Must-Know News - Jan. 11

• 1) Obama plans more economic stimulus measures to bring down the high U.S. unemployment rate

(Reuters)

“”We are … talking about actions right now to jump-start job creation,” White House Council of Economic Advisers Chairwoman Christina Romer said on CNN’s “State of the Union.

“You don’t get your budget deficit under control at a 10 percent unemployment rate,” she said.

Beating back unemployment will be a key yardstick by which U.S. voters will measure Obama’s success in November congressional elections and will go a long way to determining his own long-term political future.”

• 2) Trains, buses face declines in ridership and revenues (California)

“”After enduring the most brutal year in the history of Bay Area public transit systems, train and bus operators are barreling down a track toward bankruptcy.”

BART has lost $32 million in sales tax revenue in the past 12 months, and it has seen $129 million in state subsidies disappear in the last three years.

The problems of rising costs, vanishing state subsidies and declining tax revenues are shared by all 28 of the area’s transit agencies. Without fundamental changes, they project a cumulative budget shortfall in 25 years of $8.5 billion, and a capital projects deficit of $17.2 billion.

In other words, as a report by the regional Metropolitan Transportation Commission concluded, their current track leads to bankruptcy.”

• 3) In 2009, the Federal Reserve Bought 80% of U.S. Debt?! (CNBC video)

Update: CNBC: “I Guess You Can Use the Word Ponzi Scheme”

• 4) Cities struggle to find new uses for auto plants

“At their peak, these roaring engines of economic activity employed hundreds of thousands of people, mostly well-paid union members on the assembly line and white-collar engineers in windowed offices above the factory floor.

Those 128 plants had a payroll of 196,000 workers at the time they closed. Today, only 36,500 people work at those sites that have been redeveloped, and at only three of the revived plants does the number of employees match or exceed the number in their carmaking past. The rest are concrete prairies or steel behemoths waiting for reuse or a wrecking ball, most without any real prospects for new use.”

……………..4A) LaHood: Auto bailouts were a good investment

“DETROIT (MarketWatch) — U.S. Transportation Secretary Ray LaHood kicked off the Detroit auto show on Monday by telling reporters that the government’s commitment to the car industry was “a good investment of taxpayer dollars.” He said that the Tea Party protesters, slated to voice their disapproval of the federal aid to automakers outside Cobo Hall later in the day, are failing to see the big picture. “This industry would not be seeing the bright future it’s seeing today if it weren’t for the government’s involvement,” he said.”

• 5) In Valley, 80 mil square ft. of business space is vacant (Arizona)

“About one-quarter of metro Phoenix’s rentable office space, or nearly 20 million square feet, sat vacant at the end of 2009, according to Phoenix-based Cassidy Turley/BRE Commercial - formerly Grubb & Ellis - the Valley’s largest commercial property broker. ”

• 6) New York prowling for tax cheats

“A customer walks into a high-end retail store and inquires about the most expensive item in the shop. Initially, he balks at the asking price.

“Is that the best you can do?” he asks.

“That depends,” says the store owner. “Can you pay cash?”

“What difference does that make?” asks the customer.

“Well,” says the owner, quickly scanning the store before leaning in close and whispering: “If you pay cash, I’m not going to charge you the sales tax.”

Unfortunately for the store owner, the customer is really an undercover investigator with the state Department of Taxation and Finance. The merchant will soon learn this when the investigator returns with a search warrant from the local district attorney’s office, authorizing a search for the true business records, the ones not reported to the IRS.”

• 7) High U.S. debt means slower growth, history suggests

“A new report that reviewed 200 years of economic data from 44 nations has reached an ominous conclusion for the world’s largest economy: Almost without exception, countries that are as highly indebted as the United States is today grow at sub-par rates.

The report, “Growth in a Time of Debt,” was written by two respected academic researchers who recently published a thick book on eight centuries of economic crises.

The study by Carmen Reinhart and Kenneth Rogoff - well-regarded economists from the University of Maryland and Harvard University, respectively - found statistical breaks at different points in the relationship between a country’s national debt and its gross domestic product. GDP is the broadest measure of a country’s trade in goods and services.

When a nation’s debt exceeds 60 percent of its GDP, its growth rate slows precipitously, the study found. When that ratio exceeds 90 percent, nations’ economies barely grow, and can even contract.”

• 8) Layoff numbers still aren’t pretty (Blog..Northern California)

“By my count of the state’s WARN (Worker Adjustment and Retraining Notification) Act figures, we’re looking at approximately 7,700 layoffs in the Bay Area and Northern California in the next couple of months. The number does not include companies with fewer than 100 employees, which are exempt from the act, as are most companies planning to lay off fewer than 50 workers. The number could also change, either way, as more employers covered by the act give the mandated 60-days notice of planned layoffs, or if some of the listed layoffs have already occurred. ”

• 9) U.S. Postponed the Great Depression, Not Prevented It, Says Trend Forecaster Celente

(tech/ticker on Yahoo Finance News)

“We never thought we’d be buying companies like AIG, we never thought we’d own parts of General Motors,” he tells Aaron in the accompanying clip. “The government’s never done these things before.”

Celente believes the bailouts have just postponed a depression — not prevented one: “The hand may change but the game doesn’t change.” ”

• 10) Arizona treasurer says checks will bounce amid budget crisis

“PHOENIX — Arizona state legislators go back to work Monday in an attempt to battle the nearly $1.5 billion dollar deficit.

“The February school payment we can’t make, February payroll there’s no money there,” said State Treasurer, Dean Martin.

Martin said unless the capitol buildings are sold before the end of the month, there will be no more money meaning, “If they continue to issue checks without having money from the sale of the buildings, I have to bounce them.”

That’s because Martin said spending has increased double digits during the first two years of the recession, while revenues were dropping at the same rate.”

• 11) AP analysis: Sun Belt struggles to begin recovery

“In Riverside County, Calif., the nation’s 11th-most economically stressed county, unemployment dipped slightly in November. But that was due mainly to seasonal hiring by retailers — hiring that didn’t extend past the holidays.

Likewise, unemployment in counties in Arizona and Nevada, two states hammered by the recession, also dropped in November — but only because they lost jobseekers who moved away or gave up hope. Once people stop looking for jobs, they’re no longer counted as unemployed.

“Our rate isn’t going down because the economy is improving,” said Jered McDonald, an economist with the state of Nevada, which has lost about 2.5 percent of its work force since September. “It’s going down because people are either too discouraged to look for work or they’re actually leaving the state.”"

• 12) Financial News: Banks In Rush For Government Debt Mandates

“Chris Tuffey, head of Eastern Europe, the Middle East and Africa debt capital markets and head of high-grade syndicate at Credit Suisse in London, said: “Frankly, any one bank that isn’t a primary dealer in these markets wants to be one.”

Debt issuance from European, UK and US governments this year is forecast to more than triple to a record $2.7 trillion from $708bn last year, according to a Deutsche Bank report published last month. “

• 13) Woodford warns of ‘near certainty’ in UK rating cut amid fiscal woes

“The probability of the UK facing a downgrade in its AAA credit rating is “more likely now than it has ever been”, Neil Woodford, chief of investment at Invesco Perpetual, has warned, according to a report in The Daily Telegraph, London.”

• 14) Iran can be bombed says General Petraeus

“The US military commander for the Middle East and the Gulf region has confirmed that the United States has developed contingency plans to deal with Iran’s nuclear facilities. ”

“Gen David Petraeus, head of Central Command or Centcom, did not elaborate on the plans, but said the military has considered the impacts of any action taken there.”

……………..14A) US preparing military for possible Iran conflict

“”We’ve looked to do all we can to ensure that conflict doesn’t break out there, while at the same time preparing forces, as we do for many contingencies that we understand might occur,” Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, said during an appearance at the Washington Institute for Near East Policy.”

• 15) Business tax for unemployment benefits to rise by 50% (Arizona)

“The ripple effects of job losses in Arizona continue: Unemployment-insurance taxes paid by Arizona businesses will rise an average of 50 percent in 2010, which could further stall hiring.

Without the tax increase, and a loan from the federal government, the state trust fund used to pay out unemployment benefits would be empty within months.

The increase translates to about $50 per employee for the year, bringing the average annual per-employee cost to about $146. For a company with 250 employees, the annual cost of the unemployment-insurance tax will rise to $36,400 from about $23,800. ”

• 16) MANDATORY “R Bonds.” (Nathan’s Economic Edge)

“Now that the game of Quantitative Easing is supposedly nearing an end (yeah, right), the criminals running the Obama Administration want to annuitize 401k’s and IRA’s by creating MANDATORY “R Bonds.” Oooo, R Bonds! That sounds exciting and cool, got to have that! The average American, though, and they know this, doesn’t even have a clue that the word BOND actually is just another word for DEBT. And why do you suppose that the Administration would like to force your retirement savings into DEBT? Why that would be to finance their wild and out-of-control deficit spending, of course. Is this going to be a good thing for Americans at this time, while interest rates are at ZERO? NO, there is no worse time to invest in bonds than when interest rates are artificially at zero. As rates snap back higher, bonds will fall in value. This is yet another fleecing and yet another reason why Americans should support our plan for Freedom’s Vision. It would absolutely put an end to all such nonsense.”

(Here is an article about what he refers to)

• 17) Pimco Says BOJ May Sell Yen, Buy Debt to Spur Economy

“Jan. 11 (Bloomberg) — Pacific Investment Management Co., which runs the world’s biggest bond fund, said the Bank of Japan may need to sell yen or buy long-term government bonds in “unlimited amounts” to combat deflation.”

• 18) 2010 Food Crisis for Dummies (Ben Johnson)

If you read any economic, financial, or political analysis for 2010 that doesn’t mention the food shortage looming next year, throw it in the trash, as it is worthless. There is overwhelming, undeniable evidence that the world will run out of food next year.

• 19) Time for Fed to disprove Plunge Protection Team conspiracy theory (Ben Johnson)

Charles Biderman, chief executive of TrimTabs Investment Research, is the latest and most credible person to charge that the Federal Reserve and the Treasury (in league with top Wall Street firms) is rigging the stock market on a daily basis.

• 20) The end of consumerism: Our way of life is ‘not viable’

The stark warning comes from the renowned Worldwatch Institute, a Washington-based organisation regarded as the world’s pre-eminent environmental think tank.

Its State of the World 2010 report published this week outlines a blueprint for changing our entire way of life. “Preventing the collapse of human civilisation requires nothing less than a wholesale transformation of dominant cultural patterns. This transformation would reject consumerism… and establish in its place a new cultural framework centred on sustainability,” states the report.

“Habits that are firmly set – from where people live to what they eat – will all need to be altered and in many cases simplified or minimised… From Earth’s perspective, the American or even the European way of life is simply not viable.”

- Saxplayer00o1