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- U.S, U.K. Move Closer To Losing Rating, Moody's Says
- Monday Morning – Moody’s Makes More Negative Noises
- History Suggests That The Winners From A Recession Tend To Win Big
- China's Hidden Local Debt
- Food Prices Push Indian Inflation Up To 9.9%
- Misconceptions about Money and Velocity
- Useless Regulation: Dodd Bill "Empowers" Fed To Do Nothing
- Full Highlights From Dodd's Financial Reform Bill
- Mortgage Delinquencies At Historic Highs
- Matthew Simmons' Awesome Presentation On The Coming Oil & Water Shortage
- Petrol To Hit 120p A Litre, As Motorists 'Mugged' By Oil Companies
Economy
U.S, U.K. Move Closer To Losing Rating, Moody's Says (Christian W.)
The governments of the two economies must balance bringing down their debt burdens without damaging growth by removing fiscal stimulus too quickly, Pierre Cailleteau, managing director of sovereign risk at Moody’s in London, said in a telephone interview.
Monday Morning – Moody’s Makes More Negative Noises (Ilene)
Under the ratings company’s so-called baseline scenario, the U.S. will spend more on debt service as a percentage of revenue this year than any other top-rated country except the U.K., and will be the biggest spender from 2011 to 2013, Moody’s said today in a report.
History Suggests That The Winners From A Recession Tend To Win Big (nncita)
If low, or even negative growth is the new reality, the implications are profound, both for the public finances (published plans for fiscal consolidation in Europe and America are heavily dependent on a return to robust growth) and the way companies are managed. Established business models need to be rethought and companies must adapt to survive. Recessions quickly sort businesses into winners and losers. Recessions can therefore produce seismic industrial and corporate change, and somewhat counter-intuitively, really serious ones can catalyse great leaps forward in innovation and productivity.
China's Hidden Local Debt (Christian W.)
The local-debt problem has been around for years. At the beginning of this decade, one report put the amount of indebtedness of provincial and lower-tier governments at $600 billion, but most assessments then endorsed far lower figures as almost nobody wanted to sound the alarm.
Food Prices Push Indian Inflation Up To 9.9% (Christian W.)
Since October, when the government began reporting monthly - instead of weekly - data, headline inflation has increased nearly seven-fold.
That's been driven by spiralling food prices due to drought and rising rural incomes, but it has begun to spill over into non-food areas as India's economy picks up and global commodities prices rise, putting pressure on margins of manufacturers.
Misconceptions about Money and Velocity (Brian C.)
Misconception #1: Money Supply Needs To Grow
"Now, there is no exact way to determine the right size of the money supply. It definitely needs to grow each year by at least the growth in the size of the economy, the population, and productivity, or deflation will appear. But if money supply grows too much then you have inflation."
Useless Regulation: Dodd Bill "Empowers" Fed To Do Nothing (Brian C.)
In what amounts to a dog and pony show without dogs and without ponies, Dodd Bill Empowers Regulators to Limit Size of Financial Firms.
Full Highlights From Dodd's Financial Reform Bill (Brian C.)
The newly created Financial Stability Oversight Council will focus on identifying, monitoring and addressing systemic risks posed by large, complex financial firms as well as products and activities that spread risk across firms. It will make recommendations to regulators for increasingly stringent rules on companies that grow large and complex enough to pose a threat to the financial stability of the United States.
Mortgage Delinquencies At Historic Highs (Ben Johnson)
And here's the latest report from Lender Processing Services out of Jacksonville, Fla.: Delinquency rates have hit historic highs. More than 7.4 million home loans nationwide are in some stage of delinquency or foreclosure, with another 1 million properties either bank-owned or sold out of foreclosure. An incredible 10% of all U.S. loans are delinquent.
Energy
Matthew Simmons' Awesome Presentation On The Coming Oil & Water Shortage (Christian W.)
There are few easy substitutes for oil, and there are no substitutes for potable water.
Petrol To Hit 120p A Litre, As Motorists 'Mugged' By Oil Companies (joemanc)
The average petrol price across the country is 115.9p for a litre of unleaded and 116.6p for a litre of diesel, according to Petrolprices.com. However, the Treasury is due to add a further 3p on April 1.
Even without this increase the price at forecourts is due to hit 120p very soon, according to the AA. This would overtake the previous high of 119.7p, which motorists suffered from in July 2008.
Please send article submissions to: dd@chrismartenson.com
- DailyDigest's blog
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"Education budget cuts have prompted school districts across the state to send out nearly 22,000 pink slips, notifying teachers and other certificated employees they may not have jobs next year.
"To date, 21,905 pink slips have been issued to teachers and other staff around the state this year," Jack O'Connell, state superintendent for public instruction, said in a news release today. "While I understand the governor and the Legislature have tough decisions to make, these budget cuts are devastating our schools and impacting our ability to do the most important job in our society, that is, to teach our children.""
...................1A) California Assembly speaker OKs $132,000 in staff pay hikes, promotions
"New Assembly Speaker John A. Pérez handed out pay increases or promotions totaling nearly $132,000 per year the day he was sworn in this month, including a $65,000 raise to his chief of staff.
Of eight staff members targeted, Sara I. Ramirez received by far the largest raise, jumping her pay from $125,256 to $190,008 for serving as Pérez's top assistant, according to documents obtained under state open-records law."
"If Rep. Phil Hart, R-Athol, has his way, Idahoans could soon be able to pay their taxes with silver medallions produced in the state of Idaho.
Hart said the bill serves several purposes, including creating jobs in Idaho, as well as giving citizens in the state a way to store wealth in what he believes is a more stable form of currency. Hart said that though the U.S. Constitution dictates that the government should use nothing but gold or silver for public currency, the federal government has essentially left that provision “in the rear view mirror.” The bill would give the state treasurer the ability to work with silver processing companies to develop a state medallion that the state would then be forced to accept as payment for taxes."
"The world's five biggest AAA-rated states are all at risk of soaring debt costs and will have to implement austerity plans that threaten "social cohnesion", according to a report on sovereign debt by Moody's.
By Ambrose Evans-Pritchard
The US rating agency said the US, the UK, Germany, France, and Spain are walking a tightrope as they try to bring public finances under control without nipping recovery in the bud. It warned of "substantial execution risk" in withdrawal of stimulus. "
"March 16 (Bloomberg) -- The world shipping market is mired in its biggest slump since World War II, said James Fisher & Sons Plc, a U.K. hauler of oil products.
“This is the worst shipping recession since the war,” Chairman Tim Harris said today in a telephone interview. "
"March 15 (Bloomberg) -- Bank of America Corp., Wells Fargo & Co. and U.S. lenders may face as much as $64.8 billion in losses on delinquent mortgages that Fannie Mae and Freddie Mac can ask them to buy back because they are fraudulent loans, Compass Point Research & Trading LLC said."
"The state's teachers retirement fund had hoped four years ago that a flourishing bull market would help make up for a big projected shortfall. Now the fund is $43 billion behind as of June."
"The 97-year-old pension plan must ask the state Legislature, the governor and taxpayers for billions of dollars. Getting that money -- even with an expected massive lobbying campaign and a bruising political battle -- is no sure thing.
CalSTRS' board is "delusional if it expects the state to bail them out," said Marcia Fritz, president of the California Foundation for Fiscal Responsibility. The Sacramento group wants to reduce pension benefits for newly hired government workers, another way to reduce the shortfall.
"It will be difficult to attract support" from legislators, let alone the public, Ehnes acknowledged."
"New Jersey taxpayers face a decades-long
continuation of six-figure annual pension
payouts and other costly retirement benefits
promised to public employees.
The reason: State law guarantees that
pensions for existing workers can't be
altered. Even a package of pending legislation
— hailed as the remedy for a system that's
short $45.8 billion — would apply only to
new employees and not to the current
workforce of some 450,000.
The guarantee, in a 1997 law signed by
Republican Gov. Christie Whitman, has
served to insulate public workers from
wrenching economic realities that prevail in
the private sector."
"Strapped states, facing up to $180 billion in budget deficits in the next fiscal year, are going hat in hand to Washington.
California wants $6.9 billion in federal money for the next fiscal year, and Republican Gov. Arnold Schwarzenegger says he'll have to eliminate state health and welfare programs without it. Illinois, facing a $13 billion deficit that equals roughly half of the state's operating budget, has what it dubs a stimulus team and a group in Washington pressing for additional state aid.
Among other things, Illinois is hoping the federal government will keep paying a higher share of Medicaid costs. "That's $600 million we desperately need," said Kelly Kraft, a spokeswoman for Democratic Gov. Pat Quinn's budget office. Those funds already are counted in the governor's budget proposal."
"Anticipating a huge crash in state funding, municipal leaders urged legislators Monday to expand their ability to levy taxes and fees, particularly through a regional sales tax surcharge.
But while members of the Finance, Revenue and Bonding Committee agreed communities need new revenue sources, lawmakers from both parties expressed fears that Connecticut could be left with a patchwork tax system that helps one region while harming another.
"The next few years are going to look pretty bleak for all of us," East Hartford Mayor Melody Currey said, adding she has had to slash programs and lay off town workers for two years now, and fears things are about to get worse. "It's the most unpleasant part of the job.""
"The government’s plans to cut back the budget deficit are 'not sufficiently ambitious' and need to be 'significantly reinforced', a European Commission report is expected to warn this week. "
.................10A) Britain rejects EU calls for more fiscal cuts
"My feeling is, in terms of spending, my colleagues have gotten it," Paterson said. "They realize we can't spend now, which is a huge step.
"But now the problem is, how do you balance a budget when you owe $9.2 billion and you don't want to tax - because we don't - and you don't want to borrow because that will injure our credit rating," Paterson said. "It's going to have to be all cuts, and I think they are having a hard time grappling with it."
"Take Kangbashi, a huge new city near Erdos in Inner Mongolia.
"Build it and they will come" must be the motto of the city fathers, for Kangbashi's broad boulevards and plazas are all but deserted, visitors say. Media reports describe similar ghost towns dotted around China.
"Clearly a problem is brewing, but the timeframe in which it becomes an issue from an investment perspective is not clear," a manager at a large U.S. equity fund said as he scrolled through photographs he had taken in Kangbashi.
Monumental public buildings out of all proportion to the size of the local population are common across China."
"WASHINGTON — County Farm Bureau presidents from across Ohio traveled to Capitol Hill in an effort to tell elected officials farmers aren’t taking it any more and they want action."
"Historically, a debt-to-GDP of north of 90% and a deficit-as-a-percentage-of-GDP north of 10% have been the lines in the sand to watch. As governments cross these barriers, they enter the Pig Zone."
The Domestic Pigs(1) Pew Center
(2) Realty Trac
(3) Bureau of Labor Statistics
Surplus All But Gone for Indiana
Junk bond maturity sparks financial fears or Junk Bond Avalanche Looms for Credit Markets
Jobless benefits put Wisconsin in hole
Bank sees risk of GDP fall in Britain
Toledo sends layoff notices to 125 officers (21% of their police force)
Bobb: Close 45 Detroit schools (Detroit..."would bring total school closures to 140 since 2005 -- more than half the district")
District U-46 board approves layoffs for 1037 employees (Elgin, Illinois...25 percent of staff in the state's second largest school)
Nearly 1 in 5 Stanislaus County educators get layoff warnings (CA)
State Police Consider Massive Layoffs (Illinois...464 troopers)
Mayor Ditches Plan to Fire All City Employees (Las Vegas...instead lays off 141 employees)
State tax collections drop; Gov. Bobby Jindal plans for more budget cuts (Louisiana..creates up to $400 million deficit)
NC budget gap likely to require more spending cuts
About 1 in 4 in California lack health insurance, a UCLA study finds (Because of "soaring unemployment")
140000 in RI have no health insurance, the highest level ever
House may try to pass Senate health-care bill without voting on it (The tactic -- known as a "self-executing rule" or a "deem and pass""
KS House to debate tax hike on churches, utility bills
San Diego faces another $25 million in cuts (half is pension costs)
Along with the Feds, municipality's borrowing has been out of control for a decade. The time to pay is drawing near.
http://dailyreckoning.com/municipal-deflation-consequences-of-the-greatest-speculation/
"With nothing learned, states and municipalities borrowed $23 billion in 2000 and $215 billion in 2007. One reason credit rained on bubbly school committees was the ever-rising revenue stream from real estate taxes: receipts increased from $254 billion in 2000 to $421 billion in 2008."
More proof that the leadership in Brokifornia is from another planet.
http://www.sacbee.com/2010/03/15/2608797/new-speaker-grants-assembly-pay.html
New Assembly Speaker John A. Perez gave his top aide an annual pay increase of nearly $65,000 - about $5,400 per month - upon becoming leader of the lower house, records show.
I found this article interesting:
http://caps.fool.com/Blogs/ViewPost.aspx...
Not so much because it is novel, but because it literally restates one of the central themes of the CC: that infinite growth is not possible in a world of finite resources. The article further acknowledges the "growth is good" paradigm in which we still live.
It also provides the chart on this page, which looks very familiar as well: http://www.efn.org/~patrickb/grf.jpg
-formerly StudentOfJefferson, reporting live from the Washington D.C. Metro Area
Great inflation vs deflationary article on The Automatic Earth: http://theautomaticearth.blogspot.com/20...
Great inflation vs deflationary article on The Automatic Earth: http://theautomaticearth.blogspot.com/20...
Account deactivated per user's request.
I found this article interesting:
http://caps.fool.com/Blogs/ViewPost.aspx...
Not so much because it is novel, but because it literally restates one of the central themes of the CC: that infinite growth is not possible in a world of finite resources. The article further acknowledges the "growth is good" paradigm in which we still live.
It also provides the chart on this page, which looks very familiar as well: http://www.efn.org/~patrickb/grf.jpg
Mike,
The population chart says it all, doesn't it? A perfect picture of unsustainability. It is just a question of what will set the mechanism into motion that sends us cascading down the other side of the peak.
Davos,
Much of the deficit/debt is money we owe ourselves (social security, medicade), and much is spent on things that can quickly be stopped (2 wars). Evidence to this spending ending is in every state budget cuts that are growing (or should I say shrinking?) exponentially. Budgets will come down, and come down hard, and credit will continue to contract faster than they can print the money. Japan, here we come. As deflation sets in, demand for treasuries will increase, and rates will stay super low.
Although Davos, there is nothing I could do or say to you to get you to move from your stance...this I know....so perhaps we should just agree to disagree! While the core ideas on this site are at the core of what we both believe, the road ahead couldnt look more different in our eyes! Ha....in any event, I learn from the disagreement.
Re Williams laying things out for a 4 year old to understand - perhaps, but Williams is like a 4 year old in that he doesnt acknowledge that we will adapt, and change policies - - - that will will not just drive over the cliff without every effort to turn the wheel or apply the breaks. Unfortunately for his argument, economics and society dont exist in a vacuum. I say this being a big fan of his work and intellect - just not of his forecasts.
This is an interesting document released in Feb. 2010 by the US Joint Forces Command. It is the "Joint Operating Environment" report and guess what one of the major concerns / focuses of our military is right now? Resource wars and resource scarcity. Current events form future trends...?
http://www.jfcom.mil/newslink/storyarchi...
-formerly StudentOfJefferson, reporting live from the Washington D.C. Metro Area
Davos,
Much of the deficit/debt is money we owe ourselves (social security, medicade), and much is spent on things that can quickly be stopped (2 wars). Evidence to this spending ending is in every state budget cuts that are growing (or should I say shrinking?) exponentially. Budgets will come down, and come down hard, and credit will continue to contract faster than they can print the money. Japan, here we come. As deflation sets in, demand for treasuries will increase, and rates will stay super low.
Although Davos, there is nothing I could do or say to you to get you to move from your stance...this I know....so perhaps we should just agree to disagree! While the core ideas on this site are at the core of what we both believe, the road ahead couldnt look more different in our eyes! Ha....in any event, I learn from the disagreement.
Re Williams laying things out for a 4 year old to understand - perhaps, but Williams is like a 4 year old in that he doesnt acknowledge that we will adapt, and change policies - - - that will will not just drive over the cliff without every effort to turn the wheel or apply the breaks. Unfortunately for his argument, economics and society dont exist in a vacuum. I say this being a big fan of his work and intellect - just not of his forecasts.
Account deactivated per user's request.
They have gone to far, for sure, but this arguement is the same as thinking the pensions are at the point of no return. Sure, the headlines are fantastic and scary - but the pensions are still there - and the average public pension is over 80% funded. What does this mean? It means that people will get 80% of what they were promised. Bad? you bet, and it has huge impact on our economy (deflationary I might add) - however, I am quite sure that 90% of the population can live with "only" getting 80% of what they thought they would get at retirement.
What about social security benefits starting 5....and then 10 years later. Hmmm, problem almost disappears. Look, we are in serious financial trouble, but we have exits, there are options. The options are whats happening all over the country - Budget cuts!!! Kansas City closing 50% of their schools for example. This is the quick way to buy lots and lots of time, and its the way to deflation, and the way out of any potential currency collapse.
Our leaders are idiots sure, but they are quickly losing the power to continue the stupidity - and the evidence is widespread. These last few months, courts are giving the nod to breaking union contracts....again, deflationary - and helps budget issues.
If you were going bankrupt Davos, you wouldnt just go spend more like a maniac (well, most likely), you would first try everything to avoid it. We are just starting that process.