On the heels of announcing 519 layoffs, Milwaukee Public Schools Superintendent Gregory Thornton called on the teachers union to reconsider pension concessions that could save 200 jobs.
Thornton announced Wednesday that 519 district employees, including 354 teachers, will receive layoff notices this week because of deep budget cuts in the new fiscal year that begins Friday.
Most of the teacher cuts are at the elementary school level - kindergarten through eighth grade. The layoffs were largely determined by seniority, in accordance with the union contract. Some less-experienced teachers with specialized training were exempt.
New York City lawmakers reached a budget deal Friday that will avert the layoffs of about 4,000 teachers partly through union concessions, but the city won't pay to replace thousands more public school instructors who quit or retire this year, officials said.
Mayor Michael Bloomberg and City Council Speaker Christine Quinn gathered with city lawmakers and the head of the teachers' union Friday evening to announce the roughly $66 billion deal, which ducks the worst of the cutbacks the mayor had said would be unavoidable due to economic hard times and declining state and federal budgets.
Still, city classrooms will hold 2,600 fewer teachers next year, because a larger-than-expected number of instructors are choosing to quit or retire.
California lawmakers passed a budget brokered with Governor Jerry Brown that wagers the state’s recovering economy will bring in an extra $4 billion, after he ceded his plan for higher taxes that was blocked by Republicans.
The $85.9 billion spending package, approved by the Democratic majority late yesterday, erases a $10 billion deficit with higher revenue projections, reduced spending and deferred payments. It triggers $2.5 billion of additional cuts if the better-than-expected revenue doesn’t materialize, to assure Wall Street that the state can repay cash-flow loans by June 2012.
Moody's on Wednesday warned it may downgrade some Aaa-rated U.S. states and municipalities if the country loses its top-notch rating or if federal funding falls significantly as part of a plan to reduce the nation's deficit.
Most states and some municipalities rely on federal funding for operational purposes. The most susceptible to federal budget cuts would be those with greater economic volatility and that rely more heavily on capital markets to refinance their debt, Moody's senior analyst Anne Van Praagh told Reuters in an interview.
"To the extent that Treasuries markets are volatile (in the case of a U.S. default and downgrade), then that could pass through in the form of additional interest costs for states or local governments," she said.
An attempt by the U.S. and other non-OPEC governments to sway oil and gasoline prices appears to have petered out in less than a week.
Benchmark crude settled at $94.77 per barrel Wednesday on the New York Mercantile Exchange. Over two days, oil has nearly recovered the loss from last Thursday when the U.S. and other oil-importing countries said they'd dump emergency oil supplies onto the market.
Brent crude, which is used to price many international oil varieties, also rebounded. Although at $112.40 per barrel, it's still about 2 percent below where it was last week.
Optimism that Greece will be able to take the necessary measures to avert a default lifted Wall Street's sentiment and sent the major market averages soaring more than 1%.
The Dow Jones Industrial Average jumped 145 points, or 1.2%, to 12,189, the S&P 500 rallied 16.6 points, or 1.3%, to 1,297 and the Nasdaq Composite climbed 41 points, or 1.5%, to 2,729. The FOX 50 was up 9.8 points to 908.
The number of people who signed contracts to buy homes rose sharply in May. But the influx of spring buyers wasn't enough to signal a rebound in the struggling housing market.
The National Association of Realtors said Wednesday that its index of sales agreements for previously occupied homes rose 8.2 percent last month, to a reading of 88.8. The increase followed April's seven-month low of 82.1
Dear Sir, Would you be willing to answer this email or comment on my question in your blog?
In this last few days when the gold price went off by 50 points, what did all those sellers (whom, I presume, were the actors who caused the price to fall--maybe I am even wrong about this simple fact) do with the money they got for their gold interests? Are they mostly people who are like day traders, constantly jumping in and out of things, making a quarter of per cent. per transaction? I think this is the type of data you try to offer, but, often, it is in charts that I have trouble understanding. Nonetheless, what I can understand of your blog seems well-reasoned and well-informed. Thanks. S. Petersen.
Today, U.S. Senators Jim DeMint (R-South Carolina), Mike Lee (R-Utah) and Rand Paul (R-Kentucky) introduced the Sound Money Promotion Act, legislation that would remove the tax burden on gold and silver coins that have been declared legal tender by the federal government or state governments. On May 9th, the state of Utah became the first state to recognize such gold and silver coins as legal tender for use within the state, and similar legislation has been introduced in 12 other states, including South Carolina.
“Thanks to the government’s reckless over-spending, continued bailouts, and the Federal Reserve’s easy money policy, this year the purchasing power of the dollar hit an all-time low in the several decades since we went off the gold standard,” said Senator DeMint. “In order to rebuild strength and confidence in our economy, we need both the fiscal discipline to cut wasteful spending and the monetary discipline to restrain further destructive monetizing of our debt. This legislation would encourage wider adoption of sound money measures, and that’s a step in the right direction.”
Bank of America Corp settled nearly all of the claims related to the legacy Countrywide-issued first-lien residential mortgage-backed securitization (RMBS) repurchase exposure for $8.5 billion in cash .
The largest U.S. bank by assets said it intends to record an additional $5.5 billion provision to its representations and warranties liability for both Government-Sponsored Enterprises (GSE) and non-GSE exposures in the second quarter of 2011.
On Tuesday Reuters reported that Bank of America was close to a settlement agreement with a group of powerful group of investors that lost money on mortgage-backed securities.
Please note.
Money market funds are experiencing increased withdrawals. This could be dangerous.
Jim
New earlier this month that Moody's was placing 3 French banks on review for a possible downgrade renewed investors focus on the potential contagion through US money markets. It appears that European banks secured dollar funding through issuance of commercial paper and other short-term instruments that US money market funds purchase.
Fitch estimates that 10 of the top 15 issuers of such short-term paper are European banks and Moody's estimates that of over half of that is accounted for by Frenchbanks. There has been a net withdrawal from US money market funds and it appears that the funds have moved to strictly US Treasury or US high grade money market funds. This, coupled with new regulations/fees, and a reduction of bill offerings from the Treasury as it approaches its debt-ceiling, has weighed on US bill yields. The 4-week bill yield appears negative and the 3-month bill is at about 1 bp annualized yield, for example.
- Inflation set to increase in next 3-5 years, says Pimco
- Rising commodity prices are not "transitory"
- By focusing on core inflation, Fed could risk making policy error
NEW YORK (MarketWatch) -- Prospects of higher commodity prices and currency shifts will drive global inflation higher in the next few years, according to a report released Monday by Pacific Investment Management Co., the world's largest bond fund.
The upward push from commodity prices also raises risks of a monetary-policy error by the U.S. Federal Reserve and other central banks.
Pimco expects inflation in the developed economies, including the U.S., "to average about 3% and developing market inflation to average about 5% over the secular horizon," which is generally considered the next three to five years.
The BIS warned low cost of borrowing had resulted in a credit and property price boom that was fuelling inflation, especially in emerging economies.
Central banks across the globe have cut interest rates in an attempt to boost growth after the 2008 financial crisis.
However, BIS warned that the policy may prove to be counterproductive.
"The prolonged period of very low interest rates entails the risk of creating serious financial distortions, misallocations of resources and delay in the necessary deleveraging in those advanced countries most affected by the crisis," the bank said in its annual report.
Shale gas has become its industry darling in recent years, thanks to advances in technology, particularly hydraulic fracturing or fracking, in which gas companies inject high pressure water and secret recipes of chemicals deep underground to push out trapped gas.
But with the rise fracking, natural gas’ reputation as a “cleaner” fuel has tarnished. Residents near drilling sites have documented tainted wells and flammable tap water, even an exploding house. Then a couple of months ago a Duke report confirmed that wells near fracking sites contained high levels of methane. An analysis from the EPA in January found lifecycle emissions could be dirtier than coal.
The U.S. dollar ended the Asian session stronger Monday, as the foreign exchange market started the week off with a fresh wave of risk aversion and the euro fell victim to worries about Greek debt problems.
The Greek Parliament is due to discuss its austerity program, the Medium Term Plan, June 27-28 and Parliament will vote on the implementation law June 29, with the voting process starting the afternoon of the 29th and expected to be completed in the morning of June 30.
Dealers said ahead of the vote worries remained that Prime Minister George Papandreou may not be able to push through the plan, or that problems would persist even after Greece receives the next installment of the International Monetary Fund/EU loan in mid-July.
The euro started the morning with a weak tone, falling below $1.4200 early in the day, after an initial high of $1.4224. The pair then slid through rumored buy orders and fell to a session low of $1.4103 in the mid-morning here.
The Federal Reserve will remain the biggest buyer of Treasuries, even after the second round of quantitative easing ends this week, as the central bank uses its $2.86 trillion balance sheet to keep interest rates low.
While the $600 billion purchase program, known as QE2, winds down, the Fed said June 22 that it will continue to buy Treasuries with proceeds from the maturing debt it currently owns. That could mean purchases of as much as $300 billion of government debt over the next 12 months without adding money to the financial system.
The central bank, which injected $2.3 trillion into the financial system after the collapse of Lehman Brothers Holdings Inc. in September 2008, will continue buying Treasuries to keep market rates down as the economy slows. The purchases are supporting demand at bond auctions while President Barack Obama and Republicans in Congress struggle to close the gap between federal spending and income by between $2 trillion and $4 trillion.
“I don’t think the Fed wants to remove accommodation in any way, shape or form,” said Matt Toms, the head of U.S. public fixed-income investments at Atlanta-based ING Investment Management, which oversees more than $500 billion. “It’s quite natural for them to reinvest cash,” he said. “That effectively maintains the accommodative stance.”
U.S. Treasury prices extended their rally on Friday as more money flowed out of European bonds and equities and into safe-haven U.S. debt, but traders
said prices could fall next week ahead of scheduled auctions.
The Treasury Department plans to sell $99 billion in new debt on Tuesday, Wednesday and Thursday. Selling ahead of the auctions to lower auction prices and raise yields could overpower the safety bid, which remained strong going into the weekend. "There's so much uncertainty, even beyond Greece, in Europe that we're getting yields that are low despite the fact that we have nearly $100 billion of twos, fives and sevens to sell next week," said David Coard, head of fixed income sales and trading at Williams Capital in New York.
Coffee prices — from generic to specialty brews — have been ticking upward for over a year with no end in sight.
The price of a pound of raw coffee beans has almost doubled in 12 months. Now consumers are cutting back, roasters are struggling and retailers are scrambling to cover costs.
With rising food and fuel prices, coffee drinkers are left to make tough choices about their caffeine habits.
Christina Sleezer of Fort Mill, S.C., isn't willing to give up coffee, but something had to give, because "I've got to get gas in my car."
So Sleezer, who works in health care, switched her family of five to generic, store-brand coffee as the price of name brands rose.
She said she refuses to pay $13 for a large can of Folger's or Maxwell House coffee when it used to cost only $8 or $9.
Kraft Foods Inc., makers of Maxwell House, raised prices 22 percent in March. Other price increases came from J.M. Smucker Co., the maker of Folgers, and Starbucks Corp.
A summer road trip may not be such a bad idea after all.
Gasoline prices are falling fast. In the past 7 weeks, the average U.S. retail prices has dropped 38 cents to $3.60 per gallon. Another 25-cent drop is expected by mid-July.
When prices approached $4 in early May, drivers were worried that $5 gasoline was a possibility this summer. But since then, oil prices have collapsed, the result of slowing economic growth in developed countries, weaker demand for oil and gas and this week's decision by the U.S. and other countries to release 60 million barrels of oil from strategic reserves. Economists say falling prices will benefit consumers by leaving money in their wallets, and making them feel freer to spend on travel, shopping and dining.
Maybe the Italians will release from Strategic Stockpile pasta in a vain attempt to hold down the cost on Angle Hair & Penne. It will work as poorly as the release from of oil to try and control the oil price.
Jim
Headline: Pasta Price May Jump as North Dakota Durum Floods Boost Campbell’s Costs
Unrelenting rainfall may have slashed U.S. planting of durum wheat to the lowest level in more than 50 years, fueling a surge in the price of pasta and noodles as mills scramble for supply of the grain.
Farmers who normally are finished planting by now had completed just 44 percent as of June 19 in North Dakota, which produces more than two-thirds of U.S. durum, government data show. It’s too late to sow more without delaying the harvest to the winter-frost period, said Frayne Olson, an agricultural economist at North Dakota State University in Fargo.
Source: bloomberg.com
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Hi Im Bartek from Poland, im 21 yrs old and I am a daily reader to your insights, on the Internet I came across : stockcharts.com
(Bullish Percent Index for the mining shares), I wonder what is your take on it. It presented an "overheat" in the 80s area [late April], and now with hitting the 30s it looks very bullish. Pardon me for my poor understanding of this subject. Even if you don't have the time to answer I am really grateful for all your knowledge you present on your site.Thank you so much.
Best regards
Bartek
French President Nicolas Sarkozy on Wednesday urged the world's top economies to ensure food security by eliminating speculative price spikes as high costs are again hitting consumers and fuelling unrest.
"By addressing the volatility of agricultural markets, in assuring food security for the world for today and tomorrow, we will rebalance the structure of capitalism," Sarkozy told agriculture ministers from G20 nations as they began their first-ever meeting.
The Group of 20 top nations pledged to contain agricultural commodity volatility in the wake of the 2007-2008 surge in food prices that triggered riots in some countries, which was widely blamed on speculation.
The announcement by the US Department of Energy and the International Energy Agency that the latter would be releasing 60 million barrels of government-held stocks, immediately increasing global supply by nearly 2.5 percent, is "a sign of desperation. You don't do this if you have anything left in your arsenal," Mark Fisher, founder and CEO of MBF Clearing, told CNBC Thursday.
"This is a psychological mechanism. I think that in this case, the government is bringing a knife to a gun fight, when in reality there's only an 'x' amount of supply," Fisher said.
Be prepared for gold to take out $1650 on the upside as magnets at $12,544 come into play.
Be prepared for the Inflationary Depression of all time.
President Barack Obama's overall approval rating has dropped below 50 percent as a growing number of Americans worry that the U.S. is likely to slip into another Great Depression within the next 12 months, according to a new national poll.
A CNN/Opinion Research Corporation poll released Wednesday also indicate that the economy overall remains issue number one to voters, with other economic issues - unemployment, gas prices and the federal deficit - taking three of the remaining four spots in the top five.
Laszlo Birinyi continues to be bullish on stocks although he told CNBC Wednesday he was "disappointed with some of the language and the tone" of Federal Reserve Chairman Ben Bernanke during the latter's press conference today.
The Fed's report, which slashed its forecast for economic growth while raising its unemployment forecast, was "not really a surprise," the president of Birinyi Associates said.
"We're still positive. We can always have corrections," he said. "We're in a long-term bull market, and just as we always do, we have periods where we slow down and stop."
In the same interview, Ken Fisher, chief executive of Fisher Investment, said he remains "not wildly optimistic" about this year.
The surprise release of 60 million barrels of oil from the strategic petroleum resverves of 28 nations sent shockwaves through global markets and left investors confused about why governments opted jump into the market now.
The International Energy Agency said the decision was aimed at offsetting market disruptions prompted by Libya's war and to stave off a possible spike in energy prices.
The Paris-based agency warned that the release was in response to an "imminent threat of shortfall," according to Executive Director Nobuo Tanaka, which could undermine the nascent global economic recovery.
"Today, for the third time in the history of the International Energy Agency, our member countries have decided to release stocks," he said.
Greece's largest labor union has called a 48-hour general strike for June 28 and 29 to protest against a new euro28 billion ($41.6 billion) austerity package due to be passed in parliament next week.
The General Confederation of Greek Workers, or GSEE, said Thursday that it called the strike to press demands for a change in policy by the country's beleaguered Socialist government.
International bailout lenders say the new package is a condition for receiving continued funding.
Greece's new finance minister is meeting Thursday with a delegation of debt inspectors from the European Union and International Monetary Fund to put the finishing touches on the new austerity measures -- expected to impose more cross-the-board tax hikes.
New claims for unemployment benefits rose more than expected last week, a government report showed on Thursday, suggesting little improvement in the labor market this month after employment stumbled in May.
Initial claims for state unemployment benefits climbed 9,000 to a seasonally adjusted 429,000, the Labor Department said. The prior week's figure was revised up to 420,000.
Economists polled by Reuters had forecast claims to edge up to 415,000 from a previously reported count of 414,000.
Bill Gross on Wednesday said the Federal Reserve will likely hint at a third round of bond purchases, better known as "quantitative easing," at its next Jackson Hole meeting in August.
Jackson Hole is an annual global central banking conference, led by the Fed, which takes place at Jackson Hole, Wyoming. It was at this event last year that Fed chairman Ben Bernanke said the U.S. policymakers were prepared to make a major new investment in government debt or mortgage securities if the economy worsened significantly or if the Fed detected deflation -- a prolonged drop in prices of wages, goods and assets like homes and stocks.
Gross, the co-chief investment officer of PIMCO, the world's top bond manager, on Wednesday said on Twitter: "Next Jackson Hole in August will likely hint at QE3 / interest rate caps."
Silver-coin sales from Australia’s Perth Mint, which was founded in 1899 and processes all of the country’s bullion, have surged to a record as buyers seek to protect their wealth with the metal known as poor man’s gold.
The mint sold 10.7 million 1-ounce silver coins since July 1 last year, according to Sales and Marketing Director Ron Currie. That’s 66 percent higher than the previous full fiscal year and about 10-fold more than five years earlier. Sales of 1- ounce gold coins will be close to a record, he said.
The soaring demand adds to signs investors are stepping up precious-metal purchases as Europe’s governments tackle a sovereign-debt crisis and central banks led by the U.S. Federal Reserve print cash to stimulate their economies, potentially devaluing paper currencies. Silver, the second-best performing commodity over the past year, rallied to a record in April.
The Great Recession has now earned the dubious right of being compared to the Great Depression. In the face of the most stimulative fiscal and monetary policies in our history, we have experienced the loss of over 7 million jobs, wiping out every job gained since the year 2000. From the moment the Obama administration came into office, there have been no net increases in full-time jobs, only in part-time jobs. This is contrary to all previous recessions. Employers are not recalling the workers they laid off from full-time employment.
The real job losses are greater than the estimate of 7.5 million. They are closer to 10.5 million, as 3 million people have stopped looking for work. Equally troublesome is the lower labor participation rate; some 5 million jobs have vanished from manufacturing, long America's greatest strength. Just think: Total payrolls today amount to 131 million, but this figure is lower than it was at the beginning of the year 2000, even though our population has grown by nearly 30 million.
German Chancellor Angela Merkel is warning that a full-scale restructuring of Greek debt would have "completely uncontrollable"consequences on the financial markets.
Merkel said Wednesday that imposing a so-called haircut on Greek debt -- reducing the amount to be repaid -- would not only endanger banks and other creditors who hold Greek bonds, but also institutions that sold insurance policies against a default.
Merkel told a parliamentary committee that those credit default swaps have a higher face value than the debt itself.
A top Russian economic official says his country is likely to continue decreasing the share of its portfolio that consists of U.S. debt, according to a published media report.
"The share of our portfolio in U.S. instruments has gone down and probably will go down further," said Arkady Dvorkovich, chief economic aide to Russian President Dmitry Medvedev, according to a report on The Wall Street Journal’s Web site.
Dvorkovich made the comments on the sidelines of the St. Petersburg International Economic Forum, the report said.
Foreign countries’ interest in purchasing U.S. debt has become an important concern as the U.S. government is running large deficits and must finance them by selling Treasuries. A weakening appetite for Treasuries would drive up the cost of Washington’s borrowing.
Big names like Nouriel Roubini, Jeremy Grantham and Bob Rodriguez are slinging around words like “disaster” in forecasting the stock market, advising extreme caution and defense strategies. Contrast that with hot headlines about the Dow “storming back soon,” soaring to the “Next Stop, Dow 20,000.”
Warning, folks, you’re in a new cycle of irrational exuberance.
After losing an inflation-adjusted 20% the last decade, a prediction that the Dow will roar back 80% anytime soon is misleading, pure speculative hype. Reminds me of book titles like “Dow 36,000” and “Dow 100,000” back in 1999. And memories of those mutual funds selling with absurd multiples over 40, with annual returns in excess of 100%. Worse than the tulip-bulb mania of the 1590s.
Professor Robert Mundell urges gold convertibility for the euro, the currency which he fathered, as well as for the dollar. This is a major step forward. Thought leaders are abandoning “old monetarism,” which was vainly fixated on quantity. Even its chief proponent, Milton Friedman, acknowledged old monetarism as unsuccessful in a 2003 interview with the Financial Times. An emerging “new monetarism” is quickly taking its place — one that focuses on the quality, not quantity, of money.
Empirical data suggest that the gold dollar represents the epitome of quality. As Forbes’ own Steve Forbes advised the presidential candidates last week, the “debate should be focused on what the best gold system is, not on whether we need to go back on one.”
The People's Bank of China (PBOC), the central bank, announced on Monday that it will issue more gold and silver commemorative coins featuring the giant pandas to meet soaring demands for precious metals in the country.
PBOC said the maximum circulation of the one-ounce gold coins with a face value of 500 yuan (77.3 U.S. dollars) will be raised to 500,000 from 300,000 previously set at the end of last year.
The maximum circulation of four other gold coins with different gold purity and face values ranging from 20 yuan to 200 yuan will increase to 600,000 each set from the previous 200,000.
Jesse’s Café Americain expresses one theory: “It looks to me that there is a paired trade going on, of long bullion and short miners. … If the stock market falls apart, the miners are much more vulnerable to a sell-off than bullion. That is the reason for the paired trade I believe.”
“Trader Dan” Norcini suggests a contributory factor: “The gold and silver ETFs are also partly to blame, in that these Trojan Horses have siphoned off a huge amount of speculative money flows that otherwise would have found its way into the mining-sector shares.”
Norcini is inclined to see malign motives behind the selling pressure.
Given its high-altitude perspective, the Aden Report felt able to offer some comfort on Friday evening: “XAU fell to a new low for the year yesterday, and it’s weak below 196. Gold shares are oversold, however, and the downside looks limited.”
In a long, thoughtful discussion posted at Commodities-Now, gold-fund manager Frank Holmes notes: “Senior gold miners have seen the strongest gains, with average per-share earnings increasing roughly 67% since 2009. ... The average senior gold miner now has more than twice the amount of cash flow; mid-sized intermediate gold companies’ cash flow has more than tripled. ... One can purchase shares of gold mining companies at their second-cheapest level in nearly 30 years. The extreme was in 2008 during the depths of the financial crisis; many share values quadrupled off of those levels.”
Deficit hawks often cite Greece's debt nightmare as a cautionary tale for the United States.
But is the United States really like Greece?
The differences between the countries, after all, give the United States some built-in advantages when it comes to managing its debt.
The U.S. economy? Gargantuan. Greece's economy? Tiny.
Crude oil dropped to the lowest price in four months in New York on doubts European efforts to resolve the Greek debt crisis will succeed, and on concern of reduced economic growth and fuel demand.
Futures fell 2 percent as Greek Prime Minister George Papandreou attempted to get the country’s parliament to pass austerity measures needed for a bailout. The International Monetary Fund cut its forecast for U.S. growth in 2011. Oil tumbled 6.3 percent this week as U.S. manufacturers turned pessimistic and fuel consumption dropped.
“There are still a lot of questions about the Greek bailout and what that will mean for the demand picture,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The oil market seems more skeptical about the debt crisis than the equity market. A lot of technical damage was done to the market this week.”
The COMEX has just dropped the minimum margin requirement for gold contracts to $6,075 from its former $6,751 minimum. This move does not make economic sense as the price of gold is now within 2% of its all-time high COMEX close.
The lower margin requirement also does not make sense when compared to the COMEX margin requirements for silver contracts. With the lower margin requirements it is now possible to control more than $25 worth of gold for every $1 of margin put down on a gold contract. In contrast, the silver contract minimum margin requirements are much higher. At today’s closing silver price, investors could only control up to $8.30 of silver for every $1 of margin put down on a silver contract
Think about it for a minute. By the end of this month, the next round of COMEX silver options will expire and the first day of notice for delivery of July 2011 silver contracts will occur. Both of these events could trigger strong demand that could seriously deplete COMEX registered silver inventories.
On June 16, 2010, the COMEX had 119.5 million ounces of total silver in its bonded warehouses. Since then, there has been a steady outflow of silver from these warehouses, especially of the registered silver that is available to fulfill contract deliveries. Early this week, total COMEX silver inventories had fallen below 99 million ounces, a decline of more than 17% in the past year. Even more important, the quantity of inventories that were registered had fallen to record low levels below 30 million ounces! The remaining COMEX inventories are “eligible” which means that that they are owned by investors who are simply storing the silver in COMEX warehouses. Eligible inventories cannot be used to fulfill COMEX contracts unless the individual owners choose to make them available for that purpose.
RACINE - The state budget passed by the legislature and awaiting Governor Walker's signature cuts public school funding by $800 million dollars over two years. School officials in Racine say those cuts will hit the district especially hard and officials are considering legal action to rectify things.
The Superintendent of the Racine Unified School District, Dr. James Shaw, has written previous blog entries about the cuts his district would face if the budget proposal were to be passed. He indicated he thought his district would be hit hard because it is "property poor" compared to other districts of similar size and population. He cited examples like Madison, Green Bay, Kenosha, and Appleton. The blog post continued on in part to say:
"The Racine community has provided strong financial support for many years through local property taxes. The state also has a responsibility to provide financial support for the Racine Unified School District so that Racine children are provided a quality education comparable to other Wisconsin school districts."
And after that? I asked Reinhart the same question I asked Bill Gross: Is the U.S. government going to default on its debt?
Like Gross, she thinks such a scenario—which she calls “debt with drama”—is unlikely. Instead, she predicts that the United States will engage in “financial repression,” a sort of stealth default. Financial repression relies on inflation, regulation, and fancy accounting instead of forced restructurings, or outright refusal to pay. In 1932, for example, New Zealand did a “voluntary” debt swap that converted short-term debt to longer-term debt at lower interest rates. “You look at this deal and you ask yourself, ‘Why would anyone do this? It’s insane,’” says Reinhart. “And then you see that they changed the tax rules, so that if you didn’t do the swap, you’d lose a ton of money.”
The government said on Friday that it wants to bring the retirement age for public sector workers into line with the state pension, meaning most employees will have to work to the age of 66.
In a speech to the IPPR think tank, Chief Secretary to the Treasury Danny Alexander also warned workers that it would be a "colossal mistake" to spurn the government's pensions deal and sacrifice the best offer they will be made "for years to come".
The issue is one of the main factors behind a planned strike by teachers and civil servants on June 30, which is expected to start a wave of industrial action.
The International Monetary Fund on Friday lowered its forecast for U.S. economic growth, and warned that risks to the global recovery have increased.
In the latest update to its World Economic Outlook, the IMF said it expects the U.S. economy to expand at an annual rate of 2.5% this year and 2.7% in 2012. That's down from projected growth rates in April of 2.8% and 2.9%.
The U.S. government said last month that the economy grew at an annual rate of 1.8% in the first quarter of 2011, down sharply from 3.1% in the final three months of 2010.
The slowdown in the first quarter was due partly to "transitory factors," the IMF said, including higher commodity prices, bad weather and supply chain disruptions due to the March earthquake and tsunami in Japan.
US retail sales fell in May for the first time in nearly a year as supply constraints curtailed sales of new cars and consumers remained generally cautious.Source: ft.com
Separately, higher fuel costs lifted producer prices, but the increase was much slower than in recent months.
Retail sales were 0.2 per cent lower in May, the US commerce department said, following April’s revised 0.3 per cent rise. The decline was less steep than the 0.5 per cent drop expected by economists polled by Bloomberg, but was the first monthly fall in sales since June 2010. On an yearly basis, sales rose 7.7 per cent.
Gold may extend its decade-long rally as demand surges from emerging markets including China and India, according to the producer-funded World Gold Council.
“There’s a tidal wave of gold demand coming,” Jason Toussaint, the WGC’s managing director of U.S. and Investment, said today at the Bloomberg Link Money Managers Conference in Boston. “A key is the long-term fundamental change in emerging markets. The biggest markets of growth are China and India.”
Gold is up 7 percent in New York this year, touching a record $1,577.40 an ounce on May 2. The metal has gained fivefold since the end of 2000. India is the biggest consumer of the metal and China is the second-biggest, according to data from the council.
“There’s been a tremendous surge in the monetary base globally,” Edward Meir, a senior commodity analyst at MF Global Holdings Ltd., said at the conference. “The dollar is losing its luster. The natural currency to be bought is the yuan, but because you can’t buy the yuan, people are buying gold.”
Dear Monty,
QE1, QE2, TARP and all similar programs were "infinitely successful." They prevented a depression worse than any in history. When QE stops, if they ever do stop, you will get to see how successful they were as the world economy unwinds in months and gold unfortunately goes to $12,500.
Regards,
Jim
Stock collapse and $12,000 gold?
Commentary: Two certified doomsters are (slightly) more cautious
By Peter Brimelow, MarketWatch
NEW YORK (MarketWatch) — After six down weeks and a savage slump on Tuesday, the specter of a 2008 Crash haunts Wall Street. But two certified doomsters are (slightly) more cautious.
This is the problem, as summarized by the latest Aden Forecast:
“Many respected analysts are warning that another financial crisis could be on the horizon similar to the one in 2008. They claim that since the 2008 meltdown was not allowed to end naturally, the conclusion is still coming. This is a real possibility since the fundamental, underlying factors that triggered the crisis to begin with still persist. Another possibility is just a renewed recession.”
One service that indisputably did call the Crash of 2008 (“a financial tsunami”) was Harry Schultz’s International Harry Schultz Letter. Schultz had a long and checkered career, especially as monitored by the Hulbert Financial Digest in its closing phase. But its last years were brilliant. Greatly to the disappointment of columnists seeking colorful copy, the letter closed last winter after 45 years of publication. ( See Jan. 10 column .)
However, Schultz still publishes a monthly essay in the Aden Forecast. The good news: As of last week, he doesn’t seem to see another Crash…yet.
Schultz has always had a scatter-shot style, combining eccentricities and insight, and this tendency seems to have become more pronounced. This is his only comment on the stock market:
Source: marketwatch.com
Copper stockpiles in China, the world’s biggest consumer of the metal, may have dropped 50 percent in the past two months, potentially spurring more imports and higher prices.
Inventories in bonded warehouses, used to store shipments before duties are paid, may have declined to about 300,000 metric tons, according to estimates from traders and analysts in China including Shanghai East Asia Futures Co. The warehouses, whose holdings aren’t disclosed, contained about 600,000 tons at the end of March, according to Standard Bank Plc.
Increased shipments into China, which represents about 40 percent of global demand, may mean a rebound in prices that fell 9.8 percent from a record in February. Goldman Sachs Group Inc. (GS) anticipates copper trading at an all-time high of $11,000 a ton in 12 months as mining companies fail to keep pace with demand.
Eric Sprott is CEO of Sprott Asset Management and a long-time proponent of owning both gold and silver. He is also a long-time proponent of the belief in the conspiracy theory whereby large financial institutions are colluding to drive silver prices down, as when prices fell from around $50 to $32 an ounce in May.
“In my heart of hearts I believe it was a manipulation,” said Sprott in an exclusive interview with Silver Investing News. “There was no market, it was a setup. They’ve just pushed it down. It’s ridiculous.”
The recent price correction has largely been attributed to the increased margin requirements from the CME group. Between April 25 and May 5, COMEX increased silver margins to as much as 12 percent – or $21,600 per contract – from 6 percent, before silver tumbled 25 percent.
“The problem is so serious, the problem is so present time, the problem is so real that it has inherent in it the probability that the economy is not going to have a significant recovery for more than a decade. And the standard of living in the United States, the standard of many who are reading this now, especially those who have taken no measures whatsoever to protect themselves, who simply look at it as reading something of interest but not really acting on it, is going to be so significantly impacted as to make the middle-class or higher middle-class join the serf class. This is as serious as it gets.
...This has gone so far that there is no solution that can be applied and the only practical method is to continue to expand their (the Fed’s) monetary aggregates to continue to hold down interest rates. And hopefully kicking the can down the road until somebody else is in charge and that’s exactly what they are doing.
Well let’s just assume for a moment that QE is in fact limited to June 30th and let’s assume for a moment that the central bank of the United States would take a conservative restrictive approach towards monetary policy, I would suggest to you that the stock market would peel off 4,000 points so fast you would get wind burns. I suggest that if anything like that happened exposing the balance sheets of the financial institutions, that you would have to return to QE with a vengeance, unparalleled, unprecedented in history....
