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How a Teacher Retired at 59 With $174,000 Pension - (www.cnbc.com) After nearly 40 years in public education, Patrick Godwin spends his retirement days running a horse farm east of Sacramento, Calif., with his daughter. His departure from the workaday world is likely to be long and relatively free of financial concerns, after he retired last July at age 59 with a pension paying $174,308 a year for the rest of his life. Such guaranteed pensions for relatively youthful government retirees — paid in similar fashion to millions nationwide — are contributing to nationwide friction with the public sector workers. They have access to attractive defined-benefit pensions and retiree health care coverage that most private sector workers no longer do. Experts say eligible retirement ages have fallen over the past two decades for many reasons, including contract agreements between states and government labor unions that lowered retirement ages in lieu of raising pay.
A Romance With Risk Brought on the MF Global Panic - (www.cnbc.com) Soon after taking the reins of MF Global in 2010, Jon S. Corzine visited the Wall Street firm’s Chicago offices for the first time, greeting the brokers, analysts and sales staff there. One broker, Cy Monley, caught Mr. Corzine’s eye. Unknown to MF Global’s top management in New York, the employee, whose job was to match buyers and sellers in energy derivatives, was also trading a small account on the side, using the firm’s capital. “How are you making money on side bets? What else are you guys doing to make money here?” Mr. Corzine asked enthusiastically, his eyes widening, the broker recalled. The new chief executive grabbed a seat and spent an hour questioning Mr. Monley as other top executives from New York hovered impatiently nearby. Although Mr. Corzine had been a United States senator, governor of New Jersey, co-head of Goldman Sachs and a confidant of leaders in Washington and Wall Street, he was at heart a trader, willing to gamble for a rich payoff.
Banks in ‘Vicious Cycle’ With Government Cash - (www.bloomberg.com) European banks turning to their governments to raise required capital could trigger a downward spiral of declining sovereign-debt prices and further losses for the lenders. The European Banking Authority ordered the region’s banks on Dec. 8 to raise 115 billion euros ($154 billion) by June. Faced with dwindling profits and unable to tap capital markets to sell new shares, firms may be forced to seek government help. About 70 percent of the capital requirement falls on lenders in Spain, Greece, Italy and Portugal, countries struggling to convince the world they can pay their debts.
No One Says Who Took $586B in Fed Swaps - (www.bloomberg.com) For all the transparency forced on the Federal Reserve by Congress and the courts, one of the central bank’s emergency-lending programs remains so secretive that names of borrowers may be hidden from the Fed itself. As part of a currency-swap plan active from 2007 to 2010 and revived to fight the European debt crisis, the Fed lends dollars to other central banks, which auction them to local commercial banks. Lending peaked at $586 billion in December 2008. While the transactions with other central banks are all disclosed, the Fed doesn’t track where the dollars ultimately end up, and European officials don’t share borrowers’ identities outside the continent. The lack of openness may leave the U.S. government and public in the dark on the beneficiaries and potential risks from one of the Fed’s largest crisis-loan programs. The European Central Bank’s three-month dollar lending through the swap lines surged last week to $50.7 billion from $400 million after the Nov. 30 announcement that the Fed, in concert with the ECB and four other central banks, lowered the interest rate by a half percentage point.
Homebuyers Could Wind Up Paying for Payroll Tax - (www.cnbc.com) At face value, it seems like an easy, albeit creative way to pay for the extension of the payroll tax cut. Raise the fees that banks pay mortgage giants Fannie Mae and Freddie Mac to guarantee home loans. These are called “guarantee fees,” and are supposed to cover mortgage defaults in a normal housing market. (I say this because obviously in today’s foreclosure-ridden landscape they don’t even come close, which is why the two are currently in debt to U.S. taxpayers for a collective $152.7 billion). But back to the original premise: Senate Democrats and House Republicans like the idea, which under the Senate proposal would raise $38.1 billion, according to Pennsylvania Senator Bob Casey. Senate and House versions differ on how much the fees would be raised, but both proposals are additions of less than one percent of the loan.
EU Failure on Unanimous Agreement May Consign Top-Rated Bonds to History - (www.bloomberg.com)
Euro Undermined as Draghi Undoes Trichet Rates- (www.bloomberg.com)
Italy Sells EU7 Billion in Bills as Costs Decline - (www.bloomberg.com)
Brazil Says Done With Fiscal Stimulus as Interest-Rate Cuts to Fuel Growth - (www.bloomberg.com)
India’s First Industrial Output Drop Since 2009 Sends Rupee Lower: Economy- (www.bloomberg.com)
China Marks 10 Years as WTO Member Amid EU, U.S. Criticism - (www.bloomberg.com)
Bank Credit Highest Since Before Lehman Bankruptcy as Expansion Continues - (www.bloomberg.com)
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