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 US ECONOMY 
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Post US ECONOMY
Storm Slams East Coast as 'Super Saturday' Begins

By RACHEL DODES and ANN ZIMMERMAN

NEW YORK—A massive snowstorm slammed the eastern U.S. on Friday night, hitting Washington, Philadelphia and parts of Virginia and the Carolinas and winding its way north.

In addition to the broader human and economic threat such an event always poses, the storm could deter shoppers and hurt retailers eager to ring up sales on a critical weekend. "Super Saturday," the last Saturday before Christmas, is typically one of the biggest shopping days of the year, with an estimated $15 billion changing hands, according to weather consultancy Planalytics. The Northeast accounts for at least a quarter of those sales.

This year, the highly anticipated weekend is expected to be even more crucial to the retail industry. Shoppers procrastinated longer than ever in hopes of seeing the radical markdowns of last year. But retailers headed into the weekend feeling relatively positive, as they had planned inventories more conservatively this year, reducing the need to resort to sharp discounts to move excess inventory. Retail analysts had expected sales industrywide to be relatively flat this holiday but profits to climb on increasing margins.

If shoppers stay home, that prediction is in danger. Some sales may move to retailers' Web sites, but the e-commerce season had been expected to taper off after Friday, the last day of free-shipping deals.

Before the weekend, Toys "R" Us Chief Executive Jerry Storch had said he'd been pleased with sales and traffic so far. But he admitted he was nervously monitoring the weather, as the company had planned numerous promotions to drive last-minute shoppers to its stores. Some analysts had estimated that 20% of toy sales were still up for grabs this weekend.

The storm dumped 11 inches of snow on Charlottesville, Va., and about six inches by Reagan National Airport, near Washington. There, the National Weather Service predicted "record-breaking December snowfall" of one to two feet in the region for the weekend and warned residents not to travel on Saturday.

In Virginia, Gov. Tim Kaine declared a state of emergency. The Associated Press reported that snow, ice and freezing rain blanketed western North Carolina on Friday, cutting off power to almost 60,000 customers in the Asheville area.‪‪ In Copenhagen Friday, President Barack Obama said he was leaving before the final vote on a climate change agreement "because of weather constraints in Washington."

The National Weather Service issued a blizzard warning for Long Island, in New York, and said that "whiteout conditions" would make traveling dangerous. Snow flurries began to fall on Secaucus, N.J., Saturday morning, indicating that the storm would probably hit New York around noon.

Richard Jaffe, an analyst for Stifel Nicolaus, predicted that retailers with strong e-commerce sites would benefit, as consumers stayed home and shopped over the Internet, citing Urban Outfitters Inc. and J. Crew Group Inc. as two such retailers. He said retailers located mostly in strip centers, including TJX Cos. and Kohl's Corp., would likely be hit the hardest.

Karen Burke, a 47-year-old business manager from New York, decided to get up early and waited outside American Eagle Outfitters in midtown before it opened at 9 a.m. By 10:30 she had snapped up pajamas, hooded sweatshirts and tops that were being offered with a "buy one, get the second at 50% off" deal.

"I wanted to avoid the storm," said Ms. Burke, who was planning on heading home by noon.

The coming storm appeared to motivate consumers to buy certain categories of cold-weather goods. At Macy's, Michelle Smith, 38, and her sister Wanda Torrence were trying on Timberland boots, which they needed for the "weather heading this way right now," Ms. Torrence said. The sisters, from Astoria, N.Y., woke up at 5:30 a.m.--a couple of hours earlier than they had initially planned--to get to stores before the snowstorm to buy gifts for their families.

"We're leaving in 30 minutes. We have to get back to Queens before it starts snowing," said Ms. Smith at 11 a.m.

Amid a crush of shoppers at Bloomingdale's flagship store in New York, Wayne Boydstun, a 49-year-old businessman from Salt Lake City, didn't understand what the fuss was about. "It's funny to watch everybody in a panic," said Mr. Boydstun. "We get 12 inches of snow in an hour." He bought a pair of Ralph Lauren gloves for his 16-year-old son, Cole, who had forgotten to pack a pair.

Target Corp., which Planalytics said has about 31% of its store base receiving snowfall on Super Saturday, on Friday began stocking its stores with shovels, scrapers, ice melt and other standard winter items, making sure additional quantities were available to keep pace with increased demand.

"Target isn't planning any store closures yet but is keeping a close eye on how the storm develops," said spokeswoman Anne Zeltinger.

"Today was going to be maybe the biggest sales day of the season, since the customer has been laying in wait for the 'deals.' With only a few days left and the storm impacting such a densely populated area and so many retailers, there will certainly be a negative impact on sales," said Alan Shor, president of the Retail Connection, a real estate services and investment firm. "Depending on how long this lasts—the Weather Channel has called this storm one of 'historic proportions'—the impact could be significant."

Between e-commerce and shoppers visiting stores early to fill their carts before the storm descends, the prized retail weekend could still prove profitable. But Scott A. Bernhardt, chief operating officer of Planalytics, said that in such bad weather conditions, shoppers, when they do hit the stores, are likelier to do so with a more single-minded focus, cutting back on browsing and impulse buys.

"There's a reason why retailers count the number of shopping days between Thanksgiving and Christmas," Mr. Bernhardt said. "When you get a storm like this, it's not good news."
—Veronica Dagher contributed to this article.

http://online.wsj.com/article/SB1000142 ... ts_news_us

For those who like to wear tinfoil, can you say HAARP? - weather modification.... :hmm

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Sat Dec 19, 2009 11:59 am
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Post Re: US ECONOMY
Hat tip to guanosphere

Citadel Broadcasting to File for Bankruptcy

By MIKE SPECTOR and SARAH MCBRIDE

Citadel Broadcasting Corp., the third-largest radio broadcaster in the U.S., plans to file for bankruptcy as soon as Sunday, according to people familiar with the matter.

Citadel is expected to file in a deal supported by many lenders collectively owed $2 billion, known as a "prearranged" deal in bankruptcy parlance.

These lenders plan to swap a big portion of their debt for equity in a reorganized Citadel, effectively handing them control.

The deal would reduce Citadel's debt load to about $762.5 million, the people said. The company will need to solicit more creditor support in court to get its reorganization plan approved by a judge.

Citadel's board approved the filing in recent days.

Citadel Chief Executive Farid Suleman is likely to remain at the helm once the company emerges from Chapter 11 protection, people familiar with the situation said.

Citadel representatives didn't respond to requests for comment..

Citadel's fall is emblematic of the troubles ravaging radio broadcasters, which took on loads of debt during boom times and now face a harsh advertising climate.

Citadel loaded up on debt to finance its acquisition of Walt Disney Co.'s ABC Radio stations in 2006. At the time, radio was a $20 billion a year industry. But 2006 turned out to be a peak. Mr. Suleman has said he would have "sold, not bought" had he known where the economy was heading.

Other radio companies face similar struggles. Clear Channel Communications Inc. took on more than $17 billion to go private last year and just refinanced some debt. Emmis Communications Corp. has had to get amendments on debt agreements twice this year and Regent Communications Inc. fell into technical default earlier this year after auditors questioned whether it could avoid bankruptcy.

In recent months, Citadel hired law firm at Kirkland & Ellis LLP and investment bank Lazard Ltd. for restructuring advice.

http://online.wsj.com/article/SB1000142 ... 82990.html

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Sat Dec 19, 2009 7:06 pm
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Post Re: US ECONOMY
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What recovery? Budget deficits get worse for states.

Budget deficits for 2010 have worsened in 39 states in the past two or three months, according to a new analysis by the Center on Budget and Policy Priorities.

By Ron Scherer Staff writer / December 18, 2009
New York

State budgets are sliding deeper into the red than many governors and legislators expected only a few months ago.

As a result, states including Washington and Minnesota will have to find ways to fill their widening deficits.

On Friday, a new analysis by the Center on Budget and Policy Priorities (CBPP), a Washington think tank, found that the 2010 budget situation has worsened in 39 states in the past two or three months. The new, additional gap: more than $34 billion.

“The shortfall is emerging as forecasts and data catch up to reality,” says Nicholas Johnson, a co-author of the CBPP analysis. “Some states haven’t done an official budget projection since last spring,” says Mr. Johnson, who is director of the organization’s state fiscal project.

This past spring, most states were still trying to recover from trying to fill their 2009 budget gaps. Many used rainy-day funds and one-time gimmicks, and they borrowed as much as their constitutions allowed. Some, such as Connecticut, North Carolina, and Hawaii, raised taxes on the highest-income residents.

(Connecticut also has set a 15% "copay" for those receiving state assistance from a program designed to keep elderly from going into nursing homes by providing home health care. Many will not be able to pay this, or be able to cut back on their services enough to be able to pay that 15%, therefore ending up in nursing homes, which will cost the state much more than the home health care plan.)

The stimulus package passed by Congress in February helped states cover 30 to 40 percent of their shortfall. But revenues have continued to decline for most states.

For fiscal year 2010, CBPP estimates, 48 states are facing budget shortfalls that total $190 billion. (This figure includes the new gap of about $34 billion.)

The following year is not much brighter, with some 41 states anticipating deficits. Initial estimates for 2011 put the gap at $97 billion, but Johnson estimates that the shortfalls are likely to be closer to $180 billion. “By then, we will have seen the end of the federal aid,” he says.

State revenues, like employment numbers, often lag behind any improvements in the national economy.

“We are expecting the unemployment rate to remain above 10 percent through much of calendar year 2010 and then go down in 2011,” he says. “If it improves faster, it would make a dent in the budget deficits – but in no way fast enough to wipe out the shortfalls.”

On Wednesday in Washington, the House passed a $154 billion jobs bill. It includes $46 billion in aid to states, which would mostly go to help them in 2011. Half of the money is an extension of the increase in the federal share of the Medicaid program. The rest of the money is designated for jobs in education.

However, it won’t be enough for many states. According to the CBPP, 30 states have already enacted tax increases, raised tuition at state universities, or found other revenue methods. For example, only this week, the Missouri Department of Revenue told yoga studios to begin to collect a 4 percent recreation sales tax on class fees.

At the same time, many states are looking at service cuts. According to the CBPP analysis, 28 states have enacted or implemented cuts to reduce the eligibility of low-income families for health coverage. Some 42 states and the District of Columbia have proposed or implemented cuts to the state workforce.

In New York, Gov. David Paterson (D) has warned that the state has a severe cash-flow problem this month. He has reduced payments to school districts and counties.

Also, he has been critical of a plan put forth by the Legislature to either cut or raise $2.7 billion since it does not address the state’s long-term structural imbalance.

On Friday, outgoing Virginia Gov. Tim Kaine (D) proposed $2.3 billion in budget cuts to try to cover a $4.2 billion shortfall in the budget from 2010 to 2012. Included in the proposal is the elimination of 1,879 jobs and 664 layoffs, including some jobs at the University of Virginia.

http://www.csmonitor.com/USA/2009/1218/ ... for-states

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Sun Dec 20, 2009 12:11 am
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Post Re: US ECONOMY
Illinois enters a state of insolvency
By: Paul Merrion, Greg Hinz and Steven R. Strahler January 18, 2010

As Illinois' fiscal crisis deepens, the word "bankruptcy" is creeping more and more into the public discourse.

"We would like all the stakeholders of Illinois to recognize how close the state is to bankruptcy or insolvency," says Laurence Msall, president of the Civic Federation, a fiscal watchdog in Chicago.

"Bankruptcy is the reality that looms out there," Republican gubernatorial candidate Andrew McKenna Jr. says.

While it appears unlikely or even impossible for a state to hide out from creditors in Bankruptcy Court, Illinois appears to meet classic definitions of insolvency: Its liabilities far exceed its assets, and it's not generating enough cash to pay its bills. Private companies in similar circumstances often shut down or file for bankruptcy protection.

"I would describe bankruptcy as the inability to pay one's bills," says Jim Nowlan, senior fellow at the University of Illinois' Institute of Government and Public Affairs. "We're close to de facto bankruptcy, if not de jure bankruptcy."

Legal experts say the protections of the federal bankruptcy code are available to cities and counties but not states.

While Illinois doesn't have the option of shutting its doors or shedding debts in a bankruptcy reorganization, it seems powerless to avert the practical equivalent. Despite a budget shortfall estimated to be as high as $5.7 billion, state officials haven't shown the political will to either raise taxes or cut spending sufficiently to close the gap.

As a result, fiscal paralysis is spreading through state government. Unpaid bills to suppliers are piling up. State employees, even legislators, are forced to pay their medical bills upfront because some doctors are tired of waiting to be paid by the state. The University of Illinois, owed $400 million, recently instituted furloughs, and there are fears it may not make payroll in March if the shortfall continues.

Without quick corrective action or a sharp economic upturn, Illinois is headed toward a governmental collapse. At some point, unpaid vendors will stop bidding on state contracts, investors will refuse to buy Illinois bonds and state employees will get paid in scrip, as California did last year.

"The crisis will come when you see state institutions shutting down because they can't pay their employees," says David Merriman, head of the economics department at the University of Illinois at Chicago.

A record $5.1 billion in state bills was past due at year end, almost doubling to 92 days from 48 days a year earlier the average amount of time it takes the state to pay vendors such as doctors, hospitals, non-profit service providers and other contractors.

"I don't see any light at the end of the tunnel," says Dan Strick, CEO of SouthStar Services, a Chicago Heights non-profit that helps people with developmental disabilities. "It seems to be getting worse and worse, and the delays longer and longer." SouthStar hasn't been paid since July, forcing him to borrow to keep afloat.

con.

http://www.chicagobusiness.com/cgi-bin/ ... 0&seenIt=1

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Mon Jan 18, 2010 11:57 pm
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Post Re: US ECONOMY
California: Is Default Inevitable?
by: Adam Sharp January 10, 2010

California is (still) sliding towards an insolvency event of some sort. Their budgetary and legislative issues are insurmountable. Making the drastic cuts necessary is a near impossibility, and jacking up taxes on the beaten-down public is equally untenable.

Now the WSJ reports that the Governator is seeking $6.9b in Federal funds. Arnold is threatening to slash welfare spending, medicaid, and other social programs (he has made similar threats before, as I noted in May ‘09).

Try to imagine, for a second, what would happen if California halted welfare payments, or food stamps. It’s safe to say that things could escalate quickly.

From the WSJ (01/07/2009):

Quote:
Republican Gov. Arnold Schwarzenegger asked for $6.9 billion in federal funds in his state-budget proposal Friday and warned that state health and welfare programs would be threatened without the emergency help.

Mr. Schwarzenegger’s proposed $82.9 billion general-fund budget for the 2010-11 fiscal year would close a $19.9 billion gap over 18 months. In addition to the federal aid, he called for $8.5 billion in cuts and $4.5 billion in alternative funding to balance the budget.

‘It’s time to enact long-term reforms that will change the way the most populous state and the federal government work together,’ Mr. Schwarzenegger said. He and state legislative leaders plan to visit Washington to lobby for bailout money. White House budget officials weren’t available for comment on the governor’s request.

Mr. Schwarzenegger said that without the federal aid, he would propose cutting $4.6 billion from state assistance programs and raise another $2.4 billion, largely by extending the suspension of tax breaks.


Default Inevitable?

The last time an American state defaulted on their debt was in the 1840’s, as Bill Watkins notes in What Happens When California Defaults? (must-read). Watkins, who has a Ph.D in economics from UC Santa Barbara, thinks default is the most likely outcome. Here are his thoughts on the fallout:

Quote:
We’re left with the question: what happens when California defaults? The worst case would be the mother of all financial crises. According to the California State Treasurer’s office, California has over $68 billion in public debt, but the Sacramento Bee’s Dan Walters has tried to count total California public debt, including that of local municipalities, and his total reaches $500 billion. Whatever the amount, the impact of default could be larger than the debt amount would imply. Other states – New York, Illinois, New Jersey, for example – are in almost as bad shape as California, and they could follow California’s example.

The realization that a state could default would shock markets every bit as much as when Lehman Brothers failed. Given the precarious state of our economy and the financial sector, another fiscal crisis would be disastrous, with impacts far beyond California’s borders.


con.

http://seekingalpha.com/article/181777- ... inevitable

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Tue Jan 19, 2010 12:06 am
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Post Re: US ECONOMY
Fund N.J.'s pensions: Towns, state can't keep putting it off
By Star-Ledger Editorial Board/The Star-Led...
January 08, 2010, 5:05AM

When then-candidate Chris Christie met with The Star-Ledger Editorial Board last fall he would consider deferring the state's pension payments if elected. A pension deferral bill has been pulled from consideration in state Senate and Assembly committees, but the idea could be resurrected in the new session. It would allow municipalities to defer half of their pension contributions for the second year in a row.

Because mayors are trembling, and because legislators have a history of hiding under desks when faced with a fiscal crisis, a deferment bill eventually might pass — even though the state’s public-worker pension system is already dangerously underfunded.

So, the question becomes: Will Chris Christie — the tough-talking prosecutor who promised to be a fiscal hanging judge — sign the bill if it reaches his desk? Let’s hope not.

Christie recently said he is against letting the towns off the hook, and he criticized Gov. Jon Corzine a year ago for allowing towns to defer up to a half-billion dollars in pension payments. But Christie also told The Star-Ledger in October that, if elected, he would consider deferring the state’s pension payments. It’s hard to see how it would be OK for the state to ignore its pension responsibilities while forcing municipalities to ante up. Is Christie already infected with the Trenton epidemic — the pay-later flu?

con.

http://blog.nj.com/njv_editorial_page/2 ... state.html

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Tue Jan 19, 2010 12:11 am
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Post Re: US ECONOMY
Editorial
Some Honesty in Albany

Published: January 6, 2010

Long before Gov. David Paterson delivered his annual report on New York’s condition on Wednesday, everyone knew that the state of the state was desperate. New York is crippled by a mounting budget crisis and saddled with a Legislature that is incompetent in its governance and corrupt in its behavior.

To his great credit, Mr. Paterson skipped the usual, and usually insincere, homages to his fellow politicians and went straight into an unsparing assessment of fiscal and political reality. He insisted that the Legislature attack economics and ethics at the same time.

“Cultures of addiction to spending, power and approval have ruined empires, and now they threaten the Empire State,” he said, reciting his powerful speech from memory because his limited eyesight prevents him from reading from paper or a teleprompter.

The full details of his economic plans will become clearer when he presents his budget later this month. But Mr. Paterson made a good start on Wednesday by asking the assembled lawmakers — who mostly looked on sullenly or applauded wanly — to cap spending so Albany can finally get a grip on a deficit that is expected to be about $8 billion this year. “There are more deficits up ahead that will require an even greater sacrifice,” he said.

Mr. Paterson said he directed Lt. Gov. Richard Ravitch to create a four-year budget plan to replace the year-by-year recklessness that leaves counties, cities and towns vulnerable to economic downturns like the one now paralyzing them. Among other things, the governor proposed eliminating the costly and increasingly corrupt Empire Zone economic development program, which ended up shuffling jobs around from place to place. He suggested replacing it with a program focused on creating jobs in the high-tech and clean-energy sectors.

But Mr. Paterson went beyond the necessary hard talk about budgets and demanded that legislators “bring fairness and openness to government, which has very little of either.” Albany’s lawmakers should be worried about both of those things, and many swiftly denounced his proposal as an attempt to bolster low poll ratings. That’s fine with us. At this point, anything that forces the State Legislature to confront reality is valuable.

Here are a few of Mr. Paterson’s best ideas:

¶To clean up one of the nation’s most notoriously corrupt campaign finance systems, he proposes encouraging much-needed competition by phasing in public financing of campaigns. That would mean limiting contributions to $1,000 instead of $55,900 for state races. Lobbyists would be allowed to pitch in only $250. He would end the scandalous practice of writing checks for party “housekeeping” that have no limits at all.

¶He wants to ban all contributions from corporations, including limited liability corporations, one of the latest tricks for adding big bucks to campaigns. His bill would also ban transfers from committee to committee, which allows politicians to pile money from various sources into one campaign. He wants to limit personal use of campaign dollars, finally, and he wants to increase penalties for violations of this new law.

¶To tackle the pay-to-play culture, the governor’s bill would require everybody earning public money to disclose all outside business income in detail. His bill would even require lawyers to itemize their income and clients — an idea that the Assembly speaker, Sheldon Silver, an attorney who profits handsomely from New York’s lack of transparency, is expected to fight ferociously.

¶He proposed creating a board of financial experts to help oversee the state pension fund. The comptroller is now the sole trustee of $126 billion in pensions.

¶He wants to end double-dipping by closing a 1995 loophole that permits legislators to collect a state pension along with their legislative salary.

¶He also proposed a truly independent ethics commission to oversee all branches of the government. The state’s top politicians would appoint a “designating committee” that would then appoint the commission. That is a far cry from today’s Legislative Ethics Commission, which is made up of legislators who — to everyone’s disgust but no one’s surprise — generally find nothing wrong with their colleagues’ misbehavior.

con.

http://www.nytimes.com/2010/01/07/opinion/07thur1.html

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Tue Jan 19, 2010 12:28 am
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Post Re: US ECONOMY
Moody’s warns US of credit rating fears

By Michael Mackenzie in New York and Gillian Tett in London

Published: February 3 2010 19:53 | Last updated: February 3 2010 19:53

Moody’s Investors Service fired off a warning on Wednesday that the triple A sovereign credit rating of the US would come under pressure unless economic growth was more robust than expected or tougher actions were taken to tackle the country’s budget deficit.

In a move that follows intensifying concern among investors over the US deficit, Moody’s said the country faced a trajectory of debt growth that was “clearly continuously upward”.

http://www.ft.com/cms/s/a82cfe04-10f5-1 ... i_referer=

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Thu Feb 04, 2010 8:10 pm
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Post Re: US ECONOMY
Jobless claims unexpectedly jump last week

Report deals setback to hopes economy on the verge of job growth
Reuters
updated 7:42 a.m. CT, Thurs., Feb. 18, 2010

WASHINGTON - The number of newly laid-off workers filing applications for unemployment benefits unexpectedly surged last week after having fallen sharply in the previous week. The gain dampened hopes about how quickly the labor market may improve this year.

The Labor Department said Thursday that first-time claims for unemployment benefits rose by 31,000 to a seasonally adjusted 473,000.

The increase followed a drop of 41,000 in the previous week which had raised hopes that the labor market, which has lost 8.4 million jobs since the recession began in December 2007, could be improving.

Thursday's news deflated analysts' hopes that new claims would continue to decline. Economists surveyed by Thomson Reuters had expected new claims to fall modestly.

Still, the four-week average for claims did decline by 1,500 to 467,500, near the lows that were reached at the end of last year. The average is considered a more stable indicator because it smooths out the week-to-week volatility.

Claims at the beginning of this year had been affected by a holiday backlog. The easing of the backlog had elevated the numbers for the previous three weeks.

That temporary boost appears to have worn off.

http://www.msnbc.msn.com/id/35457799/ns/business-stocks_and_economy/

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Thu Feb 18, 2010 7:13 am
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Post Re: US ECONOMY
Bob Chapman on the Sovereign Economist 02 Mar 2010

Bob Chapman:
Quote:
Our debt is totally un-payable.
We are heading like a ship is heading towards an iceberg , the stock market can collapse at any time , the US dollar could become worthless in no time , people should wake up and get ready by learning survivalism and converting their savings into real gold and silver assets , The world is upside down , and one needs to be walking on his head to see it straight ...The Government and all its agencies are bankrupt and cannot guarantee you anything let alone your bank deposit ...


http://bobchapman.blogspot.com/2010_03_01_archive.html

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Sat Mar 06, 2010 4:36 pm
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Post Re: US ECONOMY
Congressional estimates show grim deficit picture

WASHINGTON (AP) -- A new congressional report released Friday says the United States' long-term fiscal woes are even worse than predicted by President Barack Obama's grim budget submission last month.

The nonpartisan Congressional Budget Office predicts that Obama's budget plans would generate deficits over the upcoming decade that would total $9.8 trillion. That's $1.2 trillion more than predicted by the administration.

The agency says its future-year predictions of tax revenues are more pessimistic than the administration's. That's because CBO projects slightly slower economic growth than the White House.

The deficit picture has turned alarmingly worse since the recession that started at the end of 2007, never dipping below 4 percent of the size of the economy over the next decade. Economists say that deficits of that size are unsustainable and could put upward pressure on interest rates, crowd out private investment in the economy and ultimately erode the nation's standard of living.

Still, the Feb. 1 White House budget plan was a largely stand-pat document that avoided difficult decisions on curbing the unsustainable growth of federal benefit programs like the Medicare health care program for the elderly and Medicaid, which provides health care to the poor and disabled.

Instead, Obama has created an 18-member fiscal reform commission that's charged with coming up with a plan to shrink the deficit to 3 percent of the economy within five years. But the Republicans to be named to the panel by congressional GOP leaders are unlikely to go along with any tax increases that might be proposed, which could ensure election-year gridlock.

"While the president is intent on ramming through Congress a new trillion-dollar health-care entitlement, he appears far less concerned with addressing the looming crisis of entitlement spending already on the books," said Rep. Paul Ryan of Wisconsin, the top Republican on the Budget Committee. "Instead, he delegates this task to a 'Fiscal Commission' -- which would not even report until after the next election."

The report says that extending tax cuts enacted in 2001 and 2003 under GOP President George W. Bush and continuing to update the alternative minimum tax so that it won't hit millions of middle-class taxpayers would cost $3 trillion over 2011-2020. The tax cuts expire at the end of this year and Obama wants to extend them -- except for individuals making more than $200,000 a year and couples making $250,000.

For the ongoing budget year, CBO predicts a record $1.5 trillion deficit. That's actually a little better than predicted by the White House, but at 10 percent of gross domestic product, it's bigger than any deficit in history other than those experienced during World War II.

The new report predicts that debt held by investors, including China, would spike from $7.5 trillion at the end of last year to $20.3 trillion in 2020. That means interest payments would more than quadruple -- from $209 billion this year, to $916 billion by the end of the decade.

http://finance.yahoo.com/news/Congressi ... 9.html?x=0

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Sat Mar 06, 2010 4:48 pm
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Post Re: US ECONOMY
Deficit in Logic: Moody's Threatens to Downgrade the United States

The media have been bombarding the public with scare stories about the country's "record" budget deficits. Newspapers and news shows that never bothered to mention the growth of the $8 trillion housing bubble that eventually crashed the economy are giving us an endless barrage of stories claiming that current and projected future deficits will bankrupt our grandchildren. The implication of most of these stories is that we have to cut back Social Security and Medicare for all those high living seniors as a matter of generational equity.

Most of these deficit stories feature a potpourri of wrong or misleading information. One item that is especially effective at raising fear levels in the public is the warnings from Moody's, the huge bond-rating agency, that it may downgrade its rating of U.S. government debt. U.S. government debt has always held Moody's highest AAA rating. If Moody's were to lower the rating on government debt it would be a huge embarrassment to the country; essentially an indictment of the government's poor financial practices. It would also could have the practical effect of raising the government's interest burden as a downgrade could lead to higher interest rates on U.S. government debt.

Before we rush to cut our parents' Social Security and Medicare it would be worth asking a couple of questions. First, people should know a bit more about Moody's and the other major bond-rating agencies. It would be nice to think that we had bond-rating agencies that could be trusted to examine the books of governments and businesses and tell us the truth about their financial merits. However, that is not the country in which we live.

Moody's and the other bond rating agencies have featured prominently in the build-up to the financial crisis. These agencies gave investment grade ratings to complex financial instruments filled with subprime mortgages and other bad assets. These ratings allowed Goldman Sachs and other investment banks to sell this trash around the country and the world, ensuring that the effects of the collapse of the housing bubble would reverberate throughout the financial system.

It was not just incompetence that caused Moody's to misunderstand the quality of the issues it was rating; it was corruption. Moody's and the other bond rating agencies were getting paid by the banks whose assets that they were rating. The bond-rating agencies knew that these companies wanted investment grade ratings for their issues. As one examiner for Standard&Poor's said in an e-mail, they would give investment grade ratings to products "structured by cows."

This record must be kept in mind when considering the possibility of a Moody's downgrade of U.S. government debt. It is no secret that many on Wall Street would love to see Social Security and Medicare cut back or even privatized. Investment banker Peter Peterson has even committed $1 billion toward promoting this agenda. When Moody's threatens to downgrade U.S. government debt, or if it actually does so, it may reflect its actual assessment of the creditworthiness of the U.S. government or it could be a reflection of the Wall Street agenda to cut back these key public programs.

There is one way in which the public can better recognize Moody's motivations. All banks, including giants like Citigroup and Goldman Sachs, hold huge amounts of U.S. government debt. There are also reliant on the U.S. government for all sorts of reasons, including potential bailouts. If the U.S. government were to default on its debts, then it would almost certainly wipe out every major bank in the country. There is no plausible scenario in which the U.S. government defaults on its debts and the banks will still be able to make good on their debt payments.

This means that if Moody's were to downgrade the government's debt, to be consistent it must also downgrade the debt of Citigroup, Goldman Sachs and the other big banks. If Moody's downgrades the government's debt, without downgrading the debt of the big banks -- or even threatens to downgrade the government's debt without also threatening to downgrade the debt of the big banks -- then it is more likely acting in pursuit of Wall Street's political agenda than presenting its best assessment of the creditworthiness of the U.S. government.

It is unfortunate that we have to suspect a major credit rating agency of such dishonesty, but given its track record, serious people have no choice. To paraphrase an old Winston Churchill joke, we already know about the character of the bond-rating agencies, we are only asking if they are prostituting themselves now.

http://www.huffingtonpost.com/dean-baker/deficit-in-logic-moodys-t_b_510762.html

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Wed Mar 24, 2010 7:48 am
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Hat tip to 2012Gregg

New York State To Shut Down at 12:01 p.m. on Tuesday?


By Michael Quint
June 14, 2010, 12:07 AM EDT

June 14 (Bloomberg) -- As New York lawmakers debate an emergency spending bill to keep the government running for another week, agency heads and their 150,000 workers are making contingency plans if the measure fails, leaving the state without authority to pay all its bills.

According to agency memos, employees were warned of the possibility that buildings might be closed and some of them wouldn’t be working tomorrow if the appropriation bill doesn’t pass by midnight tonight.

con.

http://www.businessweek.com/news/2010-0 ... -case.html
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State shutdown looms tomorrow?
Reported by: Torie Wells

At the Puerto Rican parade in New York City Sunday, Gov. David Paterson briefly reminded New Yorkers that a state shutdown would be no celebration.

If the Legislature doesn't pass the latest extender bill Monday that's what would happen at 12:01 p.m. on Tuesday - closing state courts, cutting social services, ending unemployment benefits.

con.

http://www.fox23news.com/news/local/sto ... ZNygw.cspx
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Chaos, Anarchy To Reign If Paterson Shuts Down NY
Marcia Kramer
ALBANY (CBS) ―

Chaos and anarchy. That's what New York Gov. David Paterson is warning if he's forced to shut down the government in a few days.

The clowns in the state Legislature, now deadlocked for 71 days on the budget, are ready to take down the "big tent" and bring state government to a standstill. At least that's what Paterson thinks.

"No one knows the full ramifications of a government shutdown," said Paterson. "It would create unimaginable chaos around the state and the greater metropolitan areas."

Such chaos includes closing all state parks, motor vehicles offices, courts, and even the lottery. Public assistance payments would not be made and unemployment payments might also be held up.

con.

http://wcbstv.com/politics/nys.govermen ... 45114.html

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Mon Jun 14, 2010 7:36 am
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Post Re: US ECONOMY
Now that seems scary, what happens if a City goes Bankrupt :hmm :doh :nono

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Mon Jun 14, 2010 12:31 pm
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Post Re: US ECONOMY
If a city goes bankrupt, there will be no garbage pickup, no police or fire protection, no repair of streets, no cleaning of streets, parks and parking lots, schools will close, sewers will remain clogged, everyone who works for the city will be out of work. Imagine a city or town with no police to prevent looting, robberies, muggings, thefts, and worse. The volunteer fire departments, where they exist, will try to handle the fires, but they won't have the funds for gas, equipment, repairs. Chaos will reign. There are probably other services that will be curtailed as well - libraries where they depend on city funds.....

BUT in the prior articles we are talking about a whole STATE closing down most of its services. Take the above and multiply by 100.

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Mon Jun 14, 2010 7:56 pm
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I can only agree with you on this rutsuyasun

I my country Local Councils have been going bankrupt, and what followed is protests from the people. Small scale anarchy with the burning of everything flammable, including buildings.

It's not a good experience even though I was not in any of these locations. It has the quality of leaving everyone in despair for those who lose out and you thinking - "What if it happens everywhere?"

The funny thing is that we are experiencing the same nonsense as in the rest of the world. The perpetrators that "stole" the money or misappropriated the contracts that were to give service to the people are not brought to book. The get suspended on full pay pending an eighteen month "enquiry"!

Are these not the signs of things to come?

The Ancients spoke about when the big change is near, the "structures" will start breaking down. :hmm


:candle

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Tue Jun 15, 2010 1:18 am
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Well isn't that just something to look forward too :sarcasism

:huh :huh :huh :huh

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US Treasuries hit by biggest sell-off in two years

By Richard Milne in London and Michael Mackenzie in New York

Published: December 8 2010 20:23 | Last updated: December 8 2010 22:18

US Treasuries suffered their biggest two-day sell-off since the collapse of Lehman Brothers, following a torrid month that has seen borrowing costs for western governments soar.

Germany, Japan and the US have all seen their benchmark market interest rates rise by more than a quarter in the past month while the UK’s has risen by nearly a fifth.

“You could argue that we are at a new stage where the global cost of capital goes higher and higher,” said Steven Major, global head of fixed income research at HSBC.

snip

The market moves came after President Barack Obama agreed with Congressional Republicans to extend Bush-era tax cuts and combine them with a $120bn payroll tax holiday. But investors and traders were divided over whether that was sufficient to explain the recent global spike in yields.

http://www.ft.com/cms/s/0/e550f996-0304 ... z17dQs97Yu

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Thu Dec 09, 2010 10:08 am
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Danger signals:

Do you want some more doom and gloom?

*There are reports of "panic buying" of silver and other precious metals right now.

*Investors are bailing out of municipal bonds at an absolutely staggering rate.

*S&P and Moody's have both warned once again that the United States is in danger of having its credit rating slashed if it does not get government debt under control.

*U.S. housing prices have now fallen further during this economic downturn than they did during the Great Depression of the 1930s.

Meanwhile, America's economic infrastructure continues to be taken apart piece by piece.

The United States is losing more jobs to China. In fact, the United States is losing more high technology "green jobs" to China.

Evergreen Solar, a company that manufactures solar panels, is closing their factory in Devon, Massachusetts and they are moving their production facilities to China. This is going to result in the loss of 800 good American jobs.

snip

at this point one out of every six Americans is now enrolled in at least one government-run anti-poverty program.

con. http://theeconomiccollapseblog.com/arch ... -and-gloom

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Wed Jan 26, 2011 9:09 am
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Where did the stimulus money go? Why did the gov't bail out the auto industry? To support other nations' economies of course!

GM to invest extra $540 million in Mexico to build motors


US giant General Motors will invest $540 million to produce two low-emission motors in central Mexico, the company announced here Thursday, accompanied by President Felipe Calderon.

The latest project for GM in Mexico would create 500 direct and another 500 indirect jobs in its plant in Toluca, Calderon said.

GM has four plants in Mexico, and has invested some $5 billion here since 2006, Calderon said.

con. http://news.yahoo.com/s/afp/20110120/ts ... ocompanygm

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Foreclosure activity up across most US metro areas
Jan 27, 7:16 AM (ET)

By ALEX VEIGA

LOS ANGELES (AP) - The foreclosure crisis is getting worse as high unemployment and lackluster job prospects force homeowners in an increasing number of U.S. metropolitan areas into dire financial straits.

In Seattle, Houston and Chicago, cities that were relatively insulated from foreclosures early on in the housing bust, a growing number of homeowners are falling behind on mortgage payments and finding themselves on the receiving end of foreclosure warnings. Others have already seen their homes repossessed by lenders.

con. here: http://apnews.myway.com/article/20110127/D9L0M4603.html

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Initial Jobless Claims in U.S. Rose Last Week to 454,000
By Alex Kowalski - Jan 27, 2011 8:52 AM E

More Americans than forecast filed first-time claims for unemployment insurance payments last week, indicating it will take time for the labor market to mend.

Applications for jobless benefits increased by 51,000 to 454,000 in the week ended Jan. 22, Labor Department figures showed today. Economists forecast 405,000 claims, according to the median estimate in a Bloomberg News survey. The number of people on unemployment benefit rolls rose, while those collecting extended payments fell.

con.

http://www.bloomberg.com/news/2011-01-2 ... 4-000.html

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CBO Director Says Obamacare Would Reduce Employment by 800,000 Workers | The Weekly Standard


Testifying today before the House Budget Committee, Congressional Budget Office (CBO) Director Doug Elmendorf confirmed that Obamacare is expected to reduce the number of jobs in the labor market by an estimated 800,000. Here are excerpts from the exchange:

con. http://www.weeklystandard.com/blogs/cbo ... 47288.html

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Mon Feb 14, 2011 12:31 am
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U.S. credit rating outlook lowered by S&P
By Ben Rooney, staff reporterApril 19, 2011: 8:20 AM ET


NEW YORK (CNNMoney) -- The United States is at risk of having its pristine credit rating lowered if politicians in Washington cannot agree on a plan to bring down the nation's deficits over the long term, ratings agency Standard & Poor's said Monday.

S&P, one of the three main agencies that rate the ability of companies and sovereign nations to repay their debts, lowered its outlook for America's long-term credit rating to "negative" from "stable."

con. here: http://money.cnn.com/2011/04/18/news/ec ... /index.htm

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Tue Apr 19, 2011 1:41 pm
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Jobless claims jump points to slowing recovery

WASHINGTON (Reuters) - The number of Americans filing for jobless aid rose to an eight-month high last week and productivity growth slowed in the first quarter, clouding the outlook for an economy that is struggling to gain speed.

Article found here

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