Tuesday, January 22, 2013

Wednesday January 23 Housing and Economic stories


State comptroller: NY government debt tops $63B - (online.wsj.com) The state government's debt has topped $63.3 billion, with New York on track to approach its borrowing limit in early 2014, the comptroller's office reported Monday. That debt burden, averaging $3,253 per resident, is almost three times the national median, according to the report. New York's state-funded debt is second only to California's $96.4 billion and 80 percent higher than New Jersey, which is third. New York paid $6.8 billion on its loans in 2011-12, though borrowing has continued to outpace payoffs. The $63.3 billion debt as of last March 31 was $1.6 billion higher than a year earlier.

Blame flies as Illinois pension plan stalls - (www.chicagotribune.com) The last-minute push to start fixing Illinois' massively indebted government worker pension system stalled out Monday when supporters couldn't round up enough votes in the House as a lame-duck session lumbers to a close. While no issue is ever dead at the Capitol until the gavel hits the wood block for the final time, the blame game commenced — a political tradition that continued even as the state's pension shortfall approaches $96.8 billion. Mistrust ran deep among lawmakers, many of whom questioned whether any pension fix was calculated to fail as they pointed to a lack of political will. Many in the House did not want to take up a controversial issue when the Senate isn't even around to consider it. Some Democrats refused to commit to voting for the plan when they didn't know how many Republicans also were willing to stick out their necks.

Rajoy Stealth Order Adds to Off-Balance Sheet Debt: Euro Credit - (www.bloomberg.com) Spanish Prime Minister Mariano Rajoy added more than 3 billion euros ($3.9 billion) to his debt load in the closing hours of 2012 with a New Year’s Eve order removing a cap on utilities’ government-guaranteed losses. The decision, announced in the official gazette, added to the snowballing power-tariff debt, which isn’t included in the public accounts. The shortfall exceeded 20 billion euros at year end, according to government filings. Spain’s government-controlled electricity system has raised less revenue from consumers than it pays to power companies for most of the past decade. Officials have covered the difference with bonds in the so-called FADE program.

European leaders hail breakthrough in debt crisis - (www.washingtonpost.com) After more than three years of global market turmoil, political upheaval and nail-biting summits, European leaders are declaring that the worst of the continent’s debt crisis is behind them. In New Year’s speeches and congratulatory comments, leaders across the region are crediting fresh rounds of painful austerity, a hard-fought new role for the European Central Bank and steps toward deeper integration with achieving a breakthrough. Borrowing costs for troubled nations, they note, have come down steadily from last year’s dangerously high levels, pulling a string of countries back from the brink of imminent financial collapse and defying naysayers who predicted a quick breakup of the euro zone last year. Yet any suggestion of victory in Europe may be viewed as the economic equivalent of President George W. Bush’s “Mission Accomplished” speech on Iraq aboard the USS Abraham Lincoln in 2003. Though market panic is subsiding, the region appears to be simply trading a crisis of financial markets for one rooted in its ailing economies.

The distinction between good debt and evil debt - (www.ochousingnews.com) On the other hand, signatory debt is slavery. Signatory debt is money given to a borrower simply based on the borrower’s promise to repay. It has nothing to do with an asset, and if the borrower chooses not to repay, recovering signatory debt can be very difficult because it is not backed by tangible collateral. Signatory debt provides no useful purpose. It provides a short-term economic boost as demand is pulled forward, but once it is consumed, money that would ordinarily have been spent by the borrower on consumer goods is instead diverted to the lender for debt service. It’s only when signatory debt is expanding that the economy is stimulated. The expansion of signatory debt is a Ponzi scheme.

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