Desert
Hot Springs, California, May Weigh Bankruptcy - (www.bloomberg.com) Desert
Hot Springs, California, a resort town near Palm Springs, may become
the first city since Detroit to seek bankruptcy protection from creditors after
a sharp drop in revenue, according to a staff report. The city of 26,000 will
run out of cash by March 31, according to a memo to the City Council from Amy Aguer, the
interim director of finance and administration. She urged the council to
declare a fiscal emergency at its Nov. 9 meeting, a prerequisite under state
law for a Chapter 9 filing. If approved, Desert Hot Springs, about 110 miles
(177 kilometers) east of Los Angeles, would join two other California cities in
bankruptcy court: San Bernardino, with a population of 210,000, and Stockton,
with 292,000 residents, the biggest U.S. city to enter Chapter 9 proceedings
untilDetroit sought
protection in July. “I’m just blindsided,” Mayor Yvonne Parks said yesterday
when asked about the fiscal crisis. “There isn’t anything that could explain
this. That’s what blows my mind.”
New
China Cities: Shoddy Homes, Broken Hope - (www.nytimes.com) Three
years ago, the Shanghai World Expo featured this newly built town as a model
for how China would move from being a land of farms to a land of cities. In a
dazzling pavilion visited by more than a million people, visitors learned how
farmers were being given a new life through a fair-and-square deal that did not
cost them anything. Today, Huaming may be an example of another transformation:
the ghettoization of China’s new towns. Signs of social dysfunction abound.
Young people, who while away their days in Internet cafes or pool halls, say
that only a small fraction of them have jobs. The elderly are forced to take
menial work to make ends meet. Neighborhood and family structures have been
damaged. Most worrying are the suicides, which local residents say have become
an all-too-familiar sign of despair.
Surprise tactics sweep central banking - (www.reuters.com) After
slashing interest rates to almost nothing and printing trillions of dollars,
central banks are
becoming increasingly reliant on another policy weapon: sucker punching markets.
The European Central Bank shocked investors and forecasters last Thursday by
cutting its main refinancing rate to a record low, reacting to a shock decline
in inflation. It was the second big central bank surprise in less than two
months, after the U.S. Federal Reserve decided in September not to trim its
monthly bond purchase stimulus. And beyond the immediate impact on financial markets,
central banks' shock therapy tactics have also had a lasting effect. The yield
on the U.S. 10-year Treasury bond -- one measure of government borrowing costs
-- fell sharply in the aftermath of the Fed's decision, and it shows no signs
of revisiting September's peaks for the year any time soon. The ECB's rate cut
helped weaken the euro more than 1 percent against the dollar, and most
economists polled by Reuters reckon it will put the currency on a firmly lower
path from here -- huge help for the fragile euro zone recovery.
U.S.
Postal Service to deliver Amazon packages on Sundays - (www.latimes.com) The
postal service will deliver Amazon packages on Sundays in the L.A. and New York
metropolitan areas at no extra charge starting this week. The service will
expand to other cities next year. Giant online retailer Amazon.com Inc. is turning up the heat on rivals this
holiday season and beyond under a new deal with the U.S. Postal Service for delivering packages on Sundays. Starting
this week, the postal service will bring Amazon packages on Sundays to
shoppers' doors in the Los Angeles and New York metropolitan areas at no extra
charge. Next year, it plans to roll out year-round Sunday delivery to Dallas,
New Orleans, Phoenix and other cities. Getting packages on Sundays normally is
expensive for customers. United Parcel Service Inc.doesn't deliver on Sundays, according to a
spokeswoman. And FedEx Corp. said Sunday "is not a regular
delivery day," though limited options are available. The deal could be a
boon for the postal service, which has been struggling with mounting financial
losses and has been pushing to limit general letter mail delivery to five days
a week.
Be Prepared For Stocks To Crash 40%-55% - (www.businessinsider.com) The
stock market continues to set new highs, which is exciting and fun for those of
us who own stocks. I own stocks, so I'm certainly enjoying it. I hope stocks
continue to charge higher, but I can't find much data to suggest that they
will. I only have a vague hope that the Fed will continue to pump air into the
balloon and corporations will continue to find ways to cut more costs and grow
their already record-high earnings. Meanwhile, every valid valuation
measure I look at suggests that stocks are at least 40% overvalued and,
therefore, are likely to produce lousy returns over the next 10 years. Which valuation measures suggest the stock
market is very overvalued? These, among others:
· Cyclically adjusted price-earnings ratio
(current P/E is 25X vs. 15X average)
· Market cap to revenue (current ratio of 1.6 vs.
1.0 average)
· Market cap to GDP (double the pre-1990s norm)
Abenomics
Faces Emerging Pressures - (online.wsj.com)
ECB split stokes German backlash fears - (www.ft.com)
ECB split stokes German backlash fears - (www.ft.com)
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