Charles Plosser and Dallas Fed President Richard Fisher may dissent from Fed Chairman Ben S. Bernanke’s plan to purchase $600 billion in Treasuries, former Fed governor Lyle Gramley said. “I think Charles Plosser of Philadelphia and Richard Fisher of Dallas probably will dissent from time to time,” Gramley said today in an interview on Bloomberg Television’s “Fast Forward” with Peter Cook. “It probably isn’t going to affect the outcome of monetary policy decisions. Ben Bernanke still has control of the committee.”….As part of an annual rotation in voting on Fed policy, Plosser, Fisher and the heads of the Chicago and Minneapolis Fed banks will cast votes in 2011.






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