The world changed this week…and most people have no idea.

• 1) Economist: High Unemployment to Last

If you’re looking for good news on unemployment, Moodys.com chief economist Mark Zandi doesn’t have it. Zandi told CBS’ “The Early Show” Monday that the nation’s near 10 percent unemployment rate will “stay there throughthis time next year”

• 2) Bank Failures Buffeting FDIC Efforts to Bolster Insurance Fund

“Nov. 2 (Bloomberg) — The Federal Deposit Insurance Corp., replenishing funds after the worst financial crisis since the Great Depression, faces additional strains on its resources after spending $2.5 billion to shut nine banks last week.”

• 3) Roadshow: Bay Bridge closing strains region’s transportation system

“The MTC estimates it will be short $40 billion over the next two decades to fulfill its long-range plans. Caltrans needs $6 billion a year to maintain the state’s highway system, but has only $1.5 billion to spend. San Jose has $17 million a year to fix city streets, but needs $37 million a year. It’s just as bad with transit. The Golden Gate District has a $132 million deficit, San Francisco Muni $129 million and the Valley Transportation Authority $98 million.”

• 4) Danville officials examining ways to deal with expenses

“By state law, the city must provide fire and police pensions, and the amount the city pays is determined by a third-party actuarial, and the city must provide retirement benefits for other employees through the Illinois Municipal Retirement Fund, Eisenhauer said. But the majority of the $700,000 increase in property tax levy expenses comes from pension costs. The police pension is expected to increase from $1.3 million to $1.7 million next year, or 25 percent, and the fire pension is expected to increase from $1.8 million to $2.1 million, or 20 percent, Eisenhauer said.”

• 5) Charities seek pension rescue: As members, funds dwindle, PBGC invited in

“United Way for Southeastern Michigan is asking the Pension Benefit Guaranty Corp. for help with United Way’s troubled group pension fund. The PBGC is expected in Detroit on Thursday to meet with United Way and the other 20 nonprofit employers still active in the plan. Collectively, they represent more than 2,000 past and present employees covered by the plan.”

• 6) Ford

“Ford has culled $4.6 billion in costs during the first nine months including $1 billion eliminated in the third quarter alone. The company now expects to eliminate a total of $5 billion in costs. However, Ford is still carrying $26.9 billion in debt with $1.6 billion maturing over the next year. Another $7 billion to $8 billion will be added to the overall debt due to payments made to the United Auto Workers retirement fund.”

• 7) NY pension grows its hedges

“The New York State Pension Fund is plowing money back into hedge funds, with plans to invest more than $1 billion by year’s end. This comes after the hedge fund industry experienced its worst year in recent memory, with typical funds losing an average of 28% over 2008. The state workers’ fund just closed a $50 million investment in Stamford, Conn.-based Diamondback Capital and has several more hedge fund deals expected to close by 2010, a spokesman for state Comptroller Thomas DiNapoli says. The New York Common Retirement Fund took a beating in 2008, dropping to about $110 billion from more than $150 billion. As the equity markets rebound, the fund aims to make back some of those losses.”

• Quarterly Debt Issues May Hit $444.5 Billion

“After digesting a record amount of debt last week, government-bond investors will get news of more supply this week with the announcement of the Treasury’s financing needs to year-end. The news comes in two stages: Monday, the government will outline its funding needs for the October-to-December quarter. Wednesday, it will present details on how it plans to raise funds to replace maturing debt. In its quarterly refunding announcement, the government is expected to increase the amounts of its three-, 10- and 30-year sales — to be sold in the second week of November — by $1 billion each, selling $40 billion in three-year notes, $24 billion in 10-year securities and $16 billion in 30-year bonds. That is a fraction of the total issuance for the quarter given the record budget deficits that need to be financed. A survey from industry group Securities Industry and Financial Markets Association projects net Treasury bill, note and bond issuance will hit $444.5 billion in the fourth quarter, up from the net $392.5 billion issued in the third.”

• 9) CMBS Defaults Climb, May Worsen on Stuyvesant Town, Reis Says

“Nov. 2 (Bloomberg) — The rate of defaults and late payments on real estate loans sold as commercial mortgage-backed securities surged more than fivefold in the third quarter and may worsen with the potential default of loans on Manhattan’s biggest apartment complex, Reis Inc. said. There are $3 billion of loans included in five CMBS issues backing the 2006 buyout of Stuyvesant Town-Peter Cooper Village, the New York-based real estate research firm said in a report today.”

• 10) Teachers want retirement fund debt paid off (Kentucky)

“FRANKFORT, Ky. — The state has been writing IOUs to the teachers’ pension fund for the past six years to cover retirees’ health insurance costs, and officials are increasingly worried that it won’t ever be able to pay up. So the Kentucky Teachers’ Retirement System has launched a push to get the state to pay off its $521 million debt to the roughly $15 billion system and find a sustainable way to pay for retired teachers’ health insurance in the future.”

• 11) Credit card rates rise to beat new law

“The average rate offered to a consumer with a solid 700 credit score is now 11.51 percent on a variable rate card, up from 10.66 percent in March, according to Bankrate.com.” (more info) ……Buried under a mountain of credit card debt? Don’t worry, when you’re down the credit card company will be there for you.

• 12) Bill Moyers and James Galbraith: Our Free Market Makes Economic Collapse Inevitablehttp://www.pbs.org/moyers/journal/10302009/transcript4.html

• 13) Japan May Be Worse Off Than America (M.W.)
  

  After decades of cheap borrowing from a captive bond market, the world’s second largest economy may be at the point of no return. Simon Johnson, former chief economist of the IMF, told the US Congress last week that the debt path was out of control and raised “a real risk that Japan could end up in a major default.”

• 14) Commercial Lending Giant CIT Files Bankruptcy (M.W.)
  

  CIT’s move will wipe out current holders of its common and preferred stock, likely meaning the U.S. government will lose the $2.3 billion it sunk into CIT last year. The bankruptcy protection filing is one of the biggest in U.S. corporate history.

- saxplayer001