KeNo's Housing and Economic Portal: Monday July 19 Housing and Economic stories

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Illinois Borrowing $900 Million as Credit-Default Insurance Cost Doubles - (www.bloomberg.com) Illinois plans to add $900 million in Build America Bonds as soon as this week to the $755 million in securities it has sold in June as the cost of insuring the state’s debt against default reached a record high. The cost of an Illinois credit-default swap has more than doubled since April 5 to a record high last week of 360 basis points, or $360,000 to protect $10 million of debt, according to CMA DataVision. The state paid a premium of 79 basis points on 10-year general obligation debt over top-rated tax-exempts June 25, or 4 basis points more than at the start of the month. A basis point is 0.01 percentage point. Some of the spread can be attributed to the state’s sale of $2 billion in debt in three months, said Mike Pietronico, who oversees $275 million in municipal holdings as chief executive officer of New York-based Miller Tabak Asset Management. “There’s some saturation of the name and that’s costing them in terms of pricing,” Pietronico said. “Once they move past this borrowing binge, the bonds will begin to perform better.” Illinois’s debt is rated fifth-highest by Moody’s Investors Service, at A1, and by Standard & Poor’s, at A+. The state’s obligations are the most expensive municipal debt to insure, at 14 basis points above California, the largest U.S. borrower.

Oil spill's psychological toll quietly mounts - (news.yahoo.com/s/ap) The Gulf of Mexico oil disaster feels far worse to shrimper Ricky Robin than Katrina, even though he's still haunted by memories of riding out the hurricane on his trawler and of his father's suicide in the storm's aftermath. The relentless spill is bringing back feelings that are far too familiar to Robin and others still dealing with the physical and emotional toll wrought by Katrina five years ago. "I can't sleep at night. I find myself crying sometimes," said Robin, of Violet, a blue-collar community on the southeastern edge of the New Orleans suburbs, along the highway that hugs the levee on the Mississippi River's east bank nearly all the way to the Gulf. Psychiatrists who treated people after Katrina and have held group sessions in oil spill-stricken areas say the symptoms showing up are much the same: Anger. Anxiety. Drinking. Depression. Suicidal thoughts. "Everybody's acting strange," said Robin, 56. "Real angry, frustrated, stressed out, fighting brothers and sisters and mamas and family."

The Third Depression - (www.nytimes.com) Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31. Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses. We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense. And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.

Unemployment benefits extension nixed for nearly 1 million - (money.cnn.com) Nearly a million people have lost their unemployment benefits because the Senate failed for the third time Thursday to extend the deadline to file for this safety net. Hoping to overcome deficit concerns, the Senate trimmed down the bill yet again on Wednesday night so that it would only increase the deficit by $33.3 billion over 10 years, instead of $55.1 billion. The main changes were to scale back additional Medicaid funding for the states and to reallocate some stimulus and Defense Department spending. The legislation failed by a 57-41 vote. Democrats needed 60 votes to overcome the GOP fillibuster of the bill. The bill will now be pulled, according to two Democratic leadership aides. This leaves many groups in flux, including the jobless who have lost their safety net, companies who are waiting to learn what tax breaks are extended, and governors who were counting on the additional funds to balance their budgets. The grab-bag legislation pushes back the deadline to file for federal unemployment benefits until the end of November, renews expired tax provisions, lengthens a small business lending program and adds to infrastructure investments.

School districts cut summertime free lunch programs - (www.sacbee.com) Who says there's no such thing as a free lunch? There is. But it's becoming more of a rarity. School districts throughout the region have closed summer schools and the free lunch programs that accompanied them. "Last year was the first year we saw school districts closing or shutting down summer school programs," said Phyllis Bramson-Paul, director of nutrition services at the California Department of Education. "It happened late enough in the year that there wasn't time for community agencies to fill the gap. We served 10 percent fewer meals than the year before." The Sacramento region has been hard hit. Elk Grove Unified and Natomas Unified school districts shuttered their summer meal programs completely when they closed their summer schools to cut budget deficits.

Sacramento shortens hours at public counter - (www.sacbee.com) Sacramento residents who visit the city Revenue Division's public counter at 915 I St. will soon find they have fewer hours to take care of business. The city, as part of its move to save costs and help balance the budget, is limiting operation of the public counter to between 12:30 p.m. and 5:30 p.m., Mondays through Fridays, starting Aug. 2. Currently, the division's public counters on the first floor are available for business - such as paying utility bills or city parking citations - from 7:30 a.m. to 5:30 p.m. daily. To compensate for the reduced hours, the Revenue Division will open additional customer windows starting in August.