- Keeps Getting Better All the Time (Video)
- Deficit forces California to issue IOUs
- China’s banks are an accident waiting to happen to every one of us (H/T Fujisan)
- U.S. Home Prices Drop 6.8 Percent in April as Foreclosures Rise
- The Net Hubbert Curve: What Does It Mean? (H/T Suzie G)
- Alan Grayson Letter To Neil Barofsky Requesting Audit of Citi
- CRE and Residential RE Prices (Chart on page)
- US credit card chargeoffs break new record – Moody’s
- Tales from Bailout Nation (Video)
- Will banks exiting TARP take back their toxic waste now?
- Large-scale lay-offs in the U.S. (lay-offs of 50 or greater at 1 time) hit highest level
- Peter Schiff, Your Record of Inacurate [CNBC] Predictions is Right (Video, H/T iDoctor)
California is preparing to issue IOUs to its creditors this week as it grapples with an unprecedented cash crunch and prepares to begin its new fiscal year deep in the red.
Once the US’s richest state, California now has the dubious distinction of having the worst credit rating in the country.
California’s fiscal year ends on Wednesday but as the state’s cash reserves are empty, IOUs will be issued to a range of creditors, including contractors, such as information technology companies and the food service groups that cater for prisons.
“On Wednesday we start a fiscal year with a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression,” said John Chiang, the state controller. “Unfortunately, the state’s inability to balance its chequebook will now mean short-changing taxpayers, local governments and small businesses.”
The state is also likely to issue IOUs to the US government. California currently contributes funding for government-run programmes for elderly and developmentally disabled people but is considering issuing IOUs to cover its contributions because of the lack of cash.
Education funding is protected under the state’s constitution while payments on the state’s bond debt are also guaranteed under state law.
Democrats and Republicans in the state government last week struck an agreement on a range of money-saving measures. However, Mr Schwarzenegger has threatened to veto the plan on the grounds that it was a piecemeal solution to California’s budgetary woes.
Mr Schwarzenegger said he would veto any bills that raised taxes without reforming the state’s government. “I will veto any majority vote tax increase bill that punishes taxpayers for Sacramento’s failure to live within its means,” he said. ”The legislature will have a difficult time explaining to Californians why they are running floor drills the day before our budget deadline.
It is facing a budget deficit of $24bn (€17bn, £14.5bn) yet Arnold Schwarzenegger, its governor, and the state assembly cannot agree on a budget that would address the shortfall.
So the regime is resorting to hazardous methods to keep excess factories humming: issuing a "Buy China" decree: using a plethora of export subsidies; holding down the price of coke, bauxite, zinc and other resources to lower production costs (prompting a complaint from America and Europe); and suppressing the yuan, again.
Protectionism is a risky game for a country that lives off global trade and runs a surplus near 10pc of GDP
Those efforts may not be able to keep up with the rising number of Americans falling behind on their mortgages. U.S. foreclosure filings are forecast to hit a record 1.8 million in the first half of this year, according to RealtyTrac Inc., the Irvine, California-based seller of default data. Filings surpassed 300,000 for the third straight month in May, RealtyTrac said on June 11.
Well, first, it means that, if the trend of declining EROI continues, society will be spending an increasingly larger chunk of their remaining energy to get more energy. This cycle is positively reinforcing:
Declining EROI means that the net energy contained in each unit of energy delivered to society is decreasing over time, requiring the extraction of increasingly greater quantities just to meet societal demand → decreases the quantity of energy remaining in the ground for future society → makes it more difficult to find and develop the remaining bit of energy.
With every barrel we pull out of the ground we propel ourselves further down this path, creating a more difficult situation for future generations. (note: I assume that the “Best First Principle” applies to this scenario, i.e. society is using the best resources (i.e. oil fields) first, then the second best, etc…)
Slang for “quantitative easing”
The Moody’s/REAL National All Property Type Aggregate Index for April measures 135.31, a decrease of 8.6% from the previous month. The index now stands 25.3% below the level seen a year ago and 29.5% below the peak measured in October 2007. The index is 27.4% lower than it was two years ago. This report is based on data through the end of April.
Chargeoff rate rises over 10 percent for the first time
But, I am sure you know this is not going to happen. This has not been a liquidity crisis. It is a solvency crisis. [emphasis mine] The banks are not well-capitalized because the stress tests were just a big charade and an effort to buy these firms time. Moreover, it is painfully obvious that the banks are very much dependent on the government still – or they would be getting their dodgy assets back.
Even if this rate of decline is now linear (i.e. falling at the same rate each month), this does not imply “stability”. Jobs are being lost in the U.S. at least as fast as during the Great Depression – if not faster. To suggest that this implies “moderation” is simply stupidity, from people who have absolutely no understanding of basic arithmetic.
Peter Schiff, Your Record of Inacruate [CNBC] Predictions is Right (Video, H/T iDoctor)[video:http://www.youtube.com/watch?v=CR1y9upW8ic]