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Japan Airlines Near Bankruptcy - (www.reuters.com) Japan Airlines Corp shares slid 12 percent to a record low on Friday as investors suggested bankruptcy may be an option for Asia's biggest airline by revenue, even as the government again pledged to support the troubled carrier. "There's increasing concern about the future of the company and whether it's heading for a GM-style bankruptcy or not," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management. The airline, plagued with high costs in a severe industry downturn, has asked creditors for 600 billion yen ($6.6 billion) in financial aid, including 300 billion yen in debt waivers and debt-for-equity swaps, as part of a restructuring plan, according to two sources familiar with the matter. JAL shares fell to 100 yen, their lowest since they were re-listed in 2002. By the close, the stock was quoted at 101 yen, down more than 11 percent. The shares have lost a quarter of their value this week. Last month, JAL proposed a plan under which it pledged to cut 6,800 jobs, eliminate 50 routes and lower its operating costs by 30 percent, but it was forced back to the drawing board after the government said the steps were not enough. The airline is now working with a government-appointed task force on a new plan to put to the transport ministry within two weeks. Transport Minister Seiji Maehara on Friday pledged his support for the airline while that process is underway. "From I can see in the pre-draft plan I received the other day from JAL and its task force, I am confident that work on the plan is progressing smoothly," said Maehara, adding there was no change in the government's stance to support the airline. But the lack of a clear growth plan for JAL is fuelling market concern that a rescue package may be throwing good money after bad, some investors said, leaving creditors such as Mitsubishi UFJ Financial Group (MUFG) and Mizuho Financial Group out in the cold.
States' Revenue Falls Most Since 1963 in Income, Sales Tax Drops - (www.bloomberg.com) U.S. state tax collections tumbled the most in almost half a century in the second quarter as the economic recession curbed levies on incomes and sales. The 16.6 percent plunge was the biggest since at least 1963, the Nelson A. Rockefeller Institute of Government said today. For the 12 months to June 30, the fiscal year for most states, revenue declined 8.2 percent, or $63 billion, about twice what states got from the $787 billion U.S. economic stimulus package, the institute said. State revenue has dwindled for two straight quarters and continued to decline in July and August, the Albany-based research organization said. Budgets for the year that began July 1 already face $26 billion of deficits, the Washington, D.C.- based Center on Budget and Policy Priorities said Aug. 12, forcing state lawmakers to confront additional spending cuts. “We’re looking at a multiyear problem hitting essentially every state,” Robert Ward, the institute’s deputy director, told reporters. “It has happened during recessions before, but the depth of this decline is unprecedented in modern times.” Collections dropped in 49 states in the second quarter as sales and personal-income taxes slid for the third consecutive period, the institute said. Income tax was down 27.5 percent and sales tax fell down 9.5 percent, its study said. Both categories fell by the most in 45 years. “Many economists believe that the national recession has ended and that a tepid recovery is now underway,” Rockefeller analysts Lucy Dadayan and Donald J. Boyd wrote. “Unfortunately for states, an emerging economic recovery does not spell instant budget relief.” ‘Considerably More’: Figures for July and August for 36 early-reporting states showed tax collections down 8 percent, the Rockefeller Institute said. At least 17 states have announced budget shortfalls since July, with “considerably more” expected, Boyd said. New York’s tax revenue from April 1 to Sept. 15 was $634.5 million below projections and $3.6 billion less than a year ago, Comptroller Thomas DiNapoli said yesterday. California reported last week that revenue trailed a forecast made less than three months earlier by $1.1 billion, or 5.3 percent. States are anticipating more cuts to current-year budgets, already pared once to bring them into balance. Mississippi Governor Haley Barbour told managers on Oct. 13 to cut spending 5 percent because tax collections in the first three months of fiscal 2010 were 7.7 percent below estimates. Florida Governor Charlie Crist told department heads on Oct. 12 not to request more money for next year, when the state faces a $2.6 billion deficit.
NO WATER IN CALIFORNIA – (www.google.com/hostednews/ap) Farmers in the most prolific agricultural region in the country should be planting winter romaine lettuce and calculating spring cantaloupe acreage at this time of year. Instead the romaine packing company left this year for the searing Sonoran Desert of Arizona, where there is more reliable water. And cantaloupe? Who knows whether there will be water to irrigate it. "How bad does it have to get for people to take action?" farmer Jeremy Freitas asked a panel of state agricultural officials Wednesday, choking back tears. They had come to California's agricultural heartland for an update on the state's water crisis. They left hearing that — even after a year of discussing possible quick fixes to the delivery problems that have fallowed tens of thousands of acres, forced bankruptcies and contributed to record unemployment — farmers are no more certain about their water supplies. As California prepares for its fourth year of drought, farmers are nervous in California's San Joaquin Valley. The valley's eight counties, if they were their own state, would be the top producing one in the nation. Nearly all the U.S. cantaloupes, garlic, almonds and processing tomatoes come from here. And so do nearly 400 other commodities — more than anywhere else. The lack of water in the state's reservoirs, coupled with the environmental collapse of the Sacramento-San Joaquin Delta where water from the state's wet north is pumped south to irrigate fields, has restricted the amount of water some of the state's most prolific farmers receive to as little as 10 percent of normal. "It's October going to March quickly and we can't seem to get an agency to move," said farmer Dan Errotabere, who lost his romaine contract when the local packinghouse moved to Yuma. "We need action. We need agreements now. We need certainty in the Central Valley now." Gov. Arnold Schwarzenegger wants a special legislative session this fall to look at issues surrounding California's aging water infrastructure, built 50 years ago for a population one-third the size. The most ambitious, a peripheral canal to move water from the north around the Delta, is at least 15 years away. Meanwhile, farmers have been begging for several quick fixes so they count on water in 2010, including temporary suspension of the Endangered Species Act so water can be pumped to them even if it kills threatened smelt. Congress once granted a temporary reprieve to New Mexico but so far has declined to do for California.
Jobless flock to sign up for the military - (money.cnn.com) The nation's armed services wrapped up a record year for recruiting as a withering job market and bigger bonuses trumped two unpopular wars. The Department of Defense said it met or exceeded recruitment goals for all branches of the armed services for fiscal year 2009, which ended Sept. 30, for the first time since 1973, when the draft ended and U.S. forces withdrew from Vietnam. "We're pleased to report that for the first time since the advent of the all-volunteer force, all of the military components, active and reserve, meet their number as well as their quality goals," said Bill Carr, deputy undersecretary of Defense for Military Personnel Policy, at a Pentagon press conference on Tuesday. The active-duty Air Force, Marine Corps and Navy all met their goals, as measured by the number of fresh recruits, while the Army achieved 108% of its recruitment goals, the DOD said. The Reserves for each branch exceeded their goals for recruitment numbers, and the National Guard matched its goal. The Pentagon also exceeded its quality goals, as 96% of the active-duty recruits were high-school graduates, surpassing a 90% benchmark. Carr acknowledged that the high level of unemployment in the civilian job market was helping the military draw recruits, and the earning power of recruits puts them in the top 10% of workers of commensurate age, education and experience. Recruits typically earn $1,399.50 a month as they undergo basic training during their first few months in the military, according to the DOD. Most enlisted personnel can expect to earn $1,568.70 a month by the end of their first year, which translates into an annual salary of $18,824.40.
Time for Baltimore to "Pull a Vallejo" and Declare Bankruptcy - (Mish at globaleconomicanalysis.blogspot.com) A crisis over police and fire benefits in Baltimore, has reached boiling temperature. Please consider Baltimore police, fire pension costs could double next year. An unusual pension benefit for police and firefighters could cost Baltimore $164.9 million next year, nearly double what the city is now paying and a figure that the city's finance director says taxpayers cannot afford. After years of calls for pension reform, board members who oversee the nearly $2 billion system said their Tuesday vote that passes the whopping bill on to City Hall is a message that the fund is close to a breaking point and needs attention. Edward J. Gallagher, the city's finance director, said the city "certainly cannot afford" to pay the full commitment due in July. "It seems that our concern has really come home to roost." The new retiree funding request is twice as large as the $81.9 million the city paid to the fire and police pension fund last year. If the pension system is not altered before the bill comes due, needed cash could come from raising the city property tax rate 11 percent, or "significant reductions across all agencies, including public safety," Gallagher said. Mayor Sheila Dixon, who has long sought reductions in the city's tax rate of $2.27 per $100 in assessed value, has said both options are unacceptable. The extra cash is needed largely to shore up a part of the pension program called a variable annuity. The benefit is similar to a cost-of-living increase, but is tied to positive stock market returns. When the market goes up, some of the extra money is given to retirees in the form of a permanent pay increase, an uncommon benefit that has made Baltimore's costs grow. In most pension plans, extra money is plowed back into the asset funds to make up for the bad investment years. The Dixon administration in March recommended replacing that part of the retirement benefit with a straight cost-of-living increase - a change that would have likely headed off Tuesday's vote. However, the unions objected, saying the proposed COLA was too low. The administration withdrew that plan and offered a new proposal to suspend the variable benefit, with the idea that some type of COLA would be reinstated later as part of a larger pension reform effort. Unions object to that plan too, and there has been no action on it. The market value of the fund's assets has fallen to 50.2 percent of what is needed to pay out all benefits. Last year, it was 89.4 percent funded. Baltimore's Pension Plan Bankrupt: It's time for Baltimore to face the facts. The pension plan is essentially bankrupt. It is grossly unfair to taxpayers to raise taxes one cent to pay for this monstrosity. My recommendation for Baltimore is to
1) declare bankruptcy
2) privatize the fire department
The greed of the unions is simply unconscionable. It's time for Baltimore to "Pull a Vallejo". Please see Judge Rules Vallejo Can Void Union Contracts for a synopsis of the situation in Vallejo, California.
OTHER STORIES:
* End of the USD as Reserve Currency * - (www.financialsense.com)
Weak Dollar? Not So Much in China - (www.nytimes.com)
For Housing, Question Now Is How Strong a Recovery - (www.cnbc.com)
CME in Informal Talks To Take Over CBOE: Report - (www.cnbc.com)
Obama Said Not To Be Demanding Public Health Option - (www.cnbc.com)
Wall Street Compensation is Outrageous: Sen. Dodd- (www.cnbc.com)
UBS Registered Mail Warns US Clients on Tax: Report - (www.cnbc.com)
GM CFO Search Complicated by US Pay Rules: Report - (www.cnbc.com)
Apple earnings: Will iPhone disappoint? - (money.cnn.com)
'Wild Things' are king at the box office - (money.cnn.com)
CIT amends restructuring plan with bondholders - (money.cnn.com)
50 Best Places to Launch a Business - (money.cnn.com)
All I want for Christmas: A job - (money.cnn.com)
Rehab for the rich and famous - (money.cnn.com)
The car that drives itself - (money.cnn.com)
How Goldman partners get paid - (money.cnn.com)
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