Some Depressing Reads

Here are some readings from Chris Martenson’s site. How many “green shoots” can you find? The second one in particular caught my attention. How long can we expect China and Japan to sacrifice their taxpayer’s money so that we can live beyond our means?

Fitch Says U.K. Rating Most at Risk Among Top-Rated…(then warns about U.S. AAA Rating)

The U.S.’s rating also might be at risk of a review if its fiscal position does not stabilize in the next couple of years, Riley was reported by Reuters as saying in a television interview.

Bill Gross on CNBC…China and Japan lose 13% on U.S. Treasuries (at 4:30 on Video)

Gross notes that over the last year alone the depreciating dollar means that every single Treasury purchased by China, Japan etc with a 1 to 2 % yield has essentially generated a negative 13 to 14% return. Yes, NEGATIVE 13 to 14% return

Banks face increase in funding costs

Banks around the world face increases in funding costs that could cut profits and hit their customers as they look to re­finance $7,000bn-plus in short-term debt expiring in the next three years with longer-dated bonds, according to research released on Tuesday. Institutions seeking to reduce their reliance on short-term paper will have to pay up because interest rates are likely to rise and governments will stop supporting the financial system, the study by the credit rating agency Moody’s concludes.” “Moody’s estimates that a lender wanting to refinance a short-term government-guaranteed bond with 10-year paper could see costs rise nearly 7 percentage points

Fed: GMAC to receive more bailout money

GMAC, a crucial player in the U.S. auto industry, has been unable to raise the $11.5 billion regulators said it needed after stress test results were announced in May. The Fed says the finance company is expected to close the gap with more money from the $700 billion financial bailout. GMAC, already the recipient of $12.5 billion in taxpayer infusions, is negotiating with regulators over how much more it will receive

Harvard Profs: This Crisis Is Not Over

The global economic crisis is not over, said Harvard University professors Kenneth Rogoff and Niall Ferguson, challenging the G20 group of wealthy countries’ assumptions that the world is on the road to recovery. Public spending in the form of bailouts and stimulus packages will create a debt burden for the world’s governments, the two professors told Bloomberg. “The financial crisis may eventually morph into a government-debt crisis,” says Rogoff, former chief economist at the International Monetary Fund.

Crisis mode declared on deficit (New York)

“State is “running out of money,’ governor says in plea for cuts” “”Some say the deficit is not even as deep as we have described it. Some say the revenues are coming back, and others say Wall Street will bail us out. I suggest to you that that is wishful thinking, my colleagues,” Paterson said. “And we do not have time to engage in it.” As soon as the $132 billion budget was created in April, fiscal critics were warning that it was built on overly rosy revenue projections and inflation-busting spending levels. Monday, Paterson joined in, warning lawmakers against making spending promises that cannot be kept or resorting to “phony solutions” for the deficit.

Schwarzenegger: This year’s budget gap may hit $7 billion

Gov. Arnold Schwarzenegger estimated Monday that California’s budget will fall out of balance by $5 billion to $7 billion this fiscal year, on top of a $7.4 billion gap already projected for 2010-11. If true, state leaders would confront at least a $12.4 billion to $14.4 billion problem when Schwarzenegger releases his budget in January. California currently has an $84.6 billion general fund budget

Ambac Financial points to possible chapter 11

Ambac reported that, should the OCI decide to initiate delinquency proceedings in order to protect the interests of its policyholders, an event of default could occur with respect to Ambac’s debt (that is, the holding company debt), which would in turn accelerate principal totaling $1.64 billion, as well as terminate credit default swap contracts insured by Ambac Assurance. This in turn could liquidiate mark-to-market claims for underlying exposures in swaps totalling approximately $23 billion, the company said

Aging boomers strain pension funds (Florida)

Now, Florida is headed for an even grayer future in the Baby Boomer retirement era, state economists and demographers predict. The consequences: worker shortages and severe strains on public pensions and government services. By 2030, more than one in four state residents will be 65 or older – or 26 percent, compared to 17 percent today, the University of Florida Bureau for Business and Economic Research says

Growth in Iowa’s unfunded pension liabilities

Because of higher usage as well as recent market losses, the program faces $4.9 billion of unfunded liability, up from $2.7 billion a year ago. That amount, like a house loan, is amortized over a 30-year period. The increase in liability has caused major concern among IPERS officials. While current retirements are not in jeopardy, the program faces major shortfalls in 20 or so years if the revenue equation isn’t balanced now, they told the legislative Public Retirement Systems Committee Monday

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