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California teachers' pension system headed toward insolvency - (www.mercurynews.com) As California school districts anticipate possibly the worst budget crisis in a generation, many will try to lighten their burden by enticing older teachers into retirement. But as more and more teachers retire -- with a pension averaging 55 percent to 60 percent of salary -- they will be straining a system that already can't meet its obligations. The California State Teachers' Retirement System is sliding down a steep slope toward insolvency. The threat isn't to teachers who have retired or plan to, but to the people of California. Taxpayers, who already pick up 23 percent of CalSTRS expenses, will be increasingly burdened as the giant pension system fails to meet its obligations. "We're on a path of destruction," said Marcia Fritz, president of pension-reform group California Foundation for Fiscal Responsibility. And merely rejiggering formulas for new employees won't rescue the system, she said. Simply put: "We overpromised." Among those promises, "Californians have typically given their public employees richer retirement benefits" than have other states, according to the nonpartisan Legislative Analyst's Office. Despite the looming disaster, CalSTRS is like an ocean liner that's slow and complicated to change course. Gov. Jerry Brown hasn't mentioned overhauling the system that benefits one of his major supporters, the teachers union. Nor has the Legislature taken up the issue.
3 Banks Warn of Big Penalties in Mortgage Inquiries - (www.nytimes.com) Several big banks warned investors on Friday that they could face sizable financial penalties as a result of state and federal investigations into abusive mortgage practices. The disclosures by Bank of America, Wells Fargo and Citigroup came after a furor late last year over how foreclosures were being conducted. Until now, the banks have emphasized that the foreclosure controversy was mostly a threat to their reputation, rather than a financial worry. But the disclosures, made in the banks’ annual financial filings with the Securities and Exchange Commission, suggest that a settlement with the government may affect both.
Oil price spikes set grim precedents - (www.ft.com) The past five global recessions have all followed sharp jumps in the oil price. Investors, traders and analysts this week have all been nervously asking: is a sixth imminent? The shock in markets has been palpable as the Brent oil price jumped as high as $119.79 a barrel on Thursday, up 16 per cent on the week. With equity and bond markets having – until this week – focused more on the prospects of inflation, some investors now think fears of an economic slowdown could surface. “In the stagflation debate, markets have been pricing for higher ‘flation’, but it is the ‘stag’ bit that hasn’t been priced in yet ... All routes head in the same direction: threats to economic growth,” says Neil Williams, chief economist at Hermes, the UK fund manager. A key part of the debate will be the ultimate size of the jump in oil prices. As oil prices stabilised on Friday at about $111.50, investors started to sound more sanguine about the outlook for equities, saying that a correction had been long overdue but could be short-lived.
GAS SURGE: 17 CENTS IN A WEEK - (money.cnn.com) Gas prices have increased 17 cents a gallon in the past week. And analysts expect prices to continue higher, following a sharp rise in the price of crude oil. The national average price for a gallon of regular gas rose 4.6 cents to $3.33, motorist group AAA said Saturday. That marks the fourth day in a row that prices have risen, and brings the national average to the highest level since October 2008. Prices at the pump can vary widely among states, due in large part to vastly different levels of gasoline tax. Gas prices were highest in Hawaii, where drivers paid $3.761 a gallon, on average. Wyoming had the lowest gas prices at roughly, $3.032 a gallon.
Arrests in Zimbabwe for Seeing Videos - (www.nytimes.com) Dozens of students, trade unionists and political activists who gathered to watch Al Jazeera and BBC news reports on the uprisings that brought down autocrats in Tunisia and Egypt have been arrested on suspicion of plotting to oust President Robert Mugabe of Zimbabwe. James Sabau, a spokesman for the police force, which is part of the security services controlled by Mr. Mugabe’s party, was quoted in Monday’s state-controlled newspaper as saying that the 46 people in custody were accused of participating in an illegal political meeting where they watched videos “as a way of motivating them to subvert a constitutionally elected government.” The evidence seized by the police included a video projector, two DVD discs and a laptop. Lawyers for the men and women in custody said they had not yet been formally charged but had been advised that they might be accused of “attempting to overthrow the government by unconstitutional means,” a crime punishable by up to 20 years in prison.
OTHER STORIES:
Fed officials play down oil price risks - (www.reuters.com)
U.S. economic recovery threatened by events in Midwest, Middle East - (www.washingtonpost.com)
U.S. 4th-Quarter Growth Figure Is Lowered, Dimming Hopes for Jobs - (www.nytimes.com)
Bank of America, Wells Fargo See Fines, Actions on Foreclosures - (www.bloomberg.com)
Higher oil slippery slope for consumer goods market - (www.reuters.com)
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