Important News - Jan. 03

• 1) Washington among 36 states seeking budgetary life preservers

“It’s said that misery loves company, as long as it doesn’t stay too long in the guest room.

If so, then Washington state can take comfort because when it convenes a 60-day legislative session Jan. 11, it will be one of 36 states facing another round of budget cuts. Added together, these states face $28.2 billion in budget gaps, according to the National Conference of State Legislatures.

That total is on top of $146 billion in budget cuts made by the states when they first adopted their current budgets.

Washington’s share is to blame for $2.6 billion of that $28.2 billion total. California, which is six times more populous, added $6 billion. New York, which has three times the population of Washington, has a $3.2 billion deficit,

The cause is the same – a deep recession that is technically over but lives on in the hearts and wallets of consumers. Add that to a continuing inability of state economists to forecast how bad it will get and you have repeated budget gaps to fill.”

• 2) 2009 foreclosures set another record in Wisconsin

“Wisconsin posted its second consecutive year of record foreclosure filings in 2009 as job cuts made it difficult for more homeowners to keep up with their monthly mortgage payments.

Preliminary figures show there were 30,624 foreclosure filings in the state last year, up almost 20% from a record 25,541 in 2008, Madison-based ForeclosureAlarm.com, which tracks foreclosures through court documents, reported Saturday.”

• 3) State unemployment offices have doubled in size (Washington)

“During a year of layoffs, one of the few places hiring in Washington in 2009 was the state’s unemployment offices.

The state Employment Security office more than doubled the size of its unemployment-claims staff this past year and still managed to clock 65,000 hours of overtime to handle the increased work load.

The extra people were needed to help 410,000 job seekers with employment counseling.

In 2009, state unemployment peaked at a seasonally adjusted 9.3 percent. The state paid out about $4 billion in jobless benefits in 2009, more than triple the previous year’s total.”

• 4) Clark County panel says salaries unsustainable

“The Citizens Committee on Community Priorities is scheduled to meet Jan. 7 to make final recommendations on how best to fill this year’s $60.7 million deficit, which is projected to reach $108.7 million in the next budget year.”

“The report said $180,000 in average wages and benefits for firefighters is “outrageous.” The Las Vegas Review-Journal reported Thursday that the average compensation rose in 2008 to more than $199,000. ”

• 5) Underfunded by $1.5 trillion (Repost)

“State and local government pensions nationwide are underfunded by about $1 trillion, Orin S. Kramer, chairman of the New Jersey Investment Council, which oversees the state’s pension fund, estimated in November. That doesn’t include other retirement benefits, such as health care, which Standard & Poor’s earlier this year pegged at about $500 billion for the states alone. The state of public pensions is a real problem.”

• 6) California’s crowded prisons (Video)

“Amid demands by federal judges to ease overcrowding, California plans to reduce its prison population by 27, 000.”

• 7) Japan Return to 1991 GDP Gives Credit Markets Mega Risk Crisis (Business Week)

““Japan’s fiscal conditions are close to a melting point,” said Takeshi Fujimaki, a former adviser to billionaire investor George Soros and now president of Fujimaki Japan, an investment advising company in Tokyo. “My biggest concern is whether the Japanese government will be able to sell all the bonds at auctions,” he said, adding that such failures might send 10- year note yields climbing through 2.4 percent.”

“Weinberg responds that the Bank of Japan isn’t capable of creating the money supply needed to pay off the debt without sparking “hyperinflation” — or increases in consumer prices so large that they destabilize the economy, such as occurred in Argentina in the 1980s.”

• The US and China: One Side is Losing, the Other is Winning

January 03, 2010 “Information Clearing House” — Asian capitalism, notably China and South Korea are competing with the US for global power. Asian global power is driven by dynamic economic growth, while the US pursues a strategy of military-driven empire building.

One Day’s Read of the Financial Times

• 9) Offshore Banking Secrets Swiss Bankers Never Tell (M.W.)

Switzerland’s largest bank has given authorities formerly sacrosanct info on its U.S. customers because of tips provided by a whistleblower, who tells Steve Kroft the secrets Swiss bankers never tell.

• 10) How Misleading Economic Data Increase Investor Risks (M.W.)

The heavily globalized $14 trillion U.S. economy has a lot of moving parts, and no collection system can track every one of them. But the inability to truly reflect imported goods and worker productivity overstates GDP, which sets up a misleading confidence in a mirage of rising GDP and worker productivity.The gap between the data and reality arises from the U.S.’s classification of “tangible” investments and “intangible” investments.

• 11) Living On Nothing But Food Stamps (M.W.)

The number of Americans reporting food stamps as their only income has soared by 50% over the past two years. With millions of jobs lost, America’s array of government aid — including unemployment insurance, food stamps and cash welfare — is being tested as never before. This series examines how the safety net is holding up under the worst economic crisis in decades.

- Saxplayer00o1