Moody's downgrades Chicago amid pension crisis - (money.cnn.com) Moody's
Investors Service rating agency downgraded Chicago's creditworthiness Tuesday,
citing the city's "massive and growing" pension hole. After years of
avoiding the issue, the city of Chicago is facing a massive spike in its annual bill for the pensions it
promised current and retired workers. Next year, the city's required
contribution will more than double to $1.07 billion. Moody's said the pension
crisis threatens "the city's fiscal solvency," without major tax
hikes or budget cuts. Chicago is home to one of the most troubled pension
systems in the country. In total, the city's four pension funds -- for
firefighters, police officers, and two for other city workers -- face funding
holes of nearly $20 billion. Tuesday's downgrades affect $8.3 billion in city
debt, including $7.8 billion in general obligation bonds and $556 million in
sales tax bonds. It follows previous downgrades by Moody's and other ratings
agencies.
Italy in economic trouble, France to miss
deficit targets -(www.reuters.com) The
European Commission put Italy on
Wednesday on its watch list because of the country's very high public debt and
weak competitiveness and warned France that
will miss agreed budget deficit reduction targets unless it takes action. The
Commission, the European Union's executive arm, conducted in-depth reviews of
the economies of 17 EU countries that it believes have macro-economic
imbalances. Under EU rules, if such imbalances are considered excessive, a
country has to take action under the European Commission's surveillance to
address them or risk a fine. The Commission said that Belgium, Bulgaria, Germany, Ireland, Spain, France,
Croatia,Italy,
Hungary, the Netherlands, Slovenia, Finland, Sweden, and the United Kingdom all
had imbalances in their economies.
A
Struggling RadioShack Will Close 20% of Its Stores - (www.nytimes.com) RadioShack
said on Tuesday that it would close about 1,100 of its stores in the United
States, as losses piled up during a dismal holiday shopping season. The
electronics chain has struggled for many years to keep up with rapidly changing
consumer tastes and cope with stiff competition from big-box electronics stores
and online retailers. A year ago, RadioShack hired Joseph C. Magnacca from
Walgreen as chief executive to help turn things around, but a shift in fortunes
has been elusive and its financial results have been deteriorating. The company reported a loss of $191.4 million for the fourth quarter
of 2013, compared with a loss of $63.3 million a year earlier. The results were
worse than analysts had expected, according to a survey by Thomson Reuters. For
the year, RadioShack reported a loss of $400 million, compared with a loss of
$139 million in 2012.
Beijing
Signals New Worry on Growth - (online.wsj.com) China's
leaders kept the growth target for their giant economy unchanged but signaled
that they are more concerned than ever about reaching it, giving themselves the
option of letting credit flow freely to keep from falling short. The suggestion
of more lending to buoy growth—despite repeated recent efforts to rein in
debt—is the latest sign of government unease that a slipping economy could
trigger higher unemployment and corporate failures, aggravating already high
social tensions. For years, China kept a growth target of about 7.5% but
actually grew far faster; in the last two years the economy has barely cleared
that figure, and many economists have said it would have a tougher time meeting
the goal this year as its economy matures and global demand for its exports
comes under pressure. That is a troubling trend for the rest of the world,
which has increasingly depended on China to fuel the global economy.
China
Bear Stearns Moment Seen by BofA in Solar Default Risk - (www.bloomberg.com) The
growing risk of default byShanghai Chaori Solar Energy Science &
Technology Co. may become China’s “Bear Stearns moment,” prompting investors
to reassess credit risks as they did after the U.S. lender was rescued in 2008,
according to Bank of America Corp. “We doubt that the financial system in China
will experience a liquidity crunch immediately because of this default but we
think the chain
reaction will
probably start,” Hong Kong-based strategists David Cui, Tracy Tian and
Katherine Tai wrote in a note yesterday. During the U.S. financial crisis, it
took a year “to reach the Lehman stage” when investors began to panic and
shadow banking froze, the strategists added.
Kerry
Makes Push to Ease Ukraine Tension in Lavrov Talks - (www.bloomberg.com)
China Retains 7.5% Growth Target for 2014 - (www.bloomberg.com)
China Retains 7.5% Growth Target for 2014 - (www.bloomberg.com)
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