LA braces for pink slips – Thousands of government workers throughout Los Angeles could begin losing their jobs this week with the start of the new fiscal year, even as officials make last-minute bids to save positions through further service cuts, tax hikes and union concessions. Up to 4,300 jobs could be cut next fiscal year from local government agencies, including the city, county and schools, if officials and unions fail to reach deals to slash spending. Los Angeles Unified School District alone could shed up to 2,500 jobs this year, although that number is expected to fluctuate through the fall as officials negotiate with unions and monitor the state revenue picture.
The state of Illinois is about to begin a new budget year that will involve debt, deficit and spending cuts.The old budget expires at midnight Wednesday. Gov. Pat Quinn says he will sign the new budget into law sometime before then.The state could be $13 billion short of all the money it will need in the coming year. Quinn and other officials have agreed to deal with that gap by borrowing money and letting more unpaid bills pile up.Quinn has also been given special powers to cut spending where he sees fit. The Chicago Democrat is scheduled to reveal on Thursday where he plans to cut.
New proposal would push retirement age to 70 for Social Security benefits — You could be forced to work until you’re 70 just to cash in your Social Security retirement benefits. It’s an attempt to make up for the Social Security budget crisis. The current age to retire and receive Social Security benefits is 65, but House Republican Leader John Boehner proposed pushing the retirement age back to 70. If approved, the new age would only affect those not set to retire for another 20 years. The proposal is being made to make up for the Social Security Administration’s budget crisis.
The $5 trillion rollover – Banks around the world must refinance more than $5 trillion of debts in the coming three years, a massive rollover that poses threats to financial stability and growth. The need to replace these debts, which are medium and long term, will place pressure on bank profit spreads and in turn may either prompt deleveraging, where banks sell assets that they can no longer economically finance, or simply lead to a bout of credit rationing, where borrowers must pay more to borrow, thus crimping investment and economic growth. For banks in the UK, according to the Bank of England Financial Stability Report, the refinancings amount to about $1.2 trillion by the end of 2012. If banks in Britain raise funds at the same pace they have been this year, they will only collect half of their needs in time. This is even before the fact that the banks need desperately to turn some of their riskier short-term funding into more reliable funding with a longer maturity.
Bankers Who Broke Big Dig With Swaps Gone Awry Get Paid for Fix (Bloomberg) — The same bankers who sold Massachusetts interest-rate swaps that blew up the debt financing for the so-called Big Dig road and tunnel project in Boston — costing taxpayers $100 million — are getting even more money to fix what they broke.UBS AG bankers showed up at the Massachusetts Turnpike Authority in 2001 with a solution to a growing deficit at the state agency overseeing the $15 billion project. The bank gave the authority $29.1 million for an interest-rate swap linked to $800 million of Big Dig bonds, an agreement meant to cut the cost of paying back the debt and cover part of the budget shortfall. JPMorgan Chase & Co. and Lehman Brothers Holdings Inc. made similar deals. The deal with UBS backfired as credit markets faltered two years ago, costing toll payers $36.3 million in extra interest and leading the Zurich-based bank to demand as much as $400 million to end the arrangement when the Big Dig bonds’ insurer lost its top credit ratings.