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California revenues down by $705 million - (www.sfgate.com) Revenues flowed into state coffers at a lower rate than projected in September, short about $302 million, putting California a total of $705.5 million below expectations for the first three months of the fiscal year, Controller John Chiang said Monday. Department of Finance officials cautioned that the controller's numbers count revenues in a way that may not show all the actual money on hand and that they may not be the most accurate picture of California's finances. Still, Chiang said the numbers were of concern. As part of the budget deal signed in June, automatic trigger cuts would take place if revenues are projected to fall short of expectations by more than $1 billion. A second round of triggered cuts would take place if the revenues are short by $2 billion or more. "For better or worse, the potential for revenue shortfalls is precisely why the governor and Legislature included trigger cuts in this year's state spending plan," Chiang said. "September's revenues alone do not guarantee that triggers will be pulled. But as the largest revenue month before December, these numbers do not paint a hopeful picture."
Insight: New bankruptcy ripples may emerge in tough economy - (www.reuters.com) Companies in a range of businesses, including hair salons, restaurants, renewable energy, and the paper industry, have tumbled into Chapter 11 in the past few months. The weak economy, lackluster consumer spending, a shaky junk-bond market and increasingly tight lending practices are also threatening struggling companies in industries as diverse as shipping, tourism, media, energy and real estate. AMR Corp's American Airlines may need to go to court to restructure its labor contracts, though a spokesman for the airline reiterated on Monday that bankruptcy is not the company's goal or preference. Kodak confirmed that a law firm known for taking companies through bankruptcy has been advising on strategy as attempts to overcome the loss of its traditional photography business falter. It has denied any intention of filing for bankruptcy. Some bankruptcy and restructuring experts warn a fresh U.S. recession could trigger a string of failures to rival the one that followed Lehman Brothers, which in 2008 filed the biggest bankruptcy in U.S. history. "It's getting busier for everyone I know," said Jay Goffman, the co-head of the Global Restructuring Group at law firm Skadden Arps, Slate, Meagher & Flom. "I think 2012 will be a busy year and 2013 and 2014 will be extraordinarily busy years in restructuring."
Juncker: Greek debt haircut may exceed 60 percent - (yahoo.finance.com) The head of the eurozone's finance ministers says the Greek creditors may have to settle for a cut of more than 60 percent in what Athens owes them. Jean-Claude Juncker, who is also prime minister of Luxembourg, says the group is "talking about more" than a 60 percent haircut for Greece. State broadcaster ORF cited Juncker on its website Tuesday, in comments made late Monday evening to ORF. He was asked whether debt forgiveness of 50 to 60 percent was being considered for Greece. He says that - unlike financial markets - EU politicians were slow to react to the debt crisis, adding there is no "historical experience" for the present situation.
Slovak PM ties bailout vote to government survival - (yahoo.finance.com) Slovakian lawmakers were casting a vote Tuesday that could help determine the future of Europe's common currency, in a bizarre by-product of eurozone rules requiring unanimous support for every major decision. EU officials could get around a potential Slovakian rejection of the bill to boost the powers and size of a euro bailout fund, designed to contain debt market turmoil, but doing so would carry costs to European unity. Slovakia's Prime Minister Iveta Radicova urged lawmakers to back the bill, arguing that the country was losing its credibility -- the country's 16 partners in the eurozone have already backed the package of measures designed to boost Europe's firefighting capabilities. "It is the entire eurozone system which is under threat at the moment, not just a few small countries anymore," Radicova said in the debate in Parliament. "Our euro is under threat. The changing situation needs a quick and immediate reaction."
Bank woes push up Euribor rates and demand for ECB funds - (www.reuters.com) Key euro-priced bank-to-bank lending rates and demand for ECB funding rose on Tuesday as growing concerns about European banks' ability to handle the euro zone's sovereign debt crisis outweighed an incoming wave of central bank liquidity support. In response to intensifying euro zone troubles, the European Central Bank last week reinstated some of its most potent crisis-fighting tools, including 1-year liquidity injections. The moves are expected to keep euro money market heavily oversupplied with liquidity for the foreseeable future and thereby maintain downward pressure on interbank lending rates. Banking sector tensions continued to outweigh the prospect of new ECB support on Tuesday, however.
Trichet Sees ‘Systemic’ Risk as Greek Writedowns Divide EU - (www.bloomberg.com)
Greek $11 Billion Loan Payment Likely in Early November as Debt Talks Loom - (www.bloomberg.com)
Trichet sees systemic threat, wants Europe banks funded - (www.reuters.com)
ECB Backs Bond Guarantee Option to Magnify Europe’s Crisis Rescue Facility - (www.bloomberg.com)
EU sets deadline to resolve debt crisis - (www.ft.com)
Indonesia Unexpectedly Cuts Benchmark Interest Rate to Bolster Expansion - (www.bloomberg.com)
Greece’s austerity measures collide with reform hopes - (www.washingtonpost.com)
U.K. Manufacturing Output Declined in August - (www.bloomberg.com)
For Americans, recovery feels like recession: study - (www.reuters.com)
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