Tuesday June 2 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Funds move to halt Chrysler restructuring - (www.ft.com) Three of Chrysler’s secured creditors are mounting a fresh attempt to thwart the carmaker’s Chapter 11 reorganisation on the grounds that it violates their legal rights and the US government’s authority under the Troubled asset relief programme. The three – all Indiana state pension funds – are among a group of 46 creditors that had appeared to back away this month from efforts to derail the process under which a “new” Chrysler would emerge from bankruptcy protection by July 1. The new entity would be owned by a union healthcare trust, the US government and Italy’s Fiat.

GM Finance Arm To Get Second Bailout - (online.wsj.com) The Treasury Department is poised to inject more than $7 billion into GMAC LLC, the first installment of a new government aid package that could reach $14 billion, according to people familiar with the matter. As a result of the move, the government within months could end up owning both GMAC and General Motors Corp. The GM plan being devised by President Barack Obama's auto task force calls for the government to emerge with a majority stake. And the increasing infusion of taxpayer money into GMAC could turn the U.S. government into a majority shareholder there.

Fed Considers More Securities Purchases - (online.wsj.com) Federal Reserve officials are open to raising the amount of Treasury and mortgage-related securities they are purchasing beyond the $1.75 trillion already committed, according to a summary of their late-April meeting released Wednesday after the customary lag. Officials also projected an even deeper recession than they expected three months earlier and a more sluggish recovery in the next two years, as labor markets remain under pressure, according to the ...

Economy Limiting Services of Local Police - (www.usatoday.com) The recession is altering local law enforcement in the U.S. by forcing some agencies to close precincts, merge with other departments or even shut down. Once largely spared from the deepest budget cuts, some police departments are struggling to provide basic services, police officials say. "For the first time, because of the economy, police departments ... may have to change how they do business," says Chuck Wexler, executive director of the Police Executive Research Forum, a law enforcement think tank. "People will see a change in the basic delivery of services," from longer police response times to a dramatically reduced police presence in some communities. Harlan Johnson, executive director of the Minnesota Chiefs of Police Association, said political leaders are "choosing whether they keep the streets open or the police on patrol," though it's too early to tell whether the changes will increase crime. The Obama administration's $787 billion stimulus plan gives about $4 billion to local law enforcement, including $1 billion to hire and retain officers. But the hiring money has not been distributed, and applicants have requested more than is available. Among the recent cuts: • In Pennsylvania, 19 suburban and rural police agencies have closed in the past 15 months, and seven others have cut patrols. The "unprecedented" closures and cuts have forced the state police — who face their own budget struggles — to assume full or partial public safety responsibility for about 54,000 more people, says Lt. Col. Lenny Bandy, deputy commissioner of operations for the state police. • In Minnesota, nine small police agencies have closed in the past five months, leaving sheriffs' departments to protect the public. The Elko New Market Police Department was briefly the 10th shuttered agency, until residents last month demanded that the City Council reverse its 2-week-old decision to eliminate it. "A lot of people felt that we were sending a potentially dangerous public message .... without a police department," says Mayor Jason Ponsonby, who opposed the closure. • In Portland, Ore., police are consolidating operations by eliminating two of five patrol precincts. Portland police spokesman Greg Pashley says some residents fear response times will rise and established officers will be replaced by others who are unfamiliar with local problems. He says the move, which takes effect in June, was needed to cut costs, but he believes it will not compromise safety.

Tom Woods: Obama's Magic Bubble Deflator - (www.mises.org) In case you've ever wondered what it must have been like to read Pravda, reading the American media's treatment of the financial crisis and our wise leaders' expert management of it all has given everyone a wonderful opportunity. For instance, check out this piece from several days ago on Politico. If you can't bring yourself to click on the link, I'll give you the headline: "Obama Would Regulate New 'Bubbles.'" Yes, you read that right. "Bubbles" just occur spontaneously. They have no cause or explanation. We need government to identify and destroy them. Sometimes I wish our overlords would get their stories straight. First, Alan Greenspan — whom the New York Times once described, in its typical toadying, totalitarian fashion, as "the infallible maestro of our financial system" — told us it was impossible to tell if a bubble existed at any given time. Now we have Barack Obama insisting that not only can we detect bubbles, but we can also deflate them with sufficient dispatch to prevent them from causing any serious economic disturbances. How are we peons to decide between the competing views of our infallible maestro on the one hand and the man who would be FDR on the other? I shouldn't be so cynical. It is not for us to question how our overlords intend to distinguish between genuine growth in some industry on the one hand and bubble conditions on the other. Just to be safe they may have to quash all rapid growth wherever it occurs. Perhaps they can cut off credit to an entire sector of the economy, or levy industry-specific taxation. (Anyone who thinks this type of discretion and micromanagement might be exercised with political motivations in mind, or for any purpose other than the common good, is almost surely a good candidate for surveillance in our progressive commonwealth.) In their quest to free us from economic instability, our betters may find it necessary to institute new rules. It is our job to accept these new rules with docility and thanks. These rules might have to be kind of sweeping, perhaps on the order of nobody may do anything. In liberal times that could perhaps be modified to nobody may do anything without asking permission. True, we could then wind up with a lengthy debate about whether asking permission itself counted as doing something, such that we'd need to ask permission in order to ask permission, in an endless regress. We'd then be back to the original nobody may do anything, which is probably the safest place to be anyway.

Huge deficit stuns Cincinnati officials - (www.cincinnati.com) A struggling economy and a forecast of income tax revenues that was far off the mark has Cincinnati City Council staring at a $40 million budget deficit through 2010 - sparking talk of layoffs and cuts in service in the year to come. Council's finance committee received a report from the city's finance department Monday saying the city was already $7.7 million behind its revenue forecast by the end of April. And, if the trend continues, the city could face a deficit of about $40 million through next year. "Hell would have to freeze over for us to get out of this,'' said Council member Leslie Ghiz. "There will be layoffs. There will be cuts. And it will be painful." For the short term, City Manager Milton Dohoney has called for a five percent cut in 2009 spending from all city departments; and ordered department heads to submit plans to him by the end of the week on how they will do that. But Tuesday, several council members said that a five percent budget cut is probably not enough, while others said that consideration ought to be given to sparing essential city services like police and fire from the budget cuts. But some council members - who will ultimately decide what is cut and what is not - are balking at the suggestion that police and fire services take a five percent cut. "As far as I am concerned, we're not even going to talk about cuts to police and fire,'' Ghiz said. "The cuts will have to come from somewhere else." The budget shortfall projections were even more stunning because, in December, city finance officials were painting a somewhat rosier picture of the city's revenue stream in 2009. At a time when most government bodies were bracing for revenue shortfalls in a troubled economy, the city administration predicted that, in 2009, the city would see a three percent increase in income tax collections. Income taxes are by far the biggest source of the city's revenue, making up about 65 percent of the city's $375 million general fund budget. Instead, through April, the city's income tax collections were $6.1 million below forecast, according to the report Dohoney and city finance director Joe Gray delivered to the finance committee Monday. The city administration had expected to collect nearly $82.6 million in income taxes through April, but the actual receipts were about $76.5 million. Admission tax revenue - the money the city gets from the sale of tickets to entertainment and sporting events - is down as well; and the city took a $1.3 million hit when the state of Ohio reduced the amount of money municipalities get from the state's Local Government Fund. Council member Laketa Cole, who chairs council's finance committee, suggested that the situation might not be as dire as it appears. "I don't want to minimize the problem, but we may see an improvement in these numbers in the months ahead,'' Cole said. The five percent across-the-board cuts, Cole said, will help, and the city may find other ways to cut costs. Her committee, she said, is looking at changes to the city's health care plan that have the potential of saving millions of dollars each year. "If we are budget-cutting, we have to be careful that it is not all a matter of laying people off,'' Cole said. "We have to be concerned about the service impact of cutting people. What good is it to have health clinics, recreation centers and swimming pools if you don't have the people to staff them?" Council member Chris Bortz said he never believed the forecasts of an increase in income tax revenues and said the current budget shortfall is "the result of out-of-control spending by this council. It has to stop, now." The finance committee is to meet again June 1 to take up Dohoney's plan for a five percent across-the-board spending cut and to discuss other budget-cutting measures. Dohoney was not available for comment Tuesday, but Meg Olberding, the city manager's spokeswoman, said that the city manager's office will release a Cincinnati economic forecast document, prepared by a financial consulting firm, within the next week "that might give us a more accurate picture of where we stand in terms of revenue."






OTHER STORIES:

US Taxpayers About to Buy GM - (www.reuters.com) Vermont: Time to Secede - (ashizashiz.blogspot.com)The Machinery of Hopelessness - (www.deprogram.net)
California faces deep budget cuts - (www.ft.com) Deficit set to reach more than $21bn
California dreamin’ - (www.ft.com)
Silicon Valley flexes political muscle - (www.ft.com)
California voters strike down tax measures - (www.ft.com)
US tackles municipal bond failings - (www.ft.com)

Fed: US Economy Improving, Not Out of the Woods Yet - (www.cnbc.com)
As VIX Continues to Drop, Will S&P Rally to 1,000? - (www.cnbc.com)
Chrysler Names Kidder Chairman, Replacing Nardelli - (www.cnbc.com)
Financial Hurricane, Is This The Eye Of The Storm? - (www.cnbc.com)
Fifth Third Plans Stock Offer to Plug Stress Test Gap - (www.cnbc.com)

Stocks fall in early going on unemployment worries - (finance.yahoo.com)
Oil futures pull back from six-month high - (www.marketwatch.com)
Three-Month Dollar Libor Declines Most in Two Months, BBA Says - (www.bloomberg.com)
Bankruptcies Swell Deficit at Pension Agency to $33.5 Billion - (www.nytimes.com)
Tracking Stimulus Spending May Not Be as Easy as Promised - (www.washingtonpost.com)
Insurers Face ‘Pain’ From Commercial Loans, S&P Says - (www.bloomberg.com)
American Express Says U.S. Card Law May Reduce Credit - (www.bloomberg.com)
Credit reform means new era for college students - (www.sfgate.com)
U.K. Credit-Rating Outlook Lowered to ‘Negative’ by S&P on Debt - (www.bloomberg.com)
U.K. Budget Deficit Soars as S&P Warns on Debt - (www.bloomberg.com)
China Grows More Picky About Debt - (www.nytimes.com)
Gulf rift exposed as UAE quits monetary union - (www.ft.com)
Surging China bank loans a concern, Fitch says - (finance.yahoo.com)
Mexican Economy Shrinks 8.2 Percent in First Quarter - (www.bloomberg.com)
Downgrades loom for Spanish banks - (www.ft.com)

Fed Officials Raised Prospect of More Bond Purchases - (www.bloomberg.com)
Jobless Claims in U.S. Decreased 12,000 to 631,000 - (www.bloomberg.com)
Fed Officials Unconvinced Economy’s ‘Stabilization’ to Persist - (www.bloomberg.com)
Geithner faces bail-out criticism - (www.ft.com)
Fed Reluctant to Guarantee Muni Borrowings as Hearings Begin - (www.bloomberg.com)
Treasury Said to Plan Second Bailout for GMAC - (www.nytimes.com)
BofA seeks to repay $45bn by end of year - (www.ft.com)
Toll Brothers homebuilding revenue dives 51 percent - (www.reuters.com)
A Foreign Buyer Could Put Saturn's Image Into Orbit - (www.washingtonpost.com)
Dollar Is Dirt, Treasuries Are Toast, AAA Is Gone: Mark Gilbert - (www.bloomberg.com)
Swine Flu Extends to Tokyo; Global Cases Top 10,000 - (www.bloomberg.com)