Postal Service hitting billions in losses, hoping for rate hike – Americans can still send and receive mail, but the U.S. Postal Service may not have much left in the bank after this week, as it’s set to announce billions of dollars in losses as early as Thursday. It’s also waiting for postal regulators to announce Thursday whether they approve of a proposed 5.6 percent postage-rate increase, to start in January. The proposed increase faces stiff resistance from business groups and lawmakers, who say that the USPS should instead make deeper spending cuts to meet its financial obligations. GOP opposition kept Congress from permitting the Postal Service to postpone paying $5.5 billion required by law to pre-fund retiree health benefits. A temporary spending measure to fund most federal programs through early December didn’t mention the Postal Service; it passed the Senate on Wednesday and is expected to clear the House on Thursday.
Senate Passes $1.25 Trillion Bill To Fund Federal Government Through Dec. 3 – The U.S. Senate on Wednesday voted to ensure there is funding in place to keep the federal government running until after the mid-term elections, allowing lawmakers to leave town to hit the campaign trail. The roughly $1.25 trillion measure will fund the various departments and agencies of the federal government until Dec. 3, by which time lawmakers will have had to reach a longer term funding solution.The measure was necessary because Congress failed to approve any of the 12 bills required to be passed each year to fund the federal government’s operations.
Budget Could Be Worse Next Year – They know the budget picture looks even worse next year. "We’ll be facing for the following year, a budget deficit of about $1.5 billion," Bauer says. Bauer tells us the state’s lifeline this year was stimulus money. Michigan received about $ 1 billion in federal grants — more than $350 million of that went to Medicaid, another $300 million supported schools. "Every school district in this state needs to realize that this is one-time money," says Sen. Majority Leader Mike Bishop. They can’t rely on it in the future."
S&P: $460B Shadow Inventory Will Take 41 Months to Clear – It’s no secret that the volume of distressed residential properties is weighing heavy on U.S. housing markets and is prolonging any meaningful recovery. Of even greater concern is the industry’s growing backlog of homes thatneed to be liquidated and resold but have yet to make their way to the market – that menacing shadow inventory that threatens to asphyxiate appreciation of home values and drive the industry to a new low in this down cycle. Standard & Poor’s (S&P) defines this shadow inventory as outstanding properties whose borrowers are, or recently were 90 days or more delinquent on their mortgage payments; properties currently or recently in foreclosure; or properties that are real estate owned (REO). The credit ratings agency has just released a new report in which it estimates that the principal balance of these distressed homes now stands at about $460 billion. S&P says this hidden supply represents nearly one-third of the non-agency residential mortgage-backed securities (RMBS) market currently outstanding.
Capital Controls Eyed As Global Currency Wars Escalate – Stimulus leaking out of the West’s stagnant economies is flooding into emerging markets, playing havoc with their currencies and economies. Brazil, Mexico, Peru, Colombia, Korea, Taiwan, South Africa, Russia and even Poland are either intervening directly in the exchange markets to prevent their currencies rising too far, or examining what options they have to stem disruptive inflows. Peter Attard Montalto from Nomura said quantitative easing by the US Federal Reserve and other central banks is incubating serious conflict. "It is forcing money into emerging market bond funds, and to a lesser extent equity funds. There has truly been a wall of money entering many countries," he said.
Bank of England’s Adam Posen Calls For More Quantitative Easing – The Bank of England should restart the printing presses and pump more money into the economy to prevent a "lost decade" of low growth and high unemployment, one of its senior policymakers Adam Posen has said. Mr Posen, an external member of the Bank’s nine-strong Monetary Policy Committee, has called for a second round of quantitative easing (QE), on top of the £200bn already injected into the economy, to stave off the threat of a period of deflation to rival Japan and the Great Depression. His downbeat comments in a speech to the Hull and Humber Chamber of Commerce, Industry and Shipping came despite confirmation from the Office for National Statistics that the economy grew at 1.2pc for the three months to June, its fastest pace in nine years, and strong high street sales. The CBI distributive trades survey for September showed the balance of retailers reporting an increase in sales had climbed to a six-year high at plus 49pc.
French Public Sector Debt Grows To 82.9% Of GDP At End 2Q –France’s public-sector debt grew sharply by the end of the second quarter to EUR1.592 trillion, representing 82.9% of gross domestic product, as lingering economic stimulus spending from the recent global recession and expenditures for social programs, especially due to high unemployment, swelled government expenditure. The closely watched debt-to-GDP ratio was bigger than the 80.4% at the end of the first quarter and substantially above the 74.2% at the end of last year’s second quarter. But that increase had generally been expected. The government Wednesday published its draft 2011 budget, which sharply narrows the public-sector budget deficit, but leaves debt-to-GDP ratio around current levels. The debt data were published under the so-called Maastricht guidelines regulating debt in the European single currency zone. The Maastricht rules call for euro-zone members to keep their public debt at 60% of GDP or less. However, most euro-zone countries are well beyond that level due to heavy stimulus spending during the recession
Moody’s cuts Spain debt rating to Aa1 — Moody’s Investors Service became Thursday the last of the three big ratings agencies to downgrade Spanish sovereign debt, cutting the rating to Aa1 from Aaa, with a stable outlook. Moody’s cited weak growth prospects, a “considerable deterioration” in government finances and worsening debt affordability as key reasons for the downgrade. The move, though widely expected, comes a day after the first general strike for the country since 2002, with thousands of protestors taking to the streets across the country to protest austerity measures.
Irish Bank Funding Boosts Budget Deficit To 32% GDP – Ireland’s financial crisis loomed large again Thursday as the government said additional costs of propping up the country’s banks could stretch its government budget deficit to nearly a third of the country’s total economy — a record for any eurozone member. The Central Bank of Ireland announced early Thursday that the state-owned Anglo Irish Bank Corp., Ireland’s most troubled financial institution, will need total capital of EUR29.3 billion and then an additional EUR5 billion in a "stress scenario." The central bank also said Allied Irish Banks PLC (AIB) will need an additional EUR3 billion by year-end. It was originally charged with raising EUR7.4 billion in capital by the end of 2010. Lenihan said the state will become the majority shareholder in the bank
Technology The Showcase As Energy Remains The Cornerstone The pavilion is a showcase for the latest and safest nuclear technologies, hi-tech solutions for the 2014 Sochi Olympic Games and Dmitry Medvedev’s pet project – the innovation center Skolkovo, which is open to hi-tech companies all over the world including China. Trade between Russia and China is heavily weighted towards energy. The world most populous and fastest growing country is hungry for power, and Russia has plenty of it. But the point of contact lies not only in oil and gas. Chinese companies are investing in manufacturing in Russia, such as Thunder Sky Corporation joining with Rusnano to build a half billion dollar plant in Novosibirsk to produce batteries for electric cars and buses.