- 1)Â Local-debt triggers market worries (China)
“The massive amount of borrowing by local government has boosted China’s total domestic and foreign government debt from 26 percent to 43 percent of national GDP, triggering worries that if a fraction of the borrowing turns sour, banks will be saddled with bad loans. ”
“Europe faces a commercial property debt timebomb with almost €1 trillion (£896bn) outstanding from the sector and a quarter of that potentially distressed. ”
“According to the property agent, €207bn of the debt is secured at high loan-to-value ratios on poor quality real estate, and is therefore most at risk of not being repaid. Of this, €89bn, or 43pc, is from the UK, and €69bn from Germany.
Also, the debt is maturing at a rate of €155bn a year, meaning almost half will have matured by the end of 2012.”
- 3)Â Califirnia pension costs (CalPers)
“Pension Pressure – As the burden of ever-increasing pension costs rests heavy on state and beach cities’ coffers, one question is on everyone’s minds — how will we pay for it? ”
“The cost of state employee pensions grew by 2,000 percent in the last 10 years, while revenues increased by only 24 percent, Gov. Arnold Schwarzenegger said in his State of the State speech in January.
“The pension fund will not have enough money to cover this amount, so the state — that means the taxpayer — has to come up with the rest of the money,†he warned. “We are about to get run over by a locomotive. We can see the lights coming at us.†”
“Cities brace for impact
Manhattan Beach
Manhattan Beach contributed $5.1 million of its $50 million budget to CalPERS in 2009-10. Next year, the city will likely have to contribute an additional $1 million, while also battling a $2.5 million general fund deficit.
“The stuff hits the fan next year,†Moe said. “(One million dollars) is a huge budget hit for us,†he said.”
“WASHINGTON -(Dow Jones)- Bailouts provided to American International Group Inc. (AIG) and U.S. auto makers General Motors Co. and Chrysler LLC will ultimately cost U.S. taxpayers $70 billion, the Congressional Budget Office said Wednesday.
The aid to troubled insurer AIG will cost $36 billion, while public funds provided to GM and Chrysler will cost taxpayers $34 billion, the non-partisan agency said in an updated report on the Treasury’s rescue programs.
The total public costs of the programs will amount to $109 billion over the next decade, the CBO said, the same figure it used in its update of the federal government’s baseline two weeks ago.”
“ALBANY — New York will end the fiscal year on March 31 with at least $2 billion less in cash on hand than originally projected, the state’s comptroller said Wednesday, burdening lawmakers with another headache and making the prospect of achieving a budget agreement before the next fiscal year begins even more dim.
The estimate by the state comptroller, Thomas P. DiNapoli, adds half a billion dollars to Gov. David A. Paterson’s own projection for the current shortfall, issued a little over a month ago. Mr. DiNapoli said the state could no longer count on two large infusions of cash that were expected by the end of the month: a $300 million fee from the winning bidder on the Aqueduct video-lottery franchise and $200 million from the coffers of the Battery Park City Authority. ”
…………………5A) NY state comptroller warns against more borrowing
“NEW YORK (Reuters) – New York should avoid borrowing as a way to plug the state’s deficit because the state already has too much debt, the comptroller said on Wednesday, as he sounded the alarm on talks in Albany already under way on more borrowing.
“More borrowing would become part of the problem, not the solution,” state Comptroller Thomas DiNapoli said in a statement.”
“Lieutenant Governor Richard Ravitch said earlier this month that the state could use short-term borrowing of about $2 billion a year to help close a five-year deficit that is expected to total $60 billion.
Other states that have used deficit borrowing to plug budget holes include Illinois, which in January sold $3.46 billion of taxable five-year bonds to make a fiscal 2010 payment to state pension funds.
Detroit in March sold nearly $250 million of fiscal stabilization bonds, and Ohio’s two-year budget relied on $736 million in cash-flow relief produced by a series of recent restructurings of state debt.
A bill currently in the Massachusetts Legislature would allow the cash-strapped city of Lawrence to issue up to $35 million of debt with state oversight to deal with its deficit.”
“(Reuters) – Greece raised the stakes on Thursday in its quest for EU help to tackle its debt crisis, warning it cannot achieve promised deficit cuts if its borrowing costs remain high and might have to call in the IMF.”
“The premium investors charge for holding Greek debt rather than benchmark German bonds rose to about 310 basis points, meaning Athens would have to pay well over 6 percent to borrow on capital markets, by far the highest yield in the euro zone.
Economists say such rates are unsustainable in a year when Greece needs to borrow some 53 billion euros ($72.4 billion), 20 billion of it in refinancing between April 20 and end May.”
- 7) U.S. schools in ‘category 5’ budget crisis (MSNBC)
“Cuts that have been announced this year are staggering:
The Kansas City, Mo., School District is closing nearly half its 61 schools, with almost 300 teachers among those losing their jobs once 29 campuses go dark.
The Montgomery, Ala., Public School Board voted last week to lay off more than 600 employees, including 415 teachers, in what it said was just the first phase of staff reductions.
In the northwest suburbs of Chicago, the Illinois 46th District school board this week approved a proposal to lay off more than 1,000 employees — about 25 percent of the district’s staff — to help make up a projected deficit of $44 million. More than 700 teachers would lose their jobs, including all first-, second- and third-year instructors.
Statewide, Illinois schools face budget cuts as high as 17 percent to make up a $1.3 billion education deficit, Gov. Pat Quinn warned last week.
In Atlanta, Superintendent Beverly L. Hall said this week that after years of cutbacks, her district’s 2010-11 budget will be almost 11 percent below its level of seven years ago.
Calling the impact a “category 5†crisis, Georgia’s state superintendent, Kathy Cox, said, “It’s going to be very tough next year. The stimulus came in and helped, but the cliff is coming.” ”
“Germany’s Chancellor Angela Merkel says she wants the Euro-zone to be able to exclude one of its members in future if that is necessary to avert a crisis. Mrs Merkel told the German Bundestag (parliament) that existing EU rules were not strong enough to deal with the current crisis triggered by Greece.
Exclusion from the 16-nation Euro-zone would be a “last resortâ€, she said.”
“Extended Benefits
Today’s report showed the number of people who’ve used up their traditional benefits and are now collecting extended payments jumped by about 352,800 to 6.04 million in the week ended Feb. 27.
“The labor market is stabilizing,†Federal Reserve policy makers said in their March 16 Federal Open Market Committee statement. At the same time, “employers remain reluctant to add to payrolls,†they said.”
- 10) Canada firms face $75 bln refunding need- Moody’s (For the U.S. it’s $1.4 trillion)
“TORONTO, March 17 (Reuters) – Canadian non-financial firms have nearly $75 billion in debt coming due over the next five years, but refunding risks are lower than in the United States, Moody’s Investors Service said on Wednesday.”
“”Still, refunding risk in Canada is far less ominous than in the U.S. over the 2010-2014 period.”
Moody’s said that in the United States, an “avalanche” of non-financial corporate debt totaling almost $1.4 trillion is set to mature over the next five years.”
“Chants of “Strike! Strike! Strike!” rose from the crowd of City of Detroit workers Wednesday as members of the American Federation of State, County and Municipal Employees filled the 13th floor auditorium in the Coleman A. Young Municipal Building to address the City Council.
“We have no choice but to shut the city down this time because we are not going to take these concessions,” said Michael Mulholland, AFSCME Local 207 secretary-treasurer, halfway through a public hearing hosted by the City Council’s Internal Operations Committee.
Hundreds of the roughly 3,500 AFSCME workers attended the hearing, speaking out against Mayor Dave Bing’s proposed 10% salary cut — which comes in the form of 26 furlough days — and additional benefit cuts.”
“The bill for San Jose to cover current and future retirement promises to its employees keeps getting steeper.
City officials said Wednesday that those costs will rise more than 43 percent in the budget year starting in July, increasing the retirement tab by $60 million.
Officials had earlier estimated that retirement costs — which run $138 million in the current budget year — would rise about $38 million in the new fiscal year to account for market losses. They more recently revised that projected increase to $53 million.
The latest figures are based on actuarial analyses used to set the city’s contribution rates to the pension funds. They indicate the total tab for retirement benefits will be $198 million for the 2010-11 budget year.”
- 13)Â Sacramento to issue $68M in IOUs to county in 2010-11 (Orange County)
“The state government will issue about $68 million in IOUs on money it owes Orange County during the next budget year, according to the county’s top budget official, another indication that Sacramento is struggling to fulfill its financial obligations.
The IOUs, or deferrals, will be issued in July and October 2010 and March 2011 and will be for periods of 60 to 90 days, said Frank Kim, county budget director. The 2010-2011 fiscal year runs from July 1 through June 30, 2011.
The upcoming deferrals are for $2 million in July, $49 million in October and $17 million in March 2011.
Kim said he expects Sacramento to pay all the money it owes the county by June 2011.”
- A few headlines:
More U.S. Tech companies head to China-
Detroit is expected to close a quarter of its schools
Government use of ‘stealth’ taxes on rise (taxes by various countries)
Portugal to Sell Bonds in Dollars to Fund Widening Budget Gap
UK public sector debt climbs above 60 pct of GDP
As Deflation Fears Persist, Japan Eases Monetary Policy
Fed’s Bernanke sees US backing Fannie, Freddie debt
Nevada’s Public Employee Pension Plan Has $9.1 Billion Unfunded Liability
EU warns Government cuts may have to be more severe (Ireland)
SLM Sells Debt at Higher Rate Than Students Pay: Credit Markets (Sallie Mae)
Venezuela’s domestic debt increases by 74 percent
US-China trade war talk heats up
U.S. current account deficit widens in fourth quarter
- Saxplayer00o1
