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US States Are Facing Total Debt of Over $4 Trillion - (www.reuters.com) The total of U.S. state debt, including pension liabilities, could surpass $4 trillion, with California owing the most and Vermont owing the least, a new analysis says. The nonprofit State Budget Solutions combined states' major debt and future liabilities, primarily for pensions and employee healthcare, unemployment insurance loans, outstanding bonds and projected fiscal 2011 budget gaps. It found that in total, states are in debt for $4.2 trillion. The group, which follows state fiscal conditions and advocates for limited spending and taxes, said the deficit calculations that states make "do not offer a full picture of the states' liabilities and can rely on budget gimmicks and accounting games to hide the extent of the deficit." The housing bust, financial crisis and economic recession caused states' tax revenue to plunge, and huge holes have emerged in their budgets over the last few years. Because all states except Vermont must end their fiscal years with balanced budgets, states have scrambled to cut spending, hike taxes, borrow and turn to the federal government for help.
Bankers fear political moves will kill off CDS - (www.ft.com) It has been blamed by politicians for causing the eurozone debt crisis and attacked as the favoured asset of “evil speculators”. Now, politicians are seeking to take their revenge: not just with the recent introduction of bans on some trading of credit default swaps but also in their attempts to ensure that any haircut on Greek government bonds does not trigger a credit event. Combined, these two events could spell the end of the credit default swaps market, say bankers. Sovereign CDS – used to protect creditors against defaults – have been bought by hedge funds and other investors as protection against possible default. But concerns over this market are rising following the latest plans to hit holders of Greek debt with punitive haircuts of 60 per cent and the European Union wide ban on naked trading, or the buying or selling the assets without owning underlying bonds.
Banks Flooded With Cash They Can’t Profitably Use - (www.nytimes.com) Bankers have an odd-sounding problem these days: they are awash in cash. Droves of consumers and businesses unnerved by the lurching markets have been taking their money out of risky investments and socking it away in bank accounts, where it does little to stimulate the economy. Though financial institutions are not yet turning away customers at the door, they are trying to discourage some depositors from parking that cash with them. With fewer attractive lending and investment options for that money, it is harder for the banks to turn it around for a healthy profit. In August, Bank of New York Mellon warned that it would impose a 0.13 percentage point fee on the deposits of certain clients who were moving huge piles of cash in and out of their accounts.
Shanghai Owners Protest as Developers Slash Prices - (www.nytimes.com) Property owners in Shanghai and other big Chinese cities are protesting as measures to cool the once-overheated real estate market prompt developers to slash prices. The trend suggests authorities are making progress with a years-long effort to cool prices that had surged beyond affordable levels for many families. But some worry the market could collapse — angering many middle class owners who put their savings into property, expecting prices only to rise. Upset home buyers gathered outside a developers' sales office in downtown Shanghai over the weekend demanding refunds after learning of the discounts now being offered, said Tang Minzhi, a spokeswoman for China Overseas Property (Group). Protesters also besieged offices of at least two other property developers in the city's eastern suburbs, some holding up signs demanding refunds. State media on Tuesday reported similar gatherings in other cities as property companies have begun trying to trim inventories of unsold homes by offering discounts of up to 40 percent from recent prices.
Trust In Government Falls To All Time Low And Everyone Hates Congress, But Obama Sees Slight Poll Bump - (www.businessinsider.com) Americans' approval of Congress dropped to an all-time low in a new poll from CBS News and The New York Times. Just nine percent of those polled approve of the way lawmakers in Washington are doing their jobs, compared to 46 percent for President Barack Obama. Obama's approval rating is up from 43 percent in September, while his disapproval rating has fallen from 50 percent to 46 percent. American's trust in their government reached a new low — even below Watergate levels — with just 10 percent of those polled believing government will do what is right "all" or "most of the time." Only 20 percent of Americans believe congressional Republicans have a clear plan for creating jobs, just over half the number who believe Obama has one.
Eurozone crisis fund ‘may be weeks away’ - (www.ft.com)
Hard line adopted on Greek debt loss - (www.ft.com)
After Talks, Aides Try to Iron Out Euro Rescue - (www.nytimes.com)
Thai Floodwaters Threaten to Overwhelm City’s Defenses as Levee Work Slows- (www.bloomberg.com)
India Increases Key Rate, Signals End of Tightening Cycle as Growth Slows - (www.bloomberg.com)
Italian Consumer Confidence Drops to Three-Year Low Amid Sovereign Crisis - (www.bloomberg.com)
U.S. Consumer Confidence Unexpectedly Drops to Two-Year Low - (www.bloomberg.com)
Home prices flat in August: S&P - (www.reuters.com)
U.S. throws lifeline to underwater homeowners - (www.reuters.com)
Fed could target housing to help economy: Dudley - (www.reuters.com)
Fisher: Fed is giving Congress an excuse to do nothing - (www.usatoday.com)
Fed Official Backs New Growth Push - (online.wsj.com)
Corzine’s MF Global Drops by Most Since 2008 - (www.bloomberg.com)
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