KeNo's Housing and Economic Portal: Tuesday April 27 Housing and Economic stories

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TOP STORIES:

Greece Plunges Deeper into Crisis, Banks, Euro Hit - (www.cnbc.com) Markets pounded Greek bonds and banking stocks on Thursday, driving the debt-stricken euro zone member's borrowing costs to new highs and pushing it closer to tapping a last resort EU/IMF safety net. The government struggled to reassure markets it can stay solvent after the premium investors demand to buy Greek rather than the benchmark German government debt surged for the third day in a row to a record high since Greece joined the euro. But skepticism at a dearth of details surrounding the European Union and International Monetary Fund lifeline continued to pile pressure on a country already struggling to cover its wide fiscal gap and huge public debt load. Chris Pryce, senior Greece analyst for rating agency Fitch, said Athens' only choice now was to ask for help. "Despite everything the EU and the euro zone have done there is still a lack of clarity (and) confusion about what they intend to do, when they intend do it and how much would be involved," he told Reuters.

Nearly Half of US Households Escape Fed Income Tax - (www.cnbc.com) Maybe we should only allow those who pay taxes to vote. Of course the 50% of those who pay no taxes will keep voting to get something for nothing (i.e., health care benefits, food stamps, etc.) when they own half the votes. About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization. Most people still are required to file returns by the April 15 deadline. The penalty for skipping it is limited to the amount of taxes owed, but it's still almost always better to file: That's the only way to get a refund of all the income taxes withheld by employers. In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax. Tax cuts enacted in the past decade have been generous to wealthy taxpayers, too, making them a target for President Barack Obama and Democrats in Congress. Less noticed were tax cuts for low- and middle-income families, which were expanded when Obama signed the massive economic recovery package last year. The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners -- households making an average of $366,400 in 2006 -- paid about 73 percent of the income taxes collected by the federal government.

L.A. to Run Out of Cash in a Month – (www.bloomberg.com) Los Angeles will run out of cash on May 5, city Controller Wendy Greuel said today in a release in which she requested a $90 million transfer of reserve funds to pay bills. “The question I have been asked most often during the budget crisis is, ‘When will the city run out of money?” Greuel said in the e-mailed release. “Unfortunately, we finally have the answer.” Greuel, 48, said in the release that the city might not be able to make payroll. She asked Mayor Antonio Villaraigosa and the City Council to release $90 million from reserve funds to meet what she described as “an urgent cash need.” The controller’s financial reporting division estimated that the city would need $90 million to ensure solvency through the fiscal year that ends June 30, according to Golombek.

Food Stamp Usage Hits Record 39 Million, 14th Consecutive Monthly Increase - (Mish at globaleconomicanalysis.blogspot.com) Food stamp usage is up again except the program is now called SNAP (Supplemental Nutrition Assistance Program). Inquiring minds are looking at a SNAP Participation Table that shows a record 39,430,724 receive SNAP benefits, a 22.4% increase from a year ago. Household SNAP participants increased from 12,728,981 in Fiscal Year 2008 to 15,232,105 in fiscal year 2009, a 16.4% increase. For comparison purposes, watch the growth in household participation. Clearly the recession took its toll, and will continue to do so until there is a dramatic decrease in the unemployment rate.

A grim assessment of L.A.'s finances - (www.latimes.com) City Controller Wendy Greuel declares an 'urgent financial crisis' and says the only way to continue paying bills in the short term is to begin draining the city's already limited emergency reserve. The city's top financial official issued a grim assessment of the escalating budget crisis Monday, warning that Los Angeles could be unable to pay its bills in just over four weeks. City Controller Wendy Greuel declared an "urgent financial crisis" and said the only way to continue paying bills in the short term was to begin to drain the city's already limited emergency reserve. Greuel's announcement was the latest development in an increasingly bitter standoff between the City Council and the city's Department of Water and Power over how much the municipal utility should charge ratepayers and how much it should contribute to the city's treasury. DWP officials have proposed rate increases that would range from roughly 9% for most users to as high as 28% for some. The council has blocked those increases, responding to irate reactions from constituents. DWP officials have said that without the extra money, they cannot meet their commitment to send the city an additional $73.5 million on which budget officials say they have been counting.

Health Insurers Stop Offering New Coverage to Small Businesses and Individuals in Massachusetts in Battle Over Rates - (Mish at globaleconomicanalysis.blogspot.com) The battle over health care costs in Massachusetts has intensified. Insurers want to hike rates while the regulators say no. In a showdown on regulatory power, Health insurers sue to raise rates. A half-dozen health insurers yesterday filed a lawsuit against the state seeking to reverse last week’s decision by the insurance commissioner to block double-digit premium increases — a ruling they say could leave them with hundreds of millions in losses this year. The proposed rate hikes would have taken effect April 1 for plans covering thousands of small businesses and individuals. Insurers wanted to raise base rates an average of 8 percent to 32 percent; tacked on to that are often additional costs calculated according to factors such as the size and age of the workforce. That Did Not Take Long: Less than a week ago, in Health Care Price Controls Hit Massachusetts I noted that state regulators denied rate increases to Massachusetts health insurers.