Daily Digest - November 10

• 1) Fitch Says U.K. Rating Most at Risk Among Top-Rated...(then warns about U.S. AAA Rating)

"The U.S.’s rating also might be at risk of a review if its fiscal position does not stabilize in the next couple of years, Riley was reported by Reuters as saying in a television interview."

  1A) Japan faces risk of ratings downgrade over debt (more info on Japan)

• 2) Shocking numbers: Real unemployment tops 22% (FROM JEROME CORSI'S RED ALERT)

""Understanding that the real level of unemployment in October 2009 was closer to 22 percent than to the officially reported 10 percent is an important corrective," Corsi wrote, "especially if we are to appreciate the extent to which a Dow at or above the 10,000 benchmark is nothing more than another Fed-created bubble."

With millions of jobs outsourced to China and India under free-trade globalism, the dollar weakness that accompanies most recessions is not stimulative, he explained, largely because the U.S. has lost so many manufacturing jobs that are never returning to its shores."

(Posted here last Friday by r101958)

"Here is a more accurate number:

From SGS: "Adding the excluded long-term discouraged workers back into the total unemployed, unemployment more in line with common experience — as estimated by the SGS-Alternate Unemployment Measure — rose to about 22.1% in October, up from 21.4% in September. See the Alternate Data tab at www.shadowstats.com for a graph and more detail.""

• 3) Bill Gross on CNBC...China and Japan lose 13% on U.S. Treasuries (at 4:30 on Video)

 "Gross notes that over the last year alone the depreciating dollar means that every single Treasury purchased by China, Japan etc with a 1 to 2 % yield has essentially generated a negative 13 to 14% return. Yes, NEGATIVE 13 to 14% return."

• 4) David Rosenberg on How We Get to $2,750 Gold

"If India were to lift is gold share of FX reserves from 6% to 20%, where it was during the strong U.S. dollar policy days of 15 years ago, we estimate that gold would go to $1300/ounce.

If China were merely to copy what India just did and raise its share to 6%, then gold would go to $1,400/ounce, based on our in-house analysis.

If the USA were to go back to a 40% ratio of gold reserves to money supply (using the monetary base), where it was a century ago when the Fed was first created, from 17% currently, that would equate to three years’ supply of bullion, and alone take the gold price up to $2,750/ounce, based again on our research on price sensitivities to central bank buying activity.”"

• 5) Banks face increase in funding costs

"Banks around the world face increases in funding costs that could cut profits and hit their customers as they look to re­finance $7,000bn-plus in short-term debt expiring in the next three years with longer-dated bonds, according to research released on Tuesday.

Institutions seeking to reduce their reliance on short-term paper will have to pay up because interest rates are likely to rise and governments will stop supporting the financial system, the study by the credit rating agency Moody’s concludes."

"Moody’s estimates that a lender wanting to refinance a short-term government-guaranteed bond with 10-year paper could see costs rise nearly 7 percentage points"

  (More info)

• 6) Fed: GMAC to receive more bailout money

"GMAC, a crucial player in the U.S. auto industry, has been unable to raise the $11.5 billion regulators said it needed after stress test results were announced in May. The Fed says the finance company is expected to close the gap with more money from the $700 billion financial bailout.

GMAC, already the recipient of $12.5 billion in taxpayer infusions, is negotiating with regulators over how much more it will receive."

• 7) Harvard Profs: This Crisis Is Not Over

"The global economic crisis is not over, said Harvard University professors Kenneth Rogoff and Niall Ferguson, challenging the G20 group of wealthy countries' assumptions that the world is on the road to recovery.

Public spending in the form of bailouts and stimulus packages will create a debt burden for the world's governments, the two professors told Bloomberg.

“The financial crisis may eventually morph into a government-debt crisis,” says Rogoff, former chief economist at the International Monetary Fund."

• 8) Sprint Adds 2,500 More Layoffs to Its Roster

"Five days after announcing dozens of layoffs in its wholesale unit, Sprint Nextel Corp. (S) said it’s cutting hundreds more jobs – up to 2,500 – by the end of the year."

• 9) Christie may declare a financial emergency (New Jersey)

"As he seeks concessions from state workers to balance his first budget, Gov.-elect Chris Christie is examining the possibility of declaring a financial emergency in the state, according to an official familiar with his plans."

•  10) City of Phila. Still Bleeding Red Ink; More Budget Cuts Ahead

"The Nutter administration on Monday convened a meeting with City Council members to deliver more grim economic news: the city has a new and unexpected budget deficit, topping $30 million.

Top aides to the mayor told councilmembers that despite months of cutbacks, the government at this point has a $31-million deficit in the current fiscal year, which ends next July."

• 11) Grand Rapids Looks to Lay Off 10 Percent of City Staff

"The City of Grand Rapids is facing a budget deficit of nearly $28 million for the year beginning July first. Grand Rapid's City Manager says its been a horrible process."I can only tell you that I am personally devastated. I have never had to do anything like this. This is certainly the saddest days of my life," said Grand Rapids City Manager Greg Sundstrom.The cuts are the result of declining income tax revenues which are on pace to fall 15 percent, and the year is not over."

• 12) Crisis mode declared on deficit (New York)

"State is "running out of money,' governor says in plea for cuts"

""Some say the deficit is not even as deep as we have described it. Some say the revenues are coming back, and others say Wall Street will bail us out. I suggest to you that that is wishful thinking, my colleagues," Paterson said. "And we do not have time to engage in it."

As soon as the $132 billion budget was created in April, fiscal critics were warning that it was built on overly rosy revenue projections and inflation-busting spending levels. Monday, Paterson joined in, warning lawmakers against making spending promises that cannot be kept or resorting to "phony solutions" for the deficit."

•  13) State tax revenue falls 17.8% in October (Georgia)

"The amount of revenue the Peach State pulled in from various taxes plunged 17.8 percent in October, the Georgia Department of Revenue reported Monday.

Georgia took in $1.14 billion last month, compared with $1.39 billion in October 2008."

• 14) State rep tells commission money woes to continue (Florida)

"WINTER HAVEN - State Rep. John Wood, speaking at a City Commission meeting Monday evening, presented a bleak picture of continuing budget woes on the state level that will trickle down to cities.

"The overriding issue will continue to be money, or lack of it," said Wood, R-Winter Haven, who represents District 65, which encompasses much of northeast Polk County and a portion of Winter Haven.

This means there will be no state budget requests from local governments because the funds aren't available to fill them.

"The economy is having a great toll on our government. The budget is going to be an extreme challenge," Wood said, adding that legislators will be dealing with a $2.5 billion deficit."

•  15) Median home prices fell nationwide in 3Q

"The national median price clocked in at $177,900, or 11 percent below the third quarter last year."

• 16) Ambac Financial points to possible chapter 11

"Ambac reported that, should the OCI decide to initiate delinquency proceedings in order to protect the interests of its policyholders, an event of default could occur with respect to Ambac’s debt (that is, the holding company debt), which would in turn accelerate principal totaling $1.64 billion, as well as terminate credit default swap contracts insured by Ambac Assurance. This in turn could liquidiate mark-to-market claims for underlying exposures in swaps totalling approximately $23 billion, the company said."

• 17) You bet OTB is hurting (New York)

"The city's teetering Off-Track Betting Corp. will seek permission to close as many as two-thirds of its 68 branches when it files a bankruptcy reorganization plan, The Post has learned.".....

"The state took over OTB from the city last year, after Mayor Bloomberg threatened to shut it down rather than spend taxpayer dollars to prop up a horse-betting operation.

One official said the state is in a bind because it could be on the hook for as much as $600 million in pension, health and other liabilities if OTB closes."

•  18) Schwarzenegger: This year's budget gap may hit $7 billion

"Gov. Arnold Schwarzenegger estimated Monday that California's budget will fall out of balance by $5 billion to $7 billion this fiscal year, on top of a $7.4 billion gap already projected for 2010-11.

If true, state leaders would confront at least a $12.4 billion to $14.4 billion problem when Schwarzenegger releases his budget in January. California currently has an $84.6 billion general fund budget."

• 19) As Foreclosure Nightmares Increase, Will More Homeowners Pay Off Their Bankers in Violence?

"The economic crisis revealed late-capitalism's central offense: Human beings are being transparently treated if they were mere transactions. And they're going postal over it."

• 20) State faces major spike in pension costs (Massachusetts)

"Without changes, the state is looking at a $2.3 billion pension appropriation next year, up from $1.4 billion, he said. Such an allocation would threaten state programs and services, he said. It would also add to a fiscal 2011 state budget gap estimated at up to $3 billion. The fiscal 2010 budget is already undergoing extensive and far-reaching changes to address a billion dollars’ worth of likely revenue declines and spending demands.

The state recently extended by two years its schedule for fully paying down its pension liability. Now another longer extension, one that may give systems the flexibility of delaying full funding until 2040, is getting serious attention on Beacon Hill. The current schedule calls for full funding in 2030."

• 21) Aging boomers strain pension funds (Florida)

"Now, Florida is headed for an even grayer future in the Baby Boomer retirement era, state economists and demographers predict. The consequences: worker shortages and severe strains on public pensions and government services.

By 2030, more than one in four state residents will be 65 or older – or 26 percent, compared to 17 percent today, the University of Florida Bureau for Business and Economic Research says"

•  22) Fire fighters pensions and retirement uncertain (Mobile, Alabama)

"The unfunded liability is $ 130,000,000 and the mayor and council members are surely aware of this growing figure of an unfunded liability of the police and fire fighters pension retirement plan."

• 23) Growth in  Iowa's unfunded pension liabilities

"Because of higher usage as well as recent market losses, the program faces $4.9 billion of unfunded liability, up from $2.7 billion a year ago. That amount, like a house loan, is amortized over a 30-year period.

The increase in liability has caused major concern among IPERS officials. While current retirements are not in jeopardy, the program faces major shortfalls in 20 or so years if the revenue equation isn't balanced now, they told the legislative Public Retirement Systems Committee Monday."

..........Everybody today seems to have one thing in common.

Utility Company Turns Restaurant Food Scraps Into Green Energy (M.W.)

great, now my 9 year old has a new excuse for not eating her vegetables

Good Read:

SOMETHING BIG IS ABOUT TO HAPPEN?

http://pragcap.com/something-big-is-abou-to-happen

A previously undiscovered asteroid came within 14,000 km of Earth last week, and astronomers noticed it only 15 hours before closest approach. On Nov. 6 at around 16:30 EST a 7 meter asteroid, now called 2009 VA came only about 2 Earth radii from impacting our home planet. This is the third-closest known non-impacting Earth approach on record for a cataloged asteroid.more.

They should rename the asteriod "Crap-your-pants".

Sheesh...If its not one thing it's another.

well it was 7 meters in size. If they can spot a man with satillites - you'd think they could be watching for asteroids with all that technology. Just shows where their intentions lie.  EGP

Depending on its composition, this asteroid could have broken up in the atmosphere and not done much damage at all.  When I was at the University of Arizona (learning to be an even bigger nerd), one of the uber-nerds at the Lunar and Planetary Laboratory pointed me to this wonderful calculator used to estimate asteroid/comet impact effects on the earth.  Try it out... you just need to enter in a handful of parameters (the page gives advice on inputting some values) and it'll tell you the impact effects. 

http://www.lpl.arizona.edu/impacteffects/

I used the assumption that the asteroid was crystalline rock composition coming in at a typical speed and angle; the calculator's results showed it would likely break up in the atmosphere.  So you'd probably get scattered chunks of rock rather than a big honkin' crater. 

I love that calculator... I can't even guess at how many hours I've wasted playing around with it.

- Nickbert

Senate Dems move to curb Fed's powers

http://news.yahoo.com/s/ap/20091110/ap_on_bi_ge/us_financial_overhaul