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STORIES:
Blink! U.S. Debt Just Grew by $11 Trillion - (www.bloomberg.com) Republicans and Democrats
spent last summer battling how best to save $2.1 trillion over the next decade.
They are spending this summer battling how best to not save $2.1 trillion over
the next decade. In the course of that year, the U.S. government’s fiscal gap
-- the true measure of the nation’s indebtedness -- rose by $11 trillion. The
fiscal gap is the present value difference between projected future spending
and revenue. It captures all government liabilities, whether they are official
obligations to service Treasury bonds or unofficial commitments, such as paying
for food stamps or buying drones. Some
question whether “official” and “unofficial” spending commitments can be added
together.
Three
California cities' bankruptcy cases reverberate - (www.sacbee.com) The back-to-back bankruptcy filings of Stockton
and San Bernardino, following Vallejo's
insolvency a few years earlier, have sparked finger-pointing about causes and
speculation about whether more cities may go under. Those on the political
right say the bankruptcies resulted from local politicians' caving in to
pressure from unions for higher pay and more generous pension and health
benefits. Those on the left – unions particularly – contend that the collapse
of the real estate market, caused by rapacious Wall Street bankers, is to
blame.
BNP Fund Freeze Shrinks Holdings Five Years After Crisis
Ignited - (www.bloomberg.com) When a Brookfield Investment
Management Inc. analyst saw bonds of Accuride Corp., the wheel manufacturer in
Evansville, Indiana, at 94 cents on the dollar in December, he decided it was
time to buy. The problem was the price wasn’t real. The debt was only available
at 104 cents. “When it actually came time to shake them loose from somebody’s
hands, that’s where the disconnect came in,” said Richard Cryan, co-manager of
high-yield corporate debt at the New York-based firm, which oversees $150
billion of assets. Unable to find a seller at the lower price, they gave up. Five
years after BNP Paribas SA (BNP) marked
the start of the worst financial crisis since the Great Depression by halting
withdrawals from three investment funds that owned subprime mortgage
securities, repercussions are lingering in the credit markets. What investors
see still isn’t what they can get.
Forty
Million Houses in the US That No One Needs? - (www.thedailybell.com) 40 million houses too many
... one explanation for falling prices ... America has too many big houses – 40
million, to be exact – because consumers are shifting preferences to condos,
apartments and small homes, experts told the New Partners for Smart Growth
Thursday, holding its 11th annual conference in San Diego through Sunday.
Relying on developers' surveys, Chris Nelson, who heads the Metropolitan
Research Center at the University of Utah, said 43 percent of Americans prefer
traditional big, suburban homes but the rest don't. "That means we are out
of balance in terms of where the market is right now, let alone trending toward
the future," he said. He estimated that this demand suggests a need for 10
million more attached homes and 30 million more small homes on
4,000-square-foot lots or less.
Former ECB Chief Economist Warns Against Trying to Blackmail
Germany With History - (online.wsj.com)
Germany’s guilt over the
Second World War doesn’t oblige it to write blank checks to euro-zone countries
that fail to reform their economies, said former European Central Bank executive
board member Otmar Issing. Mr. Issing served as a member of the ECB’s Executive
Board from 1998 to 2006. A German, he remains an influential voice on economic
and central bank matters in his home country. Since leaving his ECB post he has
served as an adviser to his government on financial and economic matters.
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