Important News - Dec. 12

• 1) Pa. teachers’ pension sees billions in costs ahead

“HARRISBURG, Pa. — The Pennsylvania Public School Employees’ Retirement System says it’s going to need more than $4 billion annually in additional taxpayer money in the coming years.

The pension system said Friday that its projected needs will rise from $617 million this year to $1.1 billion in July, and then hit nearly $4.2 billion in July 2012.

Those figures are despite a gain of nearly 9.2 percent on the system’s investments for the quarter that ended Sept. 30.”

• 2) Tough economy squeezes Pell Grant program

“WASHINGTON — An unexpected surge in college enrollment has created an $18 billion shortfall in the Pell Grant program, the biggest in its history.

An administration official told The Associated Press the program will cost $18 billion more than Congress and the White House had anticipated over the next three years. The official, who was not authorized to speak publicly about the budget, spoke on condition of anonymity.”

• 3) Barclays: Treasury Should Boost Fannie Lifeline to $300 Billion

“The U.S. Treasury may need to increase its lifeline to Fannie Mae beyond the total of up to $200 billion already made available if the economy deteriorates further next year, analysts at Barclays Capital said in a report Friday.”

• 4)  Harvard to Halt Construction on $1 Billion Life-Sciences Complex

“In a letter to Harvard on Thursday, university President Drew Gilpin Faust said that the shaky state of the global economy —including the huge hits taken by Harvard’s endowment—necessitated the pause.”

• 5) State picks broker to sell off buildings (California)

“California has picked a broker to sell $2 billion worth of real estate that the troubled state hopes will plug some of its financial holes.

CB Richard Ellis Group will sell 17 state office buildings in Los Angeles, Oakland, Sacramento, San Francisco and Santa Rosa. After paying off bond obligations on the buildings, the state hopes to net $660 million that will go directly into the general fund to help offset the $20.7 billion deficit projected through June 2011. ”

• 6) Daily Presidential Tracking Poll

“Approval Index rating of -16. That’s the lowest Approval Index rating yet recorded for this President”

(Note: not meant as a political statement)

• 7) Texas teachers fund losses will reverberate for years

“The worst of the past year’s financial upheaval might be over, but the fund that provides retirement benefits to Texas teachers will feel the effects for many years, actuaries said Friday.

“There is virtually no way that this state can give … a permanent increase to your retirees in the foreseeable future,” said Michael Carter, an outside actuary for the Teacher Retirement System of Texas.

“The depth of what the markets have done in this decade will be felt for probably at least 20 years, and it will impact what this system will be able to do,” Carter said, referring to the most recent market decline and the losses that followed the technology industry bust in 2001-02.

Over the past 10 years, the fund’s average earnings were 3.3 percent, compared with an expected return of 8 percent.

It was sobering news for the board of the $94 billion pension fund and its 1.3 million retired and active members.”

• Small Business Economic Trends

Now here’s Nathan’s Economic Edge looking at the info in the report:

“Rarely do I get to see such an honest account of small business conditions. This report is startling, never in our life times have conditions been so hostile to small business.

I took the liberty of breaking a few of the charts out of this report for you. Let’s start with Sales, Expected versus Actual. Here you will find that expected sales jumped tremendously since the beginning of the year, almost like you would guess they are by listening to CNBS, but just look at how different reality turned out. Now look over at the left scale at that reality figure! That’s right, it says down almost 40%. My critique here is that we don’t get to see the raw data and so we don’t know what the baseline is. Still, there have obviously been many months in a row of decline without a like recovery:”

• 9) Six-Figure Federal Salary Gravy Train (Mish)

“The number of federal workers earning six-figure salaries has exploded during the recession, according to a USA TODAY analysis of federal salary data.

Federal employees making salaries of $100,000 or more jumped from 14% to 19% of civil servants during the recession’s first 18 months — and that’s before overtime pay and bonuses are counted.

Federal workers are enjoying an extraordinary boom time — in pay and hiring — during a recession that has cost 7.3 million jobs in the private sector.

Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, the most recent figure available.

When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000.”

(USA Today article Mish refers to)

• 10) Loan Resets Projected to Cause Mortgage Crisis in 2010

“As many exotic adjustable rate mortgages (ARMs) are set to recast in 2010, the Consumer Mortgage Audit Center (CMAC) is projecting a mortgage crisis in 2010 as large as the subprime.

“We’ve spoken to Florida attorneys who sit at the forefront of the U.S. foreclosure crisis and have learned that 53 percent expect recasting ARMs to present a mortgage crisis as large as subprime and 61 percent expect to work on more loan modifications in 2010 than they did in 2009,” said Sylvia Alayon, VP of operations for CMAC “The New Year is going to hold very rude awakenings for some homeowners, but there are things you can do to analyze your situation and get help if you need it.”

Option ARMs enable borrowers to make monthly payments that are interest and principal, interest only, or just part of the interest due. After months and years of paying less than their full monthly payment of both interest and principal, many homeowners accumulate negative amortization. This means the amount of interest due on a loan becomes higher than the amount of the actual loan itself. As the majority of ARMs begin to recast in early 2010, housing bills will inflate, and many homeowners will be forced to repay the negative amortized balances.”

• 11) U.S. House of Representatives ups IRS budget by $387 million to catch rich tax cheaters

“A new Internal Revenue Service unit set up to catch rich tax cheats hiding their wealth in complex business entities is rapidly taking shape with the hiring of hundreds of employees.”

“The U.S. House of Representatives on Thursday approved a $387 million boost for the IRS for the fiscal year that started October 1, in part to fund the high-wealth unit. The Senate is expected to vote on the measure on Sunday.

NEW GLOBAL FOCUS, JOINT CORPORATE AUDITS

The IRS is also opening new criminal offices in Beijing, Panama City and Sydney to focus on funds flowing out of Europe and into Asia, in part because of a heightened focus on international enforcement in Europe.”

………………Gotta get the money from all of those “rich people”

- Saxplayer00o1