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State and local governments may cut 450,000 jobs in FY2012 - (www.reuters.com) Around 450,000 people who work for U.S. states, counties, cities, towns and villages could get pink slips in fiscal 2012, sharply up from the 300,000 positions shed this year, a report said on Monday. The number of job cuts will rise mainly because the federal stimulus program is ending while the cost of Medicaid is "spiraling," said the report by UBS Investment Research. States got billions of extra dollars primarily for education and Medicaid from the stimulus plan. Medicaid is the state-federal health plan for the poor and disabled. Maury Harris, a UBS economist, on a conference call said the deficits states and municipalities will have to close will climb to $155 billion in fiscal 2012 from about $108 billion in the current fiscal year. Most states and municipalities begin new fiscal years on July 1. The deep cuts state and local governments will have to make to balance their books in the next fiscal year should clip about one percentage point from the U.S. gross domestic product -- about 30 basis points more than in the current fiscal year, the report said. "The public sector is holding back growth but it doesn't derail it altogether," Harris said.
Illinois Treasurer says he would call bond houses, warn against lending to Illinois - (www.stltoday.com) Illinois chief fiscal officer said Monday he is willing to dial up the bond houses and finance companies to alert them that lending the state more money, as Gov. Pat Quinn has proposed, would be a "major risk." "If I need to send letters to the rating companies to tell them the treasurer of Illinois is opposed to more borrowing, I'm going to do that," said Republican Treasurer Dan Rutherford. Rutherford says the debt from past borrowing has soared to $45 billion in recent years, which amounts to $10,000 for every household in the state. As a result, Illinois has the second-worst credit rating in the nation, above only California, he added. The backlog of unpaid bills will reach $8 billion by July, Comptroller Judy Baar Topinka recently estimated.
Ruling Raises Stakes in California’s Fiscal Crisis - (www.nytimes.com) The Supreme Court’s order to California to ease overcrowding in the state’s prisons, by releasing tens of thousands of inmates if no other solution can be found, will probably aid Gov. Jerry Brown’s plan to move more inmates from state prisons to county jails. But it is also sure to set off a fresh round of budget battling in the financially distressed state as the governor and local officials insist on ensuring state financing before changing the system. The ruling on Monday has also already inspired a fresh round of political recriminations, with some law enforcement officials and Republicans echoing the Supreme Court’s dissenters by saying the release will result in more violence as released inmates, unable to find jobs, return to their former way of life. “We’re bracing for the worst and hoping for the best,” said Mark Pazin, the Merced County sheriff and chairman of the state’s sheriffs’ association. “This potential tsunami of inmates being released would have such an impact on local communities. Each of those who would be released have really earned their pedigree as a criminal. It could create real havoc.”
Tepco Confirms Meltdown of Reactors - (www.bloomberg.com) Tokyo Electric Power Co. said fuel rods melted in two more reactors at its Fukushima nuclear plant, indicating for the first time that damage from the March 11 earthquake and tsunami is matching worse-case-scenarios. Fuel rods in reactors 2 and 3 had almost complete meltdowns, spokesman Junichi Matsumoto told reporters in Tokyo today. That’s in line with U.S. assessments in the early days of the crisis that suggested damage to the station was more severe than Tokyo Electric officials estimated. The meltdown of the cores is the “greatest at the No. 1 reactor, followed by the No. 3 unit and then No. 2,” Matsumoto said. The analysis of the damage became possible “after data from the central control room was retrieved.” Japan’s biggest utility, known as Tepco, raised the possibility of more extensive destruction when it announced last week -- more than two months after the disaster -- that fuel rods in the No. 1 reactor had melted within 16 hours of the quake and cooling water was below the base of the rods.
It's Getting Harder To Defend Goldman Sachs - (www.forbes.com) After reading Money and Power: How Goldman Sachs Came To Rule the World by William D. Cohan, I can no longer defend Goldman Sachs and the status quo on Wall Street. As Congress and the media were debating the controversial and populist-tinged Dodd-Frank Financial Regulation bill, my first inclination was to defend Wall Street and traders overall. I didn’t like Dodd-Frank’s Volcker Rule, which divests proprietary trading and alternative investments (hedge funds and private equity) from Wall Street (commercial) banks. I believed the bill was similar to reinstating the Glass-Steagall Act separating investment banking and trading from commercial banking.
OTHER STORIES:
Sales of New Homes in U.S. Rose in April - (www.bloomberg.com)
White House Budget Chief Lew Says U.S. Debt Ceiling Deal Won’t Be ‘Pretty’ - (www.bloomberg.com)
Expectations modest as U.S. debt talks resume - (www.reuters.com)
Bullard: European debt turmoil could weigh on U.S. - (www.reuters.com)
Moody’s Lists 14 U.K. Banks for Downgrade Review - (www.bloomberg.com)
Facing Up to End of 'Easy Oil' - (www.online.wsj.com)
Greek default would hit others in euro zone, banks - (www.reuters.com)
SEC deepens probe of forex trading: report - (www.reuters.com)
Greenwich’s Priciest Homes Languish With Four Years of Inventory on Market - (www.bloomberg.com)
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