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Study: State pension shortfall ballooned in 2010 - (www.ap.com) Recession-plagued states diverted scarce money
away from pensions to pay for more immediate concerns, leaving a $757 billion
hole in the retirement funds covering millions of public employees, according
to a study released Monday. The Pew Center on the States found 34 states failed
to maintain safe levels of money in the pension funds, which most experts agree
is about 80 percent of long-term obligations. Four states — Connecticut,
Illinois, Kentucky and Rhode Island — didn't even have 55 percent of the money
they'll need in the long run. The total gap between the money states had
available and what they'll have to pay out in the decades ahead reached $757
billion in 2010, the most recent year for which figures are available. That was
up 9 percent from the year before, according to the study entitled "The
Widening Gap Update."
Spain Borrowing Costs Surge at Auction - (www.bloomberg.com) Spain lurched closer to
becoming the largest euro zone country
yet to be shut out of credit markets when it had to pay a euro era record price
to sell short-term debt on Tuesday. The soaring borrowing costs showed that a
euro zone deal to lend Spain up to 100 billion euros ($126 billion) for its
banks had not solved the country's problems or restored investor confidence and
suggests more aid may be needed fix its finances. They also illustrated how
Europe's troubles run much deeper than Greece, brought back from the brink of
default by Sunday's parliamentary election that has cleared the way for a
renegotiation of the terms of its bailout package. The two-and-a-half year old
debt crisis has hobbled the global economy and world leaders meeting in Mexico
piled pressure on the euro zone to move towards a fiscal and banking union to
fix the crisis that now threatens to engulf Spain.
Spain pleads for ECB rescue as bond market slams shut - (www.telegraph.co.uk) Europe's leaders have vowed to mobilise all
possible means to counter the region's escalating crisis after Spain's
borrowing costs threatened to spiral out of control. Yields on 10-year Spanish
bonds surged to a record high of almost 7.3pc as investors ignored the victory
of pro-bailout parties in Greece's elections. The closely-watched two-year
yield rocketed by 65 basis points in a matter of hours, signalling a near-total
collapse of confidence in Spain's €100bn (£80.3bn) rescue from the EU last week
to shore up its banking system. Cristobal Montoro, the economy minister, warned
that Spain is now in a "critical" condition and pleaded with the
European Central Bank to act with "full force" to defeat markets
hostile to the euro project.
Worried Banks Resist Fiscal Union - (www.nytimes.com) The seemingly endless series
of euro zone crises has European officials pushing for a banking union that
would watch over and bind together the currency group’s faltering financial
institutions. But for Europeans, there seems to be little appetite for such a
compact right now. In fact, banks and their national regulators, anxious about
the Greek elections and Spain’s hastily arranged bailout, are behaving more
parochially than ever. That poses a threat to the interbank lending across
borders that is crucial to maintaining liquidity — the free flow of money that
is the lifeblood of the global financial system.
Faith is lost in Italian government - (www.washingtonpost.com) Before Italians turned to
Mario Monti late last year to rescue them, the country’s debt crisis had sent
its borrowing costs skyrocketing and the government’s credibility tumbling. Anxiety
eased for a time once Monti took the helm as prime minister, and so did the
financial pressures on Italy, the euro zone’s third-largest economy. But now,
seven months after the well-regarded economist Monti was tapped to replace
billionaire playboy Silvio Berlusconi, faith in the Italian government is again
plummeting — inside and outside the country. And with global investors
increasingly squeamish about lending Italy money, the interest rate on
government bonds is soaring again, breaching the dangerous 6 percent level
on Monday.
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