My next prediction. (The Euro to fall apart)

Funny. Italy hasn't spend a single penny yet to bailout banks, so the debt is not growing yet. And the only bank with problems (Unicredit) has been recapitalized by shareholders with a few billions.

Perhaps you don't know that Italy like others ECB countries can sustain the banks' bailout, while Switzerland and United Kingdom, well... simply, they can't.
As you can see from the attached chart, Swiss and UK banks are too big to be saved. They seriously risk to follow Iceland.
And UK and Switzerland are indeed in Europe, but fortunately for us Europeans, are not part of the EURO zone....

http://www.nytimes.com/2008/10/11/business/worldbusiness/11charts.html

 

The Euro is a good help in dire times...


BRUSSELS, Oct 16 (Reuters) - Ireland's prime minister said European Union membership saved his country from a financial meltdown similar to Iceland's and the credit crisis had shown Irish voters the merits of the bloc's reform treaty.

Normally pro-EU Ireland cast the European Union into limbo in June when Irish voters rejected the Lisbon Treaty in a referendum. All 27 nations must ratify the treaty, aimed at giving the bloc stronger leadership, before it comes into force.

Irish Prime Minister Brian Cowen said EU membership, and being part of the euro zone of 15 nations that have the euro as a common currency, had shielded Dublin from much of the fall-out from the global economic downturn.

'On the financial front, Ireland would have been in a far worse position had it not been for our membership of the EU, the euro and the role the European Central Bank played in recent weeks and months,' Cowen told reporters on Thursday.

Without EU membership, he said, Ireland could have ended up in a similar position to beleaguered Iceland where a crisis stemming from huge debts taken on by its main lenders has brought down the banking system and made the local currency virtually untradeable.

'Thankfully it is a hypothetical situation, I wouldn't like to think what the situation would be if we ended up like them (Iceland) with our own currency,' he said.

'The access to the resources of the ECB far outweighs the resources of the Irish central bank or Iceland's central bank. You only have to work that out for yourself to see.'
...

 

great graphics. bridgewater is a great provider of such
material.

 

From the article:

"There again, the United States appears to face a relatively small problem, with an average leverage ratio of 12. The figures range up to 52 in Germany. Theoretically, a 2 percent drop in the value of all German bank assets would wipe out the net worth of the banking system."

Remains to be seen how well the Euro zone holds together if countries with higher leverage ratios run into problems.

I also think you're being a bit too sure of yourself when it comes to Italy considering that their short-term bank liabilities are 86% of their GDP.

 

Anyhow looks like things are falling apart.

"FRANKFURT—The worsening debt crunch on the euro zone's periphery has reawakened concerns about the viability of a currency union that encompasses 16 sovereign nations with disparate economies."

http://online.wsj.com/article/SB100...2720.html?mod=WSJ-hpp-LEFTWhatsNewsCollection

 

Italy is behind all other nations in all indexes exept corruption, sexual affairs, money vasting etc. IN GOOD TIMES SO ALSO IN BAD TIMES.
But that is nothing to be praud of. So it gains nothing when there are good times for all others and it loses nothing when there are bad times for all others.
Shit Italy (i am citizen of it, )

 

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February 5, 2010

SouthAmerica: Reply to KINGOFSHORTS


You said on your posting: “My next prediction. (The Euro to fall apart)”

Basically you can make a better case for the US dollar to fall apart regarding a major reserve currency.

The economies of Greece and Portugal are irrelevant in relation to the size of the economy that makes the European Monetary Union = the euro.

But on the other hand the economies of states such as California, New York State, New Jersey, Illinois, Michigan, and so on are relevant in relation to the size of the economy of the United State of America = the US dollar.


*******


Greece:

Population: 10,737,428 (July 2009 est.)

GDP: $339.2 billion (2009 est.)


European Union:

Population: 491,582,852 (July 2009 est.)

GDP: $14.52 trillion (2009 est.)

Note: The actual figures for Euroland are a bit smaller than the figures for the European Union.


*****


California:

Population: 36,961,664 (2009 est.)

GDP: $1.9 trillion (2009 est.)

Note: If California were an independent country its economy would be the 7th largest economy in the world. And California is responsible for 13 percent of the United States Gross Domestic Product (GDP)


United States:

Population: 307,212,123 (July 2009 est.)

GDP: $14.25 trillion (2009 est.) - (US Government estimated figures)


*****


“State budget pictures bleak as lawmakers head back”

SHANNON McCAFFREY
AP Features - Bay Ledger
Jan 03, 2010

If you thought state budgets were in bad shape last year, just wait: 2010 promises to be brutal for lawmakers — many facing re-election — as they scramble to find enough money to keep their states running without raising taxes.

Tax collections continue to sputter. Federal stimulus dollars are about to dry up. Rainy day funds have been tapped. And demand for services — like Medicaid, food stamps and unemployment benefits — is soaring.

As lawmakers head back to state capitols this month, budget woes range "from bad to ridiculously bad," said David Wyss, chief economist at Standard & Poors in New York. "There are some states, those hit particularly hard by the recession, that I don't think can cut spending enough. They're running out of things to cut."

Typically, the worst budget years for states are the two years after a recession ends. Across the nation, budgets are already lean after several rounds on the chopping block. And unless lawmakers increase taxes or fees — unpopular moves in an election year — most will need to cut even more as they grapple with the steepest decline of tax receipts on record. Services ranging from higher education to programs for the elderly could be in jeopardy.

The crunch could also mean new tolls to fund road projects, more prisoners being released early to trim corrections budgets, and the end of welfare programs that don't bring federal matching dollars.

The Center on Budget and Policy Priorities offers a bleak forecast: State budget shortfalls are likely to reach a whopping $180 billion for the coming fiscal year, double the size of Texas' annual budget.

"It's going to be the toughest year yet," said Raymond Scheppach, director of the National Governors Association, who predicts funding could evaporate for higher education, the arts and economic development. "The states haven't hit bottom."

Mary Ann Neureiter, who runs an adult day care center in suburban Atlanta, saw her state aid cut in half in 2009. The Cambridge House Enrichment Center once offered state-subsidized care to 10 low-income clients with disabilities such as Alzheimer's. It's now down to three, and Neureiter fears the funding could dry up altogether this year.

"It's heartbreaking because I foresee, in the coming year, it's going to get even worse for services for the elderly," she said.

States had already closed a $146 billion gap when they put together their budgets for the current fiscal year. They were short by about 20 percent, with 36 states now reporting an additional shortfall of $28.2 billion for the fiscal year that ends in June, according to data compiled by the National Conference of State Legislatures.

That's because state tax collections lagged behind even projections revised downward to be more pessimistic.

Forty-three states and the District of Columbia have already slashed spending on popular services, including education, health care and services to the elderly and disabled.

With cuts reaching into classrooms and hitting the neediest residents, elected officials will be under increasing pressure to find more revenue. But in a number of fiscally conservative states, leaders have pledged not to raise taxes, leaving them few options.

In Oregon, voters go to the polls Jan. 26 to decide whether to uphold tax increases the Legislature imposed on corporations and higher-income residents.

Scott Moore, of the pro-tax group Vote Yes for Oregon, said the $727 million tax increase package will protect schools and critical services while keeping the burden off middle-class families. But Pat McCormick of Oregonians Against Job-Killing Taxes argues the tax increases will cost the state private sector jobs and keep it in recession.

Lawmakers in other states will be watching to see what happens, said Corina Eckl, fiscal policy director for the National Conference of State Legislatures.

"It really could be a bellwether for public tolerance," she said.

One possible rescue could come in the form of more stimulus money from Washington, but the prospects are uncertain. States last year were able to tap President Barack Obama's economic stimulus package to soften the blow of budget cuts, mainly in education and health care, and some of that money is still left.

Politics are also at play. Twenty-two governorships are open in 2010, meaning incumbents on their way out the door could try to hand off the budget misery to their successors. Some are already signaling the pain ahead.

In Washington state, Gov. Christine Gregoire has said she will propose a tax increase package to help close a $2.6 billion state budget deficit. In California, the new House speaker has said a mix of taxes and spending cuts will be needed fill another massive $21 billion budget deficit.

In New Jersey, incoming Gov. Chris Christie has promised not to raise taxes his first year in office despite a $9 billion shortfall. He's looking at budget cuts of up to 25 percent in state agencies.

And in Idaho, Republicans are pushing to cut individual and corporate taxes by more than one-third over the next decade, saying it would breathe life into the state's sputtering economy.

States' budget problems are the result of plunging real estate values and home sales; unemployment, which is taking a toll on personal income tax collections; and plunging sales tax collections.

Eckl predicted that after several years of across-the-board cuts and short-term fixes designed to ride out the sour economy, states this year will look to make deeper, more, sustained cuts that could fundamentally change what services government provides. Whole programs could be eliminated. Layoffs will take the place of furloughs.

What the cuts will mean in specific states will become clear as state legislators roll up their sleeves and plunge into the red ink that awaits them.

Forty-five states hold regular legislative sessions in 2010, most convening in January.

http://www.blnz.com/news/2010/01/03/State_budget_pictures_bleak_lawmakers_5216.html

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February 5, 2010

SouthAmerica: Let’s put things in the correct perspective.

Talking about being “PATHETIC”.


*****


“California faces more budget pain, cuts in 2010”
Calif. will face deeper fiscal pain, more budget cuts in 2010 as recession keeps its grip
By: JUDY LIN
AP News
Jan 02, 2010

During last summer's fiscal crisis, Gov. Arnold Schwarzenegger borrowed the title of a film classic to describe California's budget, saying it contained "the good, the bad and the ugly."

He was referring to welfare reforms and the streamlining of state boards that he was able to broker, along with deep spending cuts for schools, health care programs for the poor and AIDS-prevention efforts.

All that's left in 2010 is the ugly.

The nation's most populous state faces a nearly $21 billion shortfall over the next 18 months, a deficit that comes after years of making deep cuts in core state programs.

Enrollment in California classrooms could swell, public colleges may further limit enrollment and raise student fees, state workers could face another year of furloughs, and the poor may stop receiving welfare unless Schwarzenegger and lawmakers agree to raise revenue.

"It will be an absolutely hard and difficult year," said Assemblyman Ted Lieu, D-Torrence, who is exploring a run for attorney general.

As the Republican governor winds down his tenure, he faces one last budget battle, the legacy of a recession that has upended California's economy and choked the flow of tax revenue coming to government. The crash in tax revenue has depleted California's general fund, which has fallen from a high of $103 billion in 2007-08 to $84.6 billion in the current fiscal year.

While Democrats are expected to make a play for tax hikes, Republicans can be counted on to push back. Both fear voter revolt in an election year, creating the likelihood of political stalemate and yet another drawn-out budget tug-of-war.

Since February, California has made nearly $60 billion in adjustments to its annual spending plan. That has come in the form of cuts to education and social service programs, temporary hikes in the sales and income taxes, an increase in the vehicle license fee and one-time infusions of cash from the federal stimulus package.

The stimulus funding and temporary taxes will begin to end at the end of 2010, leaving less revenue for the second half of the fiscal year that will begin in July. Compounding California's problem are lawsuits that have reversed several of this year's budget decisions, contributing to a $6 billion deficit in the current fiscal year.

The state also has been unable to adopt prison and health care cuts it passed in the last budget.

California's fiscal troubles are felt throughout the country because it is such a powerful economic engine, accounting for 12 percent of the nation's gross domestic product and the largest share of retail sales of any state.

Its financial problems are felt in many other states, as well. Nationwide, states closed a cumulative budget gap of nearly $146 billion in the current fiscal year caused by falling income, sales and corporate tax collections.

According to the National Conference of State Legislatures, three dozen states reported that budget shortfalls have re-emerged even before their fiscal years have ended.

The Denver-based group says they face a cumulative budget gap of $55.5 billion in the coming fiscal year, which begins in July for most states. States that include Arizona, Colorado, Hawaii, Iowa, Maryland, Nevada, New Jersey, New York and Vermont are again facing double-digit gaps.

"The problems are not getting better," said Arturo Perez, fiscal analyst with the group.

Even if the recession ended, it typically takes state governments another year or two to recover. That means more cuts, taxes and difficult choices ahead, Perez said.

Schwarzenegger is expected to unveil his latest spending plan in early January with cuts, requests for billions in additional federal aid and tax changes that include raiding a fund fed by a gasoline tax.

He also could bring back previous proposals that failed, such as authorizing additional oil drilling off the Santa Barbara coast.

The governor is expected to press his case in Washington. He has repeatedly pointed out that California receives about 79 cents for every dollar it sends in federal taxes.

In a Dec. 22 letter to House Speaker Nancy Pelosi, Schwarzenegger said the federal reimbursement rate for state Medicaid programs forces California to subsidize health costs for other states. He wrote that if California received a reimbursement rate equal to the average of the 10 largest state, it would be receiving billions more each year.

He has threatened to eliminate other social programs such as the in-home care program for frail seniors and the disabled unless the federal government makes adjustments.

"We reduced services to specified populations in our In-Home Supportive Services program, but federal court decisions have prevented those reductions from occurring," Schwarzenegger said in his letter. "California is now faced with a decision to eliminate the entire IHSS program."

He also could threaten to eliminate CalWORKS, the state's main welfare program, as he did last year.

Anthony Wright, executive director of Health Access California, a labor-sponsored health care advocacy group, said the governor's approach reflects California's budget constraints. The state carries an unusually high two-thirds vote requirement to pass a budget or tax increases, and lawmakers have limited discretion on spending because much of the money has been locked in by voter-approved ballot initiatives.

While the federal government may give states a second round of assistance, they should not count on a bailout, said Scott Pattison, executive director of the National Association of State Budget Officers in Washington, D.C. He said the stimulus funding was only a temporary fix.

"If states don't recognize they need to do some serious financial reforms, it would really be a shame and postpones hard choices," Pattison said.

It's not clear whether California lawmakers have the political will, especially during an election year, to enact long-term budget reforms. A bipartisan tax commission created by Schwarzenegger and Assembly Speaker Karen Bass, D-Los Angeles, recommended sweeping tax overhauls that could end years of topsy-turvy budgeting.

In September, the panel recommended repealing the sales and corporate taxes, flattening the income tax rate and imposing a new type of tax on a wider variety of businesses that would include the service sector. The recommendations have failed to gain any traction in the Legislature.

http://www.blnz.com/news/2010/01/02/More_budget_pain_cuts_ahead_8155.html


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February 5, 2010

SouthAmerica: Let’s put things in the correct perspective.

Talking about being “PATHETIC”.


*****


“U.S. state prison cuts spark controversy”
By: Karen Pierog
Reuters US Online Report Politics News
Jan 07, 2010

CHICAGO (Reuters) - Illinois Governor Pat Quinn is under attack for a plan to save his financially ailing state money by speeding up the release of prisoners who served just a fraction of their sentences.

Of the more than 1,700 inmates released for good behavior since mid-September under an accelerated early-release plan, 56 were already back in prison for parole violations or new infractions, according to Quinn. An analysis by the Chicago-Sun Times on Wednesday found 20 prisoners had previously served time for serious crimes such as murder or attempted murder.

As the recession depletes their coffers, U.S. states are looking in every corner of government for ways to save money, and some are squeezing their prison budgets.

In 2009, 12 states passed legislation to create a program for early releases of inmates or to expand eligibility or increase the amount of time an inmate can earn under an existing program, according to Alison Lawrence, a policy specialist at the National Conference of State Legislatures.

"States are looking at reducing costs and it has been shown in research this is one way to do that," she said, adding that corrections ranks among the top four budget items in most states.

Quinn last week terminated Illinois' program, calling the decision to accelerate releases to accommodate budget cuts a "big mistake" on the part of his corrections department director. The Democrat also unveiled reforms to the early-release program in effect since 1978.

The matter has created a political firestorm ahead of this year's gubernatorial election.

"Someone needs to be held accountable to the public, and more importantly, the victims of these offenders," State Senator Bill Brady, a Republican candidate for governor, said this week.

Illinois Comptroller Dan Hynes, Quinn's opponent in the February Democratic primary, has called for a full accounting of prisoners released "for the sake of public safety."

The situation in Illinois has at least one Wisconsin lawmaker worried. State Representative Scott Suder on Wednesday called for a repeal of his state's new early-release program that takes effect this week.

"Maybe our felons are just better behaved than those from Illinois, but I doubt it," he said, warning that drug dealers and drunk drivers will be back on the streets.

Other states have tackled prison food budgets. Ohio last summer moved to a "brunch" meal service on weekends and holidays instead of separate breakfasts and lunches on those days to save an estimated $1.3 million a year.

Some prisons are also cutting back on essentials like toilet paper and soap, according to Amy Fettig, staff counsel for the American Civil Liberties Union's National Prison Project.

"If you want to save money, setting yourself up to be liable in a lawsuit is not a way to do it," said , adding that the constitutionality of these "short-sighted policies" could be challenged.

Fettig said with the average annual U.S. cost at $25,000 per prisoner, states should be taking a hard look at their policies to determine who should really be kept in prison.

http://www.blnz.com/news/2010/01/07/US_state_prison_cuts_spark_5264.html


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And the gigantic elephant in the room are the legacy costs that are bleeding the state dry. Quinn and none of the other hacks in Illinois politics will touch it since the unions are so strong and can just install another lackey. Chicago could turn into a glossier version of Detroit and the beneficiaries of the system will just head south and let this place rot to the ground.