Important News - Dec. 04

• 1) China Hints Sticking to Dollar Despite Worries

“BEIJING (Reuters) - China has maintained a consistent allocation of its foreign exchange reserves across different currencies, a senior official said on Friday, suggesting that any diversification away from the dollar has been gradual.”

• 2) New Analysis Points to $1 Trillion Wage Loss through 2012

“The report, “The $1 Trillion Wage Deficit,” estimates the earnings loss of Americans from the beginning of the recession through 2012. The findings show that U.S. workers will lose a total of over $1 trillion in wages and salaries as a result of the Great Recession and the economy will continue to shed hundreds of thousands of jobs over the next three years under current policy.”

• 3) FACTBOX-U.S., European bank writedowns, credit losses

“Dec 3 (Reuters) - Top U.S. and European banks have lost more than $1 trillion from toxic assets and bad loans since the start of 2007, and losses were expected to top $2.8 trillion from 2007-10 with roughly two thirds from loans and the remainder on securities, according to International Monetary Fund forecasts. U.S. banks were expected to take a $1 trillion hit and European bank losses will reach $1.6 trillion, the IMF said at the end of September. It said U.S. banks were about 60 percent through their losses, but British and eurozone banks were only 40 percent through their writedowns. [ID:nLU99400] Below is a list of estimated losses (in billions of dollars at current exchange rates):”

• 4) Oklahoma’s Medicaid provider to seek more funding

“More people are enrolled in Oklahoma’s Medicaid program than ever before, but the health care services they receive will likely be cut as officials roll back costs due to a deepening statewide budget shortfall, the program’s chief executive said.”

“”We are setting a record every day,” Fogarty said Wednesday.

Enrollment in Medicaid — which serves the elderly, disabled, and children of low-income families with a combination of state revenue and federal matching funds — is at an all-time high as more and more people lose their jobs and their health insurance due to poor economic conditions.”

• 5) Atlanta’s unfunded pension liabilities triple

““Either liabilities continue to escalate at a rate that forces the city into insolvency and causes us to lay off more and more employees, or we have pension reform,” Reed said in an interview late yesterday.

Pension increases boosted Atlanta’s obligation for retiree benefits by 75 percent from 2000 to 2007, to $2.9 billion, Moody’s Investors Service said. The portion not covered by investment assets, the so-called unfunded liability, tripled to $1.2 billion, the New York-based credit-rating company said.”

• 6) Detroit:  ”The next few weeks will determine if they will survive“

“Detroit –The city’s finances are so shaky that officials repeatedly borrow money to cover day-to-day bills, rarely go after deadbeats and have sat on millions of dollars in property tax overpayments for years, according to two recent audits.

Mayor Dave Bing has warned the city is courting receivership unless he makes drastic changes, but two little-noticed audits offer startling glimpses of how quickly the city is burning through cash, losing revenue and failing to implement seemingly routine controls of spending.

Detroit, which faces a $300 million deficit, remains “one of the weakest (financially) in the nation” and “significant economic conditions continue to cast doubt on the city’s future operation,” outside auditors wrote last month in a 227-page audit of the 2007-08 finances.

“In a nutshell, the city is insolvent,” said Joe Harris, the city’s former chief financial officer under one-time interim Mayor Ken Cockrel Jr.

“The next few weeks will determine if they will survive.”"

• 7) Arizona budget measures may include a Sun Tran takeover and 4-day school week

“Arizona’s line of credit is maxed out. Just days after outside lender Bank of America handed over $700 Million to the state. That money has been spent.”

“Willcox schools moving to a 4-day week to save money. School board members approved the schedule change Tuesday night.”

• Loss of eight DAs means cutbacks of misdemeanor low level crimes (Stockton)

“One of the fallouts from the ongoing government budget crisis may mean most misdemeanor crimes committed in San Joaquin County will go unprosecuted.”

“The end result will be the virtual elimination of all misdemeanor prosecutions in the Stockton office with the exception of domestic violence and driving under the influence.”

• 9) Lorain County to suspend bus service

“Lorain County Transit will terminate public bus service on all 14 of its regular routes in January, because the county just can’t afford it any longer.

Lorain County Commissioners predict 300 people could lose their jobs, simply because they will no longer will have a way to get to and from work.

“The bus is not just a matter of convenience, but a necessity,” commissioners Ted Kalo and Lori Kokoski told WKYC-TV.”

• 10) Taxes, taxes everywhere (CNN Money)

“Strapped states hike taxes and fees by $24 billion for fiscal 2010. Residents pay more for speeding, entering horses in races and digital downloads.”

“”These are the highest tax increases ever,” said Scott Pattison, executive director of the National Association of State Budget Officers, which co-produced the semi-annual report with the National Governors Association.

And more taxes increases are likely on the way, experts said.

States are wrestling with some of the worst budget deficits since the Great Depression. Rising unemployment has wreaked havoc on their vital revenue streams of personal income, corporate profits and sales taxes.”

• 11) ‘Too Much Risk’ Entering Loan Market Amid Debt Rally

“Dec. 4 (Bloomberg) — Borrowers are enjoying looser financing terms following a record 46.6 percent rally in high- yield, high-risk loans, raising concern that investors will face steeper losses if companies default.

“Issuers have become emboldened,” Scott D’Orsi, a Boston- based partner at Feingold O’Keeffe Capital LLC who oversees $1.3 billion of assets, said in a telephone interview. “I’m concerned investors are beginning to allow too much risk to creep into the leveraged loan market.””

• 12) “The cost of these programs are escalating faster than the state’s ability to pay for them” (Vermont pensions)

“The discussion about possible changes to the retirement programs of teachers and state employees came about because of the fiscal difficulties facing state government.

The state of Vermont will be obligated to put aside $73.5 million this year for those retirement systems and, without changes, it will be $103.5 million next year “a $32 million one-year increase in a year the state is facing at least a $90 million deficit,” according to the state treasurer’s office.

The collapse of financial markets is a large part of the reason for the increase. So is the increased number of retirees: This year there are 2,800 more retired teachers and state employees than in 2003, according to the treasurer.

“The cost of these programs are escalating faster than the state’s ability to pay for them,” State Treasurer Jeb Spaulding said.”

• 13) Monetary Base goes higher again

Read the numbers under “Latest Observations”

• 14) Here’s where the jobs were on today’s report

“Four sectors, including the government, added jobs last month. Manufacturing payrolls fell by 41,000 after dropping 51,000 in October.

The construction sector shed 27,000 jobs, a sharp easing from the average 63,000 decline seen in the prior six months, while the service-providing sector added 58,000 workers, up from an addition of 2,000 jobs in October.

Professional and business services added 86,000 jobs, while education and health services increased payrolls by 40,000. Temporary help employment rose by 52,400, building on other recent gains.”

……….14A) The services sector gained 58,000 jobs last month, while manufacturing and construction shed 69,000 positions. Education and health services added 40,000 jobs, and government employment rose 7,000.

………….The U.S. dollar is over 1% higher, while gold has fallen more than $40 on this jobs report. I don’t know what they’re smoking, but those attending this U.S. dollar party should know better.