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Daily Digest 2/24 - CA Still Struggling with Unfunded Liabilities, Pension Costs To Rise Again

Wednesday, February 24, 2016, 10:34 AM

Economy

Atlantic City officials spurn proposed takeover by state

Without an infusion of cash, the city could run out of money within two months and would have no alternative but to ask the state’s Local Finance Board to let it file for bankruptcy protection, Guardian said. Christie, a Republican, and other state officials oppose allowing Atlantic City to make what would be the state’s first municipal bankruptcy filing since the Great Depression.

CA Still Struggling with Unfunded Liabilities

“It’s California’s debt and liabilities that are concerning financial analysts, particularly the state’s rapidly growing unfunded retiree health care costs, which grew more than 80 percent over the past decade. California has promised $74 billion more in health and dental benefits to current and retired state workers than the state has put aside,” the San Francisco Chronicle reported.

Emerging market bonds hit as foreign investors dump debt

“The currency volatility means investors are unwilling to stomach these bonds. And as growth slows in the countries and the bond yields go higher, the cost of servicing debt is getting more difficult for the countries.”

Singapore lawyers warn of 1998-like pain as debt defaults spread

Rajah & Tann Singapore LLP, Southeast Asia's largest law firm, reckons the region's rising bond defaults will inflict as much pain on creditors as the financial crises of 2008 and 1998.

Facing Default, Some Student Loan Borrowers Flee Abroad

Millions of Americans owe a collective $1.3 trillion in student loan debt, and roughly a quarter of them are behind in their payments. As they struggle to stay afloat, some have even sought refuge abroad, where it’s possible to escape student loan collectors – but only for those who plan never to return to the United States.

More Subprime Borrowers Are Falling Behind on Their Auto Loans

Rising delinquencies come as a warning sign that more loans may end up in default down the road, said John McElravey, an analyst at the bank. What may be most troubling, however, is that the default rate is already climbing, up to 12.3 percent in January from 11.3 the prior month. That is the highest rate since 2010, the data show.

Pension costs to rise for MBTA and its employees

Brian Shortsleeve, chief administrator of the Massachusetts Bay Transportation Authority, said Monday that the pension fund’s long-term liability will rise by $53 million to $868 million. That, in turn, will force the T to bump up its annual contribution to the fund by $8 million to $84 million for the year that starts July 1, he said.

Australia's mortgage debt marches to $1.4 trillion

At $1.384 trillion total outstanding debt has risen 218% from APRA’s reported $635 billion as at March 2008 when its published data series begins.

Watch all of the government debt in the world grow in real time

The U.S. owes nearly one third of total government debt with $18.91 trillion. That is 105% of its GDP and with a population of 322.8 million, is equal to $58,576 for every American man, woman and child. Annual interest comes out to $545.93 billion, which means American taxpayers are paying the equivalent of Apple Inc.’s market capitalization in interest every year.

ECB risks running out of bonds to buy unless rewrites rules

The ECB is widely expected to cut its deposit rate by 10 basis points to -0.4 percent on March 10 and economists polled by Reuters say the size of the bond-buying scheme could also be extended by 10-30 billion euros a month.

Illinois governor eyes blocking Chicago school debt

Rauner, who has called for a state takeover of the school district, said the board has the legal authority to block borrowings by districts found to be in financial duress. “The state board has never chosen to do that for the city of Chicago. I hope that never becomes necessary. But we’ve got to be ready to take action,” Rauner told reporters.

Trudeau Drops Campaign Promises and Goes All In With Deficits (Canada)

The same document shows the nation’s debt-to-GDP ratio will be rising in the coming fiscal year, not falling. Morneau also reiterated that balancing the budget in the near term would be “difficult.”

The Junk Debt Funds Threatening to Create an $88 Billion Logjam

With debt markets showing the first signs of life in weeks, Wall Street banks are trying to break a logjam that could leave them with big losses on $88 billion of risky corporate loans. They won’t get much help from one of their most reliable buyers.

G-20 Central Bankers in China Seek Alternatives to Currency War

Further raising the stakes are negative interest rates in economies from Japan to the euro area that account for about a quarter of global output. That means officials at the Feb. 26-27 meeting have even less monetary leeway to deal with disinflationary pressures than in past years, fueling calls for greater fiscal oomph, something that may prove difficult to make reality.

Japan finmin won't rule out chance of more fiscal stimulus

A senior U.S. Treasury official said Washington will call on G20 countries this week to use fiscal policy to boost global demand.

Helicopter drops might not be far away

The world economy is slowing, both structurally and cyclically. How might policy respond? With desperate improvisations, no doubt. Negative interest rates have already moved from the unthinkable to reality. The next step is likely to include fiscal expansion.

Get ready to be showered by helicopter money

The next likely option is “Hirp” – or helicopter money. And that is likely to involve some even crazier options, such as putting money into people’s banks accounts, mandating pay rises, or giving them the deposits for a house. None of it will work, of course – but that doesn’t mean we shouldn’t expect it to happen, or indeed position our portfolios to take advantage of it.

Venezuela's Descent Into World's Riskiest Sovereign Credit: Q&A

The country already tops measures of the world’s most miserable economy, with inflation of 181 percent last year, a currency that has collapsed on the black market to less than 1 percent of its official value and shortages of basic goods such as detergent and antibiotics. It’s a horrific turnaround for what was once one of the region’s most stable democracies, famous for its big cars, cheap gasoline and beauty queens.

Battered Brazil Carmakers Say Worst Isn't Over as Job Cuts Loom

Halfway through a two-year recession that’s forecast to be the worst since at least 1901, Brazil finds itself stuck in a grinding cycle of job loss and falling consumer spending. National unemployment has climbed to 9 percent as retail sales tank and industrial production contracts for 22 straight months, government reports show.

Sovereign-wealth funds could pull another $404 billion out of stock market

Sovereign-wealth funds, many of which were established by oil-rich nations to manage their petroleum-related windfalls, have been aggressive sellers of stocks and other securities as crude prices have tanked, and they may be prepared to sell significantly more if oil doesn’t recover.

J.P. Morgan adds $500 million to reserves against bad oil loans in 2016

The move comes as crude-oil prices have fallen about 12% so far this year and have plunged 34% over the past 12 months, putting the finances of energy companies under pressure.

Gold & Silver

Click to read the PM Daily Market Commentary: 2/23/16

Provided daily by the Peak Prosperity Gold & Silver Group

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."

5 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4237
S&P warns refinance risks growing for Asia-Pacific borrowers

Moody's Cuts Brazil's Rating to Junk

Nasdaq - ‎1 hour ago‎
SÃ O PAULO—Moody's Investors Service cut Brazil's sovereign-credit rating to junk status on Wednesday, making it the third major rating firm to yank the nation's investment-grade rating since September. Moody's put Brazil two notches into junk ...

China Opens Bond Market to Foreigners as Outflows Hurt Yuan

Bloomberg-6 hours ago
Hedge funds were not included, while foreign central banks and sovereign ... this month, giving foreigners improved access to the nation's stocks and debt.
 

Bank of Canada Taps Fed for Deputy Versed in Oil, Negative Rates

Bloomberg-10 hours ago
The bank is in uncharted territory as it contemplates whether to go to negative interest rates to spur growth. “It is a relatively important time for the bank,” said ...

Venezuelan Central Bank Prepares to Issue New Bills

Latin American Herald Tribune-17 hours ago
CARACAS – The Venezuelan Central Bank, or BCV, is preparing to issue new 500- and 1,000-bolivar bills, equivalent to $2.50 and $5 at the highest official ...

Fleeing Negative Rates Swedes Are Finding Haven With Taxman

Bloomberg-3 hours ago
Last week, it also flagged for the possibility to expand asset purchases to inflation-linked bonds as its seeks to add stimulus and revive inflation, which hasn't met ...

Soaring household debt deepens woes

Korea Times-6 hours ago

Korea's outstanding household debt topped 1,200 trillion won ($971.6 billion) for the first time last December, up 41.1 trillion won from three months earlier on ..

Japan Got Paid $464 Million to Borrow Thanks to Negative Yields

Bloomberg-20 minutes ago
Japan's national debt was almost 1,045 trillion yen at the end of December, and the country plans to sell a total 152.2 trillion yen of bonds to financial institutions ...

South Africa Cuts Borrowing as Debt Ratio Climbs Above 50%

Bloomberg-3 hours ago
Gross government debt is set to climb to 50.5 percent of GDP in the year through March from ... The borrowing requirement will be 151.3 billion rand in 2018-19.

S&P warns refinance risks growing for Asia-Pacific borrowers

Reuters - ‎10 hours ago‎
But it said that if borrowers chose to refinance all the rated corporate debt that matures in the next five years with bonds, average issuance would need to increase by $5 billion annually to meet scheduled maturities. Of the $961.4 billion of S&P ...

Saudi inflation soars to five-year high on subsidy cut

Daily Mail-5 hours ago
In a bid to counter a record budget deficit due to sharp declines in oil prices, ... The world's top crude exporter posted a budget deficit of $98 billion last year and ...

With economic jitters, gold imports surge 85 percent

New Kerala - ‎6 hours ago‎
India's gold imports surged 85 percent in January 2016, indicating how, as stock markets decline and some economic indicators worsen in the run up to Finance Minister Arun Jaitley's third budget, Indians are falling back on a traditional mode of ...

Chicago State University spring break cancelled due to budget ...

WLS-TV-15 hours ago
Thousands of Chicago State University students are being forced to change their ... was scheduled for March 14-19, due to the Illinois state budget impasse.

State budget director offers little input on state pension woes

Hopkinsville Kentucky New Era-10 hours ago
State budget director offers little input on state pension woes ... will solve the state's more than $30 billion of unfunded liabilities in its ailing pension systems.

Duggan: City will deal with its $490M pension shortfall

Detroit Free Press-14 hours ago
He said he will ask the City Council to approve $10 million in extra pension ... of what the city will have to pay in unfunded liabilities to the pension plans over a ...

 

robie robinson's picture
robie robinson
Status: Diamond Member (Offline)
Joined: Aug 25 2009
Posts: 1220
Mare settled?

a rhythmic reminder.

VeganDB12's picture
VeganDB12
Status: Platinum Member (Online)
Joined: Jul 18 2008
Posts: 757
Good for the younger fillies and stallions

but what is an old mare to do?  Actually I am settled but will never work the land and will never own my own stead at this point due to a back injury and poor choices of mates. Still..

I joke. My plan is to have enough lentils and beans to sit by my crock pot and put a scoop of each in with my dried onions. Each day. Just live and watch the show. From my little abode. Don't anyone come mess with me though...the ex mates are pretty tough fighters lol.   My goal is to strive to live on almost nothing and still live and have some joy.  I suppose that is settled enough. :)

robie robinson's picture
robie robinson
Status: Diamond Member (Offline)
Joined: Aug 25 2009
Posts: 1220
contentment?

"with contentment is great gain" very good, VeganD. However, I'ld have to put the lentil soup over some Polenta(with alot of crushed garlic)for variety.

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4237
Citi downgrades 2016 global growth forecast to 2.5 percent

Negative interest rates: More bad news for savers

MarketWatch-4 hours ago
based founder and editor of DepositAccounts.com, says his readers have been reaching out to him, nervous about the implications of negative interest rates.
 

Japanese institutions spend up big on foreign securities as negative ...

Reuters-9 hours ago
The BOJ's decision to introduce negative interest rates last month drove down domestic bond yields, with Japanese government bonds (JGBs) of up to 10 years ...
 

China urged to tolerate much higher fiscal deficit

MarketWatch-4 hours ago
Japan also recently introduced negative interest rates. Central-bank holdings of bonds and other assets in the U.S., Europe and Japan are stretched.

China could raise budget deficit to 4% of GDP : central bank official

China Daily-12 hours ago
In an article published by " The Economic Daily ," director of the central bank ' s surveys and statistics department Sheng Songcheng said the deficit increase ...

Bad Loans No Barrier in China

Bloomberg-14 hours ago
New advances soared to a record 2.51 trillion yuan ($384 billion) in January and the specter of soured debt is looming large: Credit Binge. Chinese bank loans ...

Shanghai stocks close down over 6% on economy worries

Yahoo News - ‎8 hours ago‎
"The economy hasn't shown signs of stabilisation and policies are still coming out one after another," Central China Securities analyst Zhang Gang told AFP. China's economy grew 6.9 percent in 2015, its slowest pace in 25 years, and policymakers have ...

China Feb official factory PMI seen shrinking for 7th month

Reuters-9 hours ago
Banks dished out a hefty 2.51 trillion yuan ($384.23 billion) of new loans last ... to take on new debt to expand, with persistently sluggish demand at home and ...

Citi downgrades 2016 global growth forecast to 2.5 percent

Reuters-13 hours ago
They said they anticipate more policy easing from the European Central Bank and Bank of Japan, but "suspect this will provide only limited stimulus." They noted ...

Ontario's net debt expected to exceed $300 billion in Thursday's ...

CTV News-3 hours ago
Progressive Conservative Leader Patrick Brown says interest payments on Ontario's debt are over $11 billion a year, and wants to see "immediate action" in the ...

Alberta's 2016 budget deficit could top $10 billion, finance minister ...

Edmonton Journal-16 hours ago
The steep and prolonged collapse of world oil prices has doubled Alberta's deficit projection for next year to more than $10 billion, Finance Minister Joe Ceci ...

Biggest Wave Yet of U.S. Oil Defaults Looms as Bust Intensifies

Bloomberg-13 hours ago
Energy XXI Ltd. and SandRidge Energy Inc., oil and gas drillers with a combined $7.6 billion of debt, didn't pay interest on their bonds last week. They have until ...

Pennsylvania's skyrocketing public pension tab gets a tote board in the Capitol

PennLive.com - ‎20 hours ago‎
Barry Shutt unveiled a public pension debt clock that, second-by-second, is now available for passers-by in the East Wing Rotunda to take in and - whether they totally understand it or not - see the relentless nature of this problem. "I just wish that ...

The $400-billion US money-fund exodus with banks in its crosshairs

The Globe and Mail-21 hours ago
Investors are poised to pull as much as $400-billion from U.S. money-market funds that buy such debt, known as commercial paper, JPMorgan Chase & Co.

European Banks' $200 Billion Oil Slick

Bloomberg-2 hours ago

That's more than the U.S. banks' estimated $123 billion of outstanding loans and .... an investment spree supported by debt was quickly followed by a collapse in ..

Illinois budget battle leads Moody's to downgrade several state ...

Washington Post-2 hours ago
An epic budget battle in Illinois led Moody's Investors Service to downgrade the credit ... [George Mason student shares debt struggles at congressional forum].

Puerto Rico needs restructuring to avoid cascading defaults: Treasury

Reuters - ‎12 minutes ago‎
"As the cascading defaults and litigation unfold, there is real risk of another lost decade, this one more damaging than the last," Weiss said. A legislative solution for Puerto Rico, battling with $70 billion debt, may be edging closer. Legislation to ...

Detroit's pension shortfall raises red flags about bankruptcy plan ...

Michigan Radio-3 hours ago
“There were concerns coming out of the bankruptcy about the pension system and ... said Eric Scorsone, a municipal finance expert at Michigan State University.

 

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