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Americans struggle to regain their shrunken wealth - (www.google.com/hostednews/ap) Americans' long journey to regain the wealth they lost in the recession is stalled. Households failed even to run in place during the April-June quarter as sinking stock prices eroded wealth. Stocks have since recovered about two-thirds of those losses. But based on last quarter's data, household net worth would have to surge 23 percent to reach its pre-recession peak. Net worth — the value of assets like homes and investments, minus debts like mortgages and credit cards — fell 2.7 percent last quarter, or $1.5 trillion, the Federal Reserve said Friday. It now stands at $53.5 trillion. That's above the bottom hit during the recession, $48.8 trillion in the first quarter of 2009. But it's far below the pre-recession peak in wealth of $65.8 trillion. The drop from April to June was the first quarterly decline in Americans' wealth since early 2009. Before then, net worth had risen slowly for four straight quarters. Economists generally think household wealth has ticked up in the July-to-September quarter so far, because of higher stock prices. Yet given last quarter's setback and expectations of scant gains ahead, some economists have pushed back their forecast for when Americans will regain all their lost wealth: Not until the middle of this decade.
Fort Worth pension bubble will blow up in our faces - (www.star-telegram.com) To understand why Fort Worth's pension system is such a financial disaster, look at one month's list of recent retirements. In January, a 53-year-old policeman retired with an annual benefit of $90,312 for life, plus $256,000 in a lump sum payment. Another policeman, 57, got almost $74,000 annually, plus $313,000 in a lump sum. A 54-year-old firefighter got an annual pension of $90,130, plus $178,000 in cash. With an average age of 50 for the police and 54 for the firemen in this group, they're likely to spend more years in retirement than they worked. An analysis for the City Council, presented in July, projected that the retiring policemen would collect $3.1 million in pension pay. You don't have to be an actuary to know that this pension plan will end badly. The technical phrase is "trending toward insolvency." Except that the city is on the hook for all the promised benefits. Taxpayers will have to pony up hefty contributions for years, even generations, and the city may have to cut services to afford it. The pension for city employees is currently projected to pay out $432 million more than it brings in over the next 30 years. And that's the optimistic scenario. If investment returns average 7 percent, rather than the dreamy 8.5 percent in the assumptions, the unfunded liability could approach $1 billion. The pension will require $60 million in city funds next year, and it's already a drag on a strapped city budget that has to close swimming pools and libraries and impose furloughs. Every year, the pension hole grows, because the benefits keep piling up. "This is the elephant in the room," Mayor Mike Moncrief told the council in late July. "Not only for this budget, but for all the budgets to come."
Washington State budget deficit hits $520 million, 6.3 pct cut next - (www.komonews.com) Low tax collections are driving a new state budget deficit of about $520 million through mid-2011, leading to spending cuts of about 6.3 percent from Gov. Chris Gregoire.
Thursday's state revenue forecast showed continuing weakness in the national and state economies following the Great Recession. Arun Raha, the state's chief economist, said the economic picture is still in "uncharted territory." Tax collections for the following two-year budget period are projected at about $670 million lower than previously expected. That makes the total drop in expected revenues about $1.4 billion, and the projected deficit for the upcoming 2011-2013 budget around $4.5 billion. Spending cuts won't touch certain areas, such as basic education, pensions and debt service. But Marty Brown, Gregoire's budget director, said social services, corrections and community colleges will clearly face significant losses. That could lead to larger community college classes, fewer services for ill people and more. Any plan that will not touch education or pensions is as advisable as pissing in the wind.
Calpers in Talks With Schwarzenegger on $2 Billion Budget Loan - (www.bloomberg.com) The California Public Employees’ Retirement System said it is in talks with Governor Arnold Schwarzenegger’s administration on a proposal to borrow $2 billion from the fund to help the state balance its budget. Anne Stausboll, the fund’s chief executive officer, said her staff has been holding informal discussions with Schwarzenegger’s department of finance on a proposal that office has floated to credit the state with $2 billion this year as an advance on the roughly $74 billion the governor estimates the state would save during the next 30 years from his proposals to roll back pension benefits for government workers. California has been without a spending plan since the July 1 start of its fiscal year as Schwarzenegger and Democrats who lead the Legislature remain deadlocked over how to fill a $19 billion deficit. The Republican governor has vowed not to sign any final budget unless it’s accompanied by legislation to permanently cut the state’s cost to finance workers’ retirement benefits.
Gov: ‘No Choice’ But To Lay Off State Workers Early - (newyork.cbslocal.com) Going back on a pledge not to layoff state workers before Jan. 1, Gov. David Paterson said Thursday a round of layoffs will begin before the end of 2010 to close New York’s massive budget gap. It’s always that last question that produces the bombshell: “Why aren’t you calling a spade a spade and talking about the unions in this state?” And Paterson did not hesitate. “They have left us no choice. We will probably, in fact, we will lay off workers before the end of the year,” Paterson said. Patricia Baker is the VP of the Public Employees Federation, which represents 59,000 New York State professional, technical, and scientific employees. The state unions have a written agreement with the governor that he will not lay off workers before Dec. 31. “We do have an agreement with the governor and we’re gonna hold him to that agreement,” Baker said. “They have fought and tried to restrain our administration at every turn,” Paterson said.
OTHER STORIES:
Treasury Notes Gain on Speculation Irish Debt Crisis Deepening - (www.bloomberg.com)
Monetary easing fears lift gold to record high - (www.ft.com)
Raising the curtain on the private nature of derivatives - (www.ft.com)
U.S. woes are not our fault, Chinese economists say - (www.reuters.com)
Japan Weighs More Risk in Pension - (online.wsj.com)
Germany seizes on big business in China - (www.washingtonpost.com)
New Fed Rules Are Being Questioned - (online.wsj.com)
America’s Great Recession Wasn’t the Worst - (www.nytimes.com)
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