“March 31 (Bloomberg) — China may curb purchases of U.S. Treasuries this year as its first trade deficit in 17 years leaves it with fewer dollars to invest, causing yields to climb, according to Societe Generale SA.”
“March 31 (Bloomberg) — Dan Fuss, whose Loomis Sayles Bond Fund beat 95 percent of competitors in the past year, says Bill Gross got it right by forecasting declines for U.S. Treasuries.
U.S. 10-year yields will rise past 4 percent next year as the government sells record amounts of debt, from 3.86 percent today, Fuss said in an interview from Tokyo on Bloomberg Television. “Bonds have seen their best days,†Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said last week on Bloomberg Radio.”
“France’s public deficit reached 7.5 per cent of gross domestic product (GDP) in 2009, its highest level ever and more than twice the maximum agreed for members of the European Union. The French budget deficit hit 144.8 billion euros last year, according to figures released by national statistics office Insee on Wednesday.
The increase soared to 80.1 billion euros more than 2008′s.
Insee attributes France’s growing deficit to a sharp drop in government revenues and a simultaneous increase in public spending.
Over the same period, France’s public debt rose to 1.489 trillion euros or 77.6 per cent of GDP, up from 67.5 per cent in 2008.
Insee forecasts that debt will increase again in 2010, reaching 83.2 per cent of GDP this year and 87.1 per cent in 2012. Debt levels will not begin to fall until 2013, according to the statistics office.”
“March 31 (Bloomberg) — Italy’s ability to tackle its high debt amid low economic growth “will be tested,†Moody’s Investors Service said.
Italy is struggling to shake off a recession that saw the economy contract 5.1 percent last year, the most in at least three decades. Debt will rise this year to 117 percent of gross domestic product, the second-highest in the EU, after Greece, according to European Union forecasts.
“The government faces some challenges in growing out of its high public-debt levels given the current context of low economic growth,†Alexander Kockerbeck, a Moody’s analyst, said in a report released today.”
“Fiscal Risk’
“The increasing fiscal risk premium is bound to push yields up,†said Eiji Dohke, chief strategist in Tokyo at UBS Securities, one of the 23 primary dealers that are required to bid at government debt sales. “The pace at which banks buy JGBs will probably slow.â€
The Ministry of Finance said in December it will boost total issuance to a record 144.3 trillion yen in the year starting tomorrow.
Japan’s national debt will increase to 973 trillion yen by the end of March 2011, the Finance Ministry said in January. The debt level may rise to 246 percent of gross domestic product by 2014, according to the International Monetary Fund.”
“The government is scheduled to borrow a record gross 4.57 trillion rupees from the market in 2010/11 to fund its fiscal deficit estimated at 5.5 percent of the gross domestic product.”
“March 31 (Bloomberg) — Greece may pay about 13 billion euros ($17.5 billion) more in interest on the debt it sells this year than it would have if yields had stayed at their pre-crisis levels relative to Germany’s, according to data compiled by Bloomberg and Credit Agricole Corporate and Investment Bank.
Interest on the three bonds it sold this year, including a seven-year note offered this week, will amount to 7.7 billion euros over the life of the securities, compared with 3.8 billion euros if they had sold them at the average extra yield, or spread, over German debt that prevailed between 2000 and 2008, the data show. Greece will incur a further 18.9 billion euros of interest on this year’s remaining issuance, compared with 9.4 billion euros before the crisis began, according to Bloomberg calculations based on Credit Agricole data.”
…………………..7A) Moody’s cuts five Greek banks ratings
“Pittsburgh’s multimillion-dollar pension liability is set to balloon to $1.04 billion today, when city officials must comply with a state requirement to report retirement obligations to police, firefighters and other city workers.
With $296 million on hand in February, the city has about 30 cents for every dollar required to cover pension promises to about 3,200 employees and thousands of pensioners.”
“There are 16,000 publicly owned wastewater treatment plants in the United States that operate 100,000 major pumping stations, 600,000 miles of sanitary sewers and 200,000 miles of storm sewers, according to U.S. EPA. That system received a grade of D- from the American Society of Civil Engineers in its latest “Report Card for America’s Infrastructure.” The society noted that billions of gallons of untreated wastewater is discharged each year because of lagging investments.
Hornback said many communities would be facing a difficult challenge even if the economy were more robust. Communities historically “undervalue” their water and sewer services, charging users less than is needed to keep the systems operating to modern standards.
“The pipes in the ground are in some cases over 100 years old,” he said.”
“The conference report, written by senior adviser Richard Anderson, estimates that local governments will have to spend between $2.5 trillion and $4.8 trillion over the next 20 years to fulfill those demands for improved water and sewer systems.
There is a “vague and false confidence among Congress that they have already addressed the issue by granting $60 billion to cities over two decades ago to build water infrastructure when the cost in a single year (2008) is over $40 billion in capital investments and another $50 billion for operations and maintenance,” Anderson wrote. “A more thorough understanding of how much is spent on public water and wastewater is a necessary first step in establishing a framework for a National Strategy.”"
“Two Jefferson County commisÂsioners who had favored bankÂruptcy to solve the county’s $3.2 billion sewer debt crisis said they will agree to settle with Wall Street creditors if the banks cancel apÂproximately $2 billion of the money that’s owed to creditors.
Commissioners Jim Carns and Bobby Humphryes, who could provide the swing votes to solve the crisis, said Tuesday they will back a negotiated settlement if JPMorgan Chase & Co. and other creditors make significant concesÂsions.”
- 11) Property Value Drop To Hit Government Budgets (Dallas)
“DALLAS, TX (KERA) – Dallas County Commissioners say they may have to raise taxes after three years of holding steady. KERA’s BJ Austin says declining property values will mean millions in lost revenue.
Dallas County commissioners are facing a 56 million dollar budget shortfall, with few budget-cutting options left. Last year they cut ten percent across the board. The bad budget news is based on an expected 8 to 9 percent drop in property values countywide.”
“NEW YORK (Reuters) – U.S. private employers shed 23,000 jobs in March, missing expectations for an increase in jobs although fewer than the adjusted 24,000 jobs lost in February, a report by a private employment service said on Wednesday.
The February fall was originally reported at 20,000.
The median of estimates from 35 economists surveyed by Reuters for the ADP Employer Services report, jointly developed with Macroeconomic Advisers LLC, was for a rise of 40,000 private-sector jobs last month.”
“(Reuters) – Goodbye, Federal Reserve. Hello Fannie and Freddie.
Housing Market
With the Federal Reserve ending its 15-month $1.25 trillion mortgage bond buying binge on Wednesday, delinquent loan buyouts by Fannie Mae and Freddie Mac could serve as the saving grace for the $5 trillion agency mortgage-backed securities market.
The paydowns from these buyouts will put billions into the hands of mortgage investors for reinvestment and significantly reduce supply, mitigating the massive void the central bank will leave behind and helping keep yield spreads near record tights.
That is good news for the U.S. housing market since it should keep mortgage rates, which are linked to yields on Treasuries and yields on mortgage-backed securities, at historically low levels”
“The chart below shows three types of debt:
• Explicit state borrowing, in the form of general obligations bonds and other debt.
• The market value of unfunded state employee pension obligations; this is generally several times higher than the value states themselves acknowledge.
• States’ shares of the total federal debt: these are calculated by assuming that states bear the federal debt in the same proportion to which they pay overall federal income taxes, such that high income taxes will tend to carry proportionately more than low-income states.”
“All these debts are expressed as a percentage of state gross domestic product, as a way of showing each state’s ability to service the debt.
When combined, the picture is grim. The average state has a combined debt of 104 percent of GDP, with the 10 worst states each having total debts exceeding 128 percent of GDP. That’s around where Greece was when the music stopped.
What separates states, and the United States in general, from Greece is that while we clearly have a solvency problem—our total liabilities far exceed our total assets—we don’t yet have a liquidity problem, where we can’t produce the dollars today needed to fund current obligations. But that state of affairs won’t go on forever. As the Times story notes, states like California are speeding up tax collections and delaying payments in order to keep current on their payments. And this won’t necessarily get easier over time.
While I’m an optimist by nature, it’s getting harder and harder to see a smooth transition out of these problems.”
“March 31 (Bloomberg) — European inflation accelerated more than economists forecast on higher oil prices, while the unemployment rate reached double-digits for the first time since 1998.”
- 16)Â Fear Seen Driving Prices Lower than Last 20 Years (Real estate)
“Most metro areas will see prices fall below the lowest levels of the last 20 years, according to the latest forecast from University Financial Associates of Ann Arbor.
“It is often stated that prices decline faster than they rise because fear is a stronger emotion than greed. This certainly proved to be the case in Detroit where 10 years of real price gains were erased in just 4 years,†said UFA in its most recent UFATM House Price Forecast.
“Detroit metro was the canary in the coal mine this cycle, with falling house prices arriving earlier than in other metros,†said Dennis Capozza, who is the Dykema Professor of Business Administration in the Ross School of Business at the University of Michigan, and a founding principal of UFA. “Other metros that have already or will soon converge to pre-bubble real prices include Las Vegas, Phoenix, the inland California metros and many south Florida metros.â€
UFA’s prediction would take the national median price of a home in most markets below $101,000, the national median in 1990, according to the Census Bureau.”
- Other headlines and news stories:
Japan Bankruptcies Set for Eight-Year High After JAL Collapse
China’s Stocks Fall, Worst Quarter Since Entering Bear Market
State, local pension plans dropped $179 billion even before markets crashed
Croatia’s public debt reaches record-breaking level
Municipal debt set to double in five years (Finland)
German Banks May Face Losses on Southern Europe
- Saxplayer00o1
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