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Business Week: 47 States Face Collective Budget Shortfall of $350 Billion
Ref - http://www.businessweek.com/bwdaily/dnflash/content/may2009/db20090522_625957.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis
Some 47 states face budget gaps in the 2010 and 2011 fiscal years. The collective shortfall is a staggering $350 billion. Congress offered some relief with $140 billion in state funding packed into the $787 billion stimulus bill passed in February. California is set to receive $8 billion of that. But the appetite in Washington to work out additional funding for the true basket cases like California is nil . . . That leaves states turning to a mixed bag of revenue hikes and expense cuts. Governors have announced furloughs of workers, layoffs, fee hikes, and across-the-board spending cuts. Sixteen states are enacting tax hikes and 17 others are considering doing so . . .
Los Angeles Times: Governor Proposes Dismantling Welfare for Families
Ref - http://www.latimes.com/news/local/la-me-budget22-2009may22,0,4603538.story
With deficit forecasts growing darker by the day, Gov. Schwarzenegger is considering a plan to slash California's safety net for the poor by eliminating the state's main welfare program, health insurance for low-income families and cash grants to college students. The stark proposal surfaced at a joint legislative hearing on Thursday that followed the governor's decision to withdraw a week-old plan to borrow $5.5 billion to help balance the budget
Wall Street Journal: Americans Clash With Immigrants Over Job Openings
Ref - http://online.wsj.com/article/SB124303310871748603.html#mod=todays_us_nonsub_page_one
Now, with U.S. unemployment at a 25-year high, they are also fiercely coveted. American workers -- who for years have largely avoided fruit -picking, office-cleaning and meat-processing shifts -- are increasingly vying for these jobs with immigrants, creating flashpoints in places like Shelbyville, Tennesse. The rising friction has been on display at the employment center here. When Tyson put out a call for applications, in February, shoving and cursing broke out between locals and immigrants jockeying for position at the head of the line. With too few jobs to go around, outraged locals demanded that the work go to residents . . .
UK Independent: Cold, Hunger, Job Losses Ignite Dissent in Russian Town
Ref - http://www.independent.co.uk/news/world/europe/cold-hunger-and-job-losses-ignite-dissent-in-russian-town-1690418.html
The Kremlin's worst fears are being played out in a small town outside St Petersburg, as angry residents of crisis-hit Pikalevo marched upon the offices of the mayor and demanded improved living conditions. The final straw came when the town lost heating and hot water as the local power station couldn't afford to keep running. Even kindergartens and hospitals were left without hot water. The town's gas supply was also cut off.
James Howard Kunstler: "About a week remains before General Motors is reduced to lunch meat on industrial-capital's All-You-Can-Eat buffet . . ."
Ref - http://lifeaftertheoilcrash.net/Archives2009/KunstlerMay25GMBankruptcy.html
. . . the bankruptcy of General Motors may set in motion a chain of events hat will accelerate the destructive unwind of the bad credit economy, the damage to our bond values, the loss of faith in our currency, and the authority and legitimacy of our leaders. This last dire outcome might be allayed if, say, President Obama directed his policy efforts to the items in the paragraph above, that is, a reality-based agenda for true change in how we live - but who can feel confident about that happening these days? Maybe it will take a horrifying chain of events to get Mr. Obama there. And then, tragically, he may be overwhelmed by the chain of events itself . . .
To the author of the whiniest little private message I ever saw . . .
My answer is: No, I won't. So, get over it.
Washington Post: Areas Hit Hardest by Economic Collapse in Need of Food
Ref - http://www.washingtonpost.com/wp-dyn/content/article/2009/05/21/AR2009052104403.html
Ed Montgomery is so new to his job that the only things on the wall of his sparse office at the Department of Labor are a couple of unemployment charts and a pair of color-coded maps highlighting the communities hardest hit by the collapse of the American auto industry. The Midwest is a blotch of dark purple. A month into the job . . . Montgomery said a plea in Warren, Mich., reminded him of how serious the crisis is for some cities. A United Way director told Montgomery the No. 1 request on a help line is food.
Wayne Madsen: The Secret History of the Synthetic H1N1 "Swine" Flu Virus
Ref - http://onlinejournal.com/artman/publish/article_4724.shtml
The history of the extraction of the genetic material from the corpses of victims of the 1918 Spanish influenza virus who were buried in Arctic permafrost is part X-Files and part Jurassic Park. After an unsuccessful 1951 mission, that involved U.S. biological warfare specialists, to extract 1918 Spanish flu genetic material in 1951 from a cemetery in the Inupiat Eskimo village of Brevig Mission, Alaska, scientists made another attempt, a successful one it turns out, in 1997. Dr. Johan Hultin, from the State University of Iowa, successfully extracted genetic material from the corpse of an obese 30-something female who died from the Spanish flu in 1918 . . .
John Michael Greer: The Internet Won't Be Around as Long as You Think
Ref - http://www.lifeaftertheoilcrash.net/Archives2009/GreerInternet.html
The survival of the internet in an age of dwindling energy supplies is subject to the same hard logic. The internet demands huge inputs of energy and resources. Those were easy to provide during the quarter century from 1980 to 2005, when the price of energy was artificially forced down to the lowest levels in human history, and the same glut of cheap energy made it possible to build and power the internet without impacting other sectors of the economy. As energy becomes scarce and costly in the not too distant future, on the other hand, the demands of the internet will begin to conflict with the demands of other economic sectors. Now it's true, of course, that the internet could be operated more efficiently than it is today. Efforts to increase efficiency, however, are subject to the law of diminishing returns;
Bloomberg: "The U.S. government's AAA rating heading for the dumpster"
Ref - http://www.bloomberg.com/apps/news?pid=20601039&sid=aKOzWiTDseUE&refer=columnist_gilbert
The odds on the dollar, Treasury bonds and the U.S. government’s AAA grade all heading for the dumpster are shortening. While currency forecasting is a mug’s game and bond yields can’t quite decide whether to dive toward deflation or surge in anticipation of inflation, every time I think about that credit rating, I hear "the sound of inevitability."
S&P Earnings Down 90% Even as Market is Up
Ref - http://www.chartoftheday.com/20090515.htm
While the stock market is up sharply since early March, the economy as well as corporate earnings continue to suffer. Today's chart helps provide some perspective as to the magnitude of the current economic decline. Today's chart illustrates that 12-month, as-reported S&P 500 earnings have declined over 90% over the past 20 months (with over 90% of S&P 500 companies having reported for Q1 2009), making this by far the largest decline on record (the data goes back to 1936). In fact, real earnings have dropped to a record low and if current estimates hold, Q3 2009 will see the first 12-month period during which S&P 500 earnings are negative
My Personal Credit Crisis
Ref - http://www.nytimes.com/2009/05/17/magazine/17foreclosure-t.html
Something important to note at the end of the article: the guy hasn't paid his mortgage (from Chase) in over eight months and he's still waiting for them to call to "drop the axe" as he says. Many people in the economic doom-o-sphere have suspected that there are huge swaths of the population that, like the author of the Times piece, are essentially living "rent free" at this point. The banks, naturally, don't want to admit this for two reasons: first, it could spook their investors. Second, if people got word that at least a few of their neighbors are living in their homes 6, 9, or even 12 months without paying, they would probably just say "f--k it" and stop paying as well. It will be interesting to track the aggregate reaction to this part of the article as it's what you might call a "highly actionable" piece of financial intel.
NY Times: Credit Card Debt a Timebomb Ready to Blow Through Economy
Ref - http://www.nytimes.com/2009/05/18/opinion/18kim.html?_r=1
Americans’ credit card debt now tops $960 billion. And with the economy in a downswing, it’s hard to see how the debt can ever be paid back.
The Exiled Online: Inside New York City's Real Estate Propaganda Machine
Ref - http://exiledonline.com/the-making-of-k-town-inside-new-yorks-real-estate-hype-machine/
Across the US, similar salesmanship - masquerading as journalism - can be found in money-hemorrhaging publications, kept on life-support by brokers’ ad revenue. Reading the LA Times most e-mailed article this week, it’s difficult to imagine the infusion of real-estate cash not holding editorial sway. "[P]ent-up demand in traditionally stable or chic areas have kept prices up — not as high as the market’s peak, but not nearly as low as they feared," the broker-sourced piece gushes, bending over backwards to assure readers that - contrary to popular belief - the sky hasn’t fallen . . .
National Geographic Report on the Global Food Crisis: "The End of Plenty"
Ref - http://ngm.nationalgeographic.com/2009/06/cheap-food/bourne-text
It is the simplest, the most natural of acts, akin to breathing and walking upright. We sit down at the dinner table, pick up a fork, and take a juicy bite, oblivious to the double helping of global ramifications on our plate. Our beef comes from Iowa, fed by Nebraska corn. Our grapes come from Chile, our bananas from Honduras, our olive oil from Sicily, our apple juice — not from Washington State but all the way from China. Modern society has relieved us of the burden of growing, harvesting, even preparing our daily bread, in exchange for the burden of paying for it. Only when prices rise do we notice. And the consequences of our inattention are profound
401(k)s Hit by Withdrawal Freezes
Ref - http://online.wsj.com/article/SB124148012581385199.html
Some investors have lost hope of recovering their money. Judith Sterner, a 69-year-old part-time nurse, had more than $12,000 in the fund when she tried to transfer that balance to a money market last fall. But her transfer was denied, and her stake has since declined to less than $10,000. "This $12,000 represents a year of my retirement money that I don't have," said Ms. Sterner, of Morton Grove, Ill.
JHK isn't the only one. Money and Markets is predicting a swift and substancial drop in equity values for a numerous reasons right around the corner.
CNN Money: Schools, Agencies See Big Increase in Homeless Families
Ref - http://www.cnn.com/2009/POLITICS/05/02/homeless.families/
For years, homelessness has been depicted as that of an individual man or woman living on the street and begging for money. But with the perfect storm of the foreclosure crisis and the faltering economy, more and more families are becoming homeless. According to a recent count by the Metropolitan Washington Council of Governments, the number of homeless families in the Washington region alone has jumped 15 percent since last year.
Associated Press: California May Need to Borrow $20 Billion Next Year
Ref - http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/05/07/state/n101250D05.DTL
Gov. Arnold Schwarzenegger's finance officials had estimated the state would have to borrow $13 billion for California to get through the 2009-10 fiscal year. . . Dickerson urged Schwarzenegger and the Legislature to resume work on the budget since passing a spending plan in February. The budget analyst in March said the recession created another $8 billion hole just weeks after the end of a bruising fight to close a $42 billion gap through June 2010.
Associated Press: General Motors Moving Closer to Bankruptcy Filing
Ref - http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/08/BU0417GLMV.DTL&type=business
The company lost $6 billion in the first three months of the year. The results were bad enough to bring a warning from Chief Financial Officer Ray Young, who acknowledged the difficulty of climbing out of a steep decline even if the company cuts costs. "Once you start losing revenue, you get yourself into a vicious circle in which you cannot recover," he told reporters on a conference call.
Der Spiegel: Freighters Being Scrapped En Masse Through South Asia
Ref - http://www.spiegel.de/international/business/0,1518,623250,00.html
The global economic and trade crisis is so severe that a growing number of ships, some larger than the Titanic, are being pulled from their routes and sent to scrap yards to be sold for parts. Freight and charter rates have fallen and regularly scheduled passenger lines are being cancelled. Those container ships that are still sailing can barely cover their costs. Over-capacity created in recent boom times has accelerated the trend toward scrapping ships.
Mike Whitney: Bank Stress Tests Just A "Giant Public Relations" Ploy
Ref - http://www.counterpunch.org/whitney05082009.html
The stress tests are a public relations ploy designed to build confidence in the banking system and to fend off demands that insolvent banks be taken into conservatorship by the government. The market will decide whether Geithner's tests are credible or not; the jury is still out. Initial results indicate significantly smaller losses than estimates by the IMF and the vast number of economists. So, who is right; Geithner or the IMF? If Geithner is right--and the banks are in such great shape -- then why is the taxpayer being asked to provide up to $2 trillion through the Term Asset-backed Securities Loan Facility (TALF) and the Public Private Investment Partnership (PPIP) to purchase the banks garbage assets?
Economist: America's Mountain of Debt Means Recovery will be Painful
(Welcome back . . .)
Ref - http://www.economist.com/finance/displaystory.cfm?story_id=13611284
. . . do not mistake the bottom for a vigorous rebound. Consumption may be growing again, but there is every chance it will remain depressed in coming years because of weak income growth, depleted wealth and tightened credit.
Washington Post: Rural Towns Collapsing as Employment Evaporates
Ref - http://www.washingtonpost.com/wp-dyn/content/article/2009/05/03/AR2009050302066.html
He traveled 60 miles each way, every day, for the job that paid $17 an hour. The job helped him buy this plot of land, his first, so he never complained about the pre-dawn drive there or the bumper-to-bumper drive back home. But that job is gone now. It evaporated in the sputtering Northern Virginia economy. So Morgan, along with many others in Luray and surrounding Page County -- where unemployment recently was as high as 17.7 percent -- spend their days picking through the scant job listings, tending to daytime chores or hunting for day laborer work.
Bloomberg: Rich Americans Defaulting Just Like Subprime Vicitms
Ref - http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aXIKT1zzD4.g
Bloomberg: Almost One-Quarter of U.S. Homeowners Under Water
Ref - http://www.bloomberg.com/apps/news?pid=newsarchive&sid=alObJoQNAz.E
Stan Humphries, Zillow’s vice president of data and analytics, said in an interview . . . “You are going to continue to see home prices fall for the rest of this year and some portion of next year.” The recession cut home values by $2.4 trillion last year, First American CoreLogic said in a March 4 report. More than 8.3 million U.S. mortgage holders owed more than their properties were worth and an additional 2.2 million borrowers will be underwater if prices decline another 5 percent, the Santa Ana, California-based seller of mortgage and economic data, said in the report.
Bloomberg: U.S. Companies Reduce Payrolls by Another 491,000
Ref - http://www.bloomberg.com/apps/news?pid=20601103&sid=asnDB772FbzE&refer=us
The Federal Reserve projects the U.S. will probably continue to lose jobs even after the economy emerges from the recession, economists said. “We are likely to see further sizable job losses and increased unemployment in coming months,” Fed Chairman Ben S. Bernanke told congress yesterday. “The unemployment rate could remain high for a time, even after economic growth resumes.”
The Atlantic Monthly: Why This Crisis is a Depression, Not a Recession
Ref - http://correspondents.theatlantic.com/richard_posner/2009/05/the_developing_economic_situation_and_the_obama_administrations_response_february_2-may_1_2009.php
The most ominous depression phenomenon--significant deflation--cannot be ruled out.
NY Times: Nation's Debt Time Bomb Clock is Ticking Faster Than Ever
Ref - http://www.nytimes.com/2009/05/04/business/economy/04debt.html?_r=3&ref=business
. . . the Treasury Borrowing Advisory Committee, a group of industry officials that advises the Treasury on its financing needs, warned about the consequences of higher deficits at a time when tax revenues were “collapsing” by 14 percent in the first half of the fiscal year. “Given the outlook for the economy, the cost of restoring a smoothly functioning financial system and the pending entitlement obligations to retiring baby boomers,” a report from the committee said, “the fiscal outlook is one of rapidly increasing debt in the years ahead.”
Asia Times: Creditworthiness of Entire American Economy Now at Risk
Ref - http://www.atimes.com/atimes/Global_Economy/KE05Dj01.html
. . . while it often appears otherwise, finance provides no free lunch. The mispricing of credit and misperceptions of risk in the marketplace have deleterious effects, although their true impact may remain unexposed for years. Indeed, the more immediate (and always seductive) consequences of loosened financial conditions tend to be reduced risk premiums, higher asset prices, and a boost to economic "output". Conventional analysis of monetary policymaking still focuses on "inflation" and "deflation" risks. I would strongly argue that our contemporary world has already validated the analysis that acute financial and economic fragility are major costs associated with market pricing distortions.
Macleans: California the Bleeding Edge of the U.S. Economic Collapse
Ref - http://www2.macleans.ca/2009/04/15/on-the-front-lines-of-america%E2%80%99s-meltdown/?ref=patrick.net
unemployment in Merced (pop. 80,000) hit 19.9 per cent, double the national average and well above California’s already high rate of 10.5 per cent (only Michigan has been harder hit). During the housing boom, half of all new jobs in California were tied to real estate, and Merced was no different. With the housing collapse, thousands of construction jobs have dried up. The region relies heavily on agriculture, but a three-year drought has crippled the sector . . . Quebecor World, the Montreal-based printing company that sought bankruptcy protection last year, operates a plant here that has laid off staff. Ellie Wooten, the 75-year-old mayor of Merced, recently warned it might close altogether. “Merced was a sleepy little town that nobody had ever heard of,” says Whalley, a Canadian from London, Ont., who moved to Merced at the peak of the boom to work at the university. “Now everybody knows it as the centre of the bust.”
San Francisco Chronicle: Carmakers' Woes Hitting State Budgets Hard
Ref - http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/04/30/BUNA17CGD0.DTL
. . . these plans could hurt because auto dealers are big local employers and sales taxes on cars are vital to cities.
Bloomberg: Recession Will Redefine Full Employment as Jobs Vanish
Ref - http://www.bloomberg.com/apps/news?pid=20601102&sid=aOhkusQ9LifQ&refer=uk
almost a quarter of the unemployed have been out of work for 27 weeks or longer, the highest proportion since 1983. Permanent layoffs -- for workers who don’t expect to ever regain the same job -- hit a record 51.5 percent in March. Mass layoffs, those that affect 50 or more people, rose to a record 2,933, comprising almost 300,000 lost positions. “We’re shedding jobs in industries in a significant way, and we’re not going to see those same industries be the source of job creation,” Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York, said in an April 21 interview. “We’re going to be living in a world in which we’re going to be feeling that the normal on the unemployment rate is above 6 percent.”
AFP: Few in D.C. Realize China Has Cancelled America's Credit Card
Ref - http://www.google.com/hostednews/afp/article/ALeqM5i4estRSYeFBIII9kezxnP4jgoGZQ
Kirk said he was the first member of Congress to tour the Bureau of Public Debt, which trades bonds, and was alarmed at how much debt was being bought by the US Federal Reserve due to absence of foreign investors. "There will come a time where the lack of Chinese participation may have a significant impact," Kirk said. "We should track that, because up until last month they were the number one provider of currency to the United States and now they're gone."
Kunstler: "America has hit the bottom of its ability to process reality"
Ref - http://www.lifeaftertheoilcrash.net/Archives2009/KunstlerMay04.html
. . . even after the "stress test" for banks is finally let out of the massage parlor with a "happy ending", events are underway that are beyond the command of personalities. We're done "doing business" in all the ways that we've been used to, but we just can't get with the new program. And, China is basically screwed. They have less oil left than we have (which is saying, not much at all) and they won't corner the rest of the global oil market without starting World War Three. Meanwhile, they're running out of water and food. Good luck becoming the next global hegemon. Oh, and Japan imports 90 percent of its energy; India over 80 percent. Fuggeddabowdit.
Washington Post: It's Time for a Reality Check for Economic Optimists
Ref - http://www.washingtonpost.com/wp-dyn/content/article/2009/04/28/AR2009042803457.html
The reason for the seeming disconnect has to do with the various benchmarks by which the economy can be measured. There's the level at which it is functioning -- how many people have jobs and how much the nation produces. There's the direction it is going -- whether those numbers are growing or shrinking. And there is the speed with which it is changing. The improvement that Obama and economists inside and outside of government are talking about is, so far, limited to the third category.
NY Times: U.S. Economy in Second Straight Quarter of Steep Decline
Ref - http://www.nytimes.com/2009/04/30/business/economy/30econ.html?ref=business
The last six months were brutal. Output fell at a 6.1 percent annual rate in the January-through-March quarter after falling at a rate of 6.3 percent in last year’s fourth quarter, according to the Commerce Department. If that pace were to continue, nearly $1 trillion would be wiped out this year from the nation’s economic output of $14.2 trillion last year.
Yahoo News: Jobless Rate Rises in All U.S. Metro Areas In March
Ref - http://finance.yahoo.com/news/Jobless-rates-rise-in-all-US-apf-15068914.html?sec=topStories&pos=6&asset=&ccode&ref=patrick.net
The Labor Department reported Wednesday all 372 metropolitan areas tracked saw jobless rates move higher last month from a year earlier. The Indiana region has been hammered by layoffs in the recreational vehicle industry. RV makers Monaco Coach Corp. Keystone RV Co. and Pilgrim International have sliced hundreds of jobs.
NY Times: Chrysler in First Major Automaker Bankruptcy Since 1933
Ref - http://www.nytimes.com/2009/05/01/business/01primer.html?_r=1&ref=business
Chrysler is reorganizing under Chapter 11 of the United States Bankruptcy Code. The law allows companies to shed assets, restructure debt, cancel contracts and close operations that normally would have to continue running. Once they secure financing to emerge from bankruptcy, these companies are reconstituted as new legal entities. Should Chrysler fail to successfully reorganize, it might turn to a Chapter 7 bankruptcy, which would mean a liquidation.
Ca.Gov: California Declares an Unemployment State of Emergency
Ref - http://gov.ca.gov/proclamation/12041/?ref=patrick.net
. . . WHEREAS on April 17, 2009, the State Employment Development Department (EDD) reported that the unemployment rate in California increased to 11.2 percent in March, that nonfarm payroll jobs declined by 62,100, that the year-over-change (from March 2008 to March 2009) showed a decrease of 637,400 jobs, and that the number of people unemployed in California was 2,080,000, up over 119,000 for the month, and up by 913,000 compared with March of 2008; and
WHEREAS in that same report, EDD indicated that there were 79,979 new claims for unemployment insurance in March 2009, compared with 76,303 in February 2009, and 48,282 in February 2008; and
WHEREAS EDD and the California Unemployment Insurance Appeals Board (CUIAB) have made significant efforts to expand its operations in response to the exponential increase in demand for their services, but more resources are needed to effectively serve the needs of Californians struggling in this economic downturn; and the services are of such an urgent nature that the delay incumbent in their implementation under state civil service and contracting rules would frustrate the very purpose of unemployment compensation under state law, and the federal stimulus payments under federal law; and
WHEREAS the circumstances of the economic downturn, and the circumstances of the resulting unemployment in California, by reason of their magnitude, are beyond the control of the services, personnel, equipment and facilities of any single county, city and county, or city and require the combined forces of a mutual aid region or regions to combat; and
WHEREAS under the provisions of section 8558(b) of the California Government Code, I find that conditions of extreme peril to the safety of persons and property exist in California caused by the current and continuing economic downturn and resulting unemployment in California.
NOW, THEREFORE, I, ARNOLD SCHWARZENEGGER, Governor of the State of California, in accordance with the authority vested in me by the California Constitution and the California Emergency Services Act, and in particular California Government Code sections 8625 and 8571, HEREBY PROCLAIM A STATE OF EMERGENCY to exist in California.
IT IS HEREBY ORDERED that all agencies of the state government utilize and employ state personnel, equipment and facilities for the performance of any and all activities consistent with the direction of the California Emergency Management Agency (CalEMA) and the State Emergency Plan