Portuguese Central Bank Warns of ‘Intolerable Risk’ (Audio) – The Bank of Portugal claims its own banking industry faces what it calls an "intolerable risk" if the country fails to get a grip on its spending and borrowing. The warning is contained in the Bank’s Financial Stability report which is published this morning. The Portugese budget deficit has continued to worsen despite government spending cuts. Economist Paulo Casaca, a former MEP for the Portuguese Socialist Party, analyses the latest warning.
Camden layoff plan targets a quarter of city’s workforce – Camden will lay off nearly half of its police officers and a third of its firefighters, while eliminating positions in every other city office, according to a layoff plan approved Tuesday by the state. The 383 layoffs represent about a quarter of the city’s workforce and touch all corners of city government – from 15 courtroom positions to 20 police dispatchers to all four animal-control officers. The elimination of 180 positions from a 373-member force means more bad news for a poor, violent city that has seen 37 homicides this year. A national survey recently named Camden the second-most dangerous in the United States, although police officials have pointed to some recent reductions in crime.Camden appears to be in a worse predicament than Newark, which laid off 167 of its 1,034 police officers this week after negotiations broke down between their union and the city. Cities and towns around New Jersey are struggling this year following cuts in state aid, with layoffs in public safety increasingly common.
Newark police layoffs are largest in 32 years – More than 150 police officers lost their jobs Tuesday after negotiations between their union and New Jersey’s largest city broke off, reducing the police force as violent crime has started to rise after three years of decline. The layoffs began at midnight Monday and were to continue through 4 p.m. Tuesday when remaining officers finished their shifts, Police Director Garry McCarthy said. The 167 layoffs mark the city’s largest force reduction in 32 years. Mayor Cory A. Booker criticized the Fraternal Order of Police for an "unwillingness to make one penny’s worth of concessions in order to save jobs" and noted that all other city employee unions had made concessions in recent months. He also slammed the union’s executive board for rejecting the city’s demands without putting them to a vote by the full membership.
Dozens protest against LAUSD mass layoffs (KABC) — Tuesday was the last day of work for hundreds of Los Angeles Unified School District employees who are losing their jobs because of budget cuts. Dozens of members from the United Teachers of Los Angeles joined concerned parents and teachers on Tuesday evening at the district headquarters in downtown Los Angeles to protest the layoffs. The district will be letting go of 680 classified workers including office technicians, secretaries, cafeteria workers and custodians. Nearly 3,700 more workers will be bumped to other positions or have their salaries cut. Many will be moved from one school campus to another mid-semester
2 million lose jobless benefits as holidays arrive – Extended unemployment benefits for nearly 2 million Americans begin to run out Wednesday, cutting off a steady stream of income and guaranteeing a dismal holiday season for people already struggling with bills they cannot pay. Unless Congress changes its mind, benefits that had been extended up to 99 weeks will end this month. That means Christmas is out of the question for Wayne Pittman, 46, of Lawrenceville, Ga., and his wife and 9-year-old son. The carpenter was working up to 80 hours a week at the beginning of the decade, but saw that gradually drop to 15 hours before it dried up completely. His last $297 check will go to necessities, not presents. "I have a little boy, and that’s kind of hard to explain to him,"
Volcker Says Dollar’s Role in Danger as U.S. Influence Declines – Former Federal Reserve Chairman Paul Volcker, who is chairman of President Barack Obama’s Economic Recovery Advisory Board, said the U.S. dollar is in danger of losing its role as a global benchmark currency. “The growing question is whether the exceptional role of the dollar can be maintained,” Volcker told a gathering of New York civic leaders at the University Club of New York last night. The decline of the U.S. economy, political gridlock at home, U.S. involvement in two wars and “festering” geopolitical issues in the Middle East and Asia have undermined the ability of the U.S. to influence global events, Volcker said. Volcker offered no prescriptive solutions as he spoke in broad terms of the country’s loss of stature.
Portugal’s Banks Pile Up Sovereign Debt – Portuguese banks are buying their government’s debt at a fast pace, a move that could pose a risk to institutions that so far have weathered the financial crisis better than many. According to the Portuguese Central Bank, the country’s financial institutions, including banks, have together invested €17.91 billion ($23.5 billion) in the country’s public debt as of September, up 87% from €9.58 billion a year ago. Since the beginning of the year, the exposure has risen 77%. The move also highlights contradictions European authorities are facing to save the region’s economies. The officials are providing cheap funding to banks through the European Central Bank, and economists say the banks seem to be using that money to buy government bonds, thereby leaving the country’s banking system vulnerable to risks associated with sovereign debt.
Spain, Italy Now Face Bonds Pressure – Financial pressure on the euro zone intensified today, with the euro falling and Italy facing rising borrowing rates as EU measures to control its debt crisis left investors uncertain and anxious. The euro fell under $1.30 for the first time since mid-September, dropping at one point to $1.2969, though it later recovered to stand at $1.3030 this evening. There was also more pressure on 10-year borrowing rates for countries seen at risk of needing a rescue after Greece and Ireland, with particular attention focused on Spain as the size of its economy puts it in a far bigger problem category. The borrowing rate for Spain rose to 5.57%, while Portugal’s equivalent remained high at almost 7.2%. The gap between Spanish and benchmark German borrowing rates widened to three percentage points, an all-time high.
Trichet Says EU’s Resolve on Euro Shouldn’t Be Underestimated — European Central Bank President Jean-Claude Trichet signaled investors are underestimating policy makers’ determination to shore up the euro region’s stability as contagion spreads through the bloc’s bond markets. “I don’t believe that financial stability in the euro zone could really be called into question,” Trichet told lawmakers in Brussels today. Observers “are tending to underestimate the determination of governments.” European leaders are struggling to contain a worsening sovereign debt crisis that forced Ireland last week to follow Greece and ask for an international bailout. While European Union governments on Nov. 28 agreed to give Ireland an 85 billion-euro ($110 billion) rescue package, Spanish and Italian bonds have dropped on concern they may also need to need help as they try to get budgets under control. The selloff is reminiscent of the declines that preceded the EU’s decision in May to set up a 750 billion-euro bailout fund to rescue the euro. On the same day, the ECB took the unprecedented step of agreeing to buy government bonds.
S&P threatens Portugal Downgrade – Standard & Poor’s tossed a bit of fuel on the euro zone financial blaze Tuesday by threatening to downgrade Portugal. S&P put its A-minus long-term debt rating on Portugal on CreditWatch with negative implications, saying a downgrade is possible in the next three months. The move comes as the weaker European economies, known collectively as the PIIGS for Portugal, Italy, Ireland, Greece and Spain, are under attack in the bond markets.