KeNo's Housing and Economic Portal: Wednesday September 21 Housing and Economic stories

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Postal Service warns it could lose $10 billion this year - (www.washingtonpost.com) The U.S. Postal Service could lose up to $10 billion and have little more than a week’s worth of money left in the bank when its fiscal year ends Sept. 30, the nation’s top postmaster will tell Congress Tuesday. Postal officials are hoping the latest numbers will finally compel lawmakers to grant them new legal authority to alter delivery schedules, close post offices and lay off hundreds of thousands of workers. Competing legislative proposals from Democrats and Republicans in the House and Senate are pending, and Postmaster General Patrick R. Donahoe wants lawmakers to vote by month’s end, when the Postal Service will have to pay more than $7 billion in statutory labor and health-care costs that Donahoe says are chiefly responsible for its financial collapse. According to Donahoe, mail volume fell again this year to only 167 billion pieces delivered, down 22 percent from four years ago, partly because Americans are paying bills online and sending electronic invitations instead of paper ones.

Rhode Island considers radical moves as pensions put state on brink - (www.washingtonpost.com) This state has barely a million residents, but it is at least $6.8 billion short when it comes to funding pension plans for retired teachers, police officers and other public employees. State Treasurer Gina M. Raimondo (D) said that per capita, Rhode Island has the nation’s largest unfunded pension liability. But if the Ocean State’s pension problem is among the country’s most severe, so are the remedies being considered to solve it. An ongoing pension reform effort is likely to result in reduced benefits for 51,000 public workers and retirees. Officials are pondering lowering retirement payments, replacing part of the guaranteed pensions with 401(k)-type accounts, and sharply reducing generous cost-of-living increases enjoyed by retirees. The Rhode Island legislature is expected to consider changes next month during a special session. Until recently, most states, including Virginia and Maryland, have attacked their pension problems by cutting benefits for new hires while preserving retirement packages for current employees. Others have rolled over their pension debt by taking out loans or papering them over with what some have called unrealistic projections about investment earning and life expectancy.

Greece may ask for second bailout to expire earlier: report - (www.reuters.com) Athens may ask its euro zone partners that its second bailout, agreed by EU leaders in July, expire a year earlier than currently planned because of a higher than expected deficit, newspaper Kathimerini said on Tuesday. "Athens is expected to propose that the new aid program does not last until 2014 but until the end of 2013, so that the 109 billion euros are sufficient to cover Greece's increased(financing) needs, because of the higher budget deficit," the newspaper said, without citing sources. The paper reiterated a report it published on Saturday that the government wants to ease the deficit targets of 7.6 and 6.5 percent of GDP for 2011 and 2012 to help the economy emerge from a three-year recession. "The smaller reduction in the deficit will be offset by a larger effort in the last two years of the program," the paper said. EU leaders agreed on July 21 to extend a second, 109-billion euro bailout to Greece, on top of a 110 billion euros rescue package the debt-choked country obtained in May 2010.

World in ‘Dangerous’ Period With Europe Turmoil: Zoellick - (www.bloomberg.com) World Bank President Robert Zoellick indicated that risks to the global economy are intensifying, with the euro region’s outlook dependent on European leaders making the right decisions. “We are moving into a dangerous period,” Zoellick said in an interview with Bloomberg Television in Singapore today. While the U.S. is likely to avoid a return to recession, escaping with slow growth, the euro zone is facing a “particularly sensitive time,” he said. Zoellick’s comments add pressure to European officials who have yet to contain a sovereign debt crisis that threatens to engulf Italy, whose government bonds in euros have tumbled for a record 11 straight days.Finland has sown division among policy makers by seeking collateral for loans to Greece, the first of the three euro-region nations to receive bailouts so far.

Chris Whalen: Bank Of America Should Declare Bankruptcy - (www.businessinsider.com) Bank of America has over $100 billion in mortgage liabilities, says Chris Whalen Co-founder of Institutional Risk Analytics. On a web broadcast published on KingWorldNews, he advocates "the classical American way of dealing with this problem"-- complete and total restructuring through Chapter 11. Before its too late. He says, "The only sane way of fixing this and I mean fix it so that Bank of America comes out of the process restructured, ready to support growth, support leverage, is a classic chapter 11..." His point: Countrywide's bond trusts are worthless, were never properly constructed, and don't protect investors at all. Bank of America is on the hook for all of that, and while its subsidiaries are well capitalized, the parent company is bust. The only thing to do to fix this problem is to unmake $100s of billions worth of bond contracts.