New York Times

Food & Water Watch Analysis Reveals Surge in Potential Privatization Deals in 2010 –  Ravaged by the recent economic recession, more municipalities are considering selling or leasing their water systems in order to quickly infuse dwindling coffers with much needed cash. Analysis released today by the national consumer advocacy group Food & Water Watch reveals that as of October 2010, at least 39 communities in the U.S. were considering selling or leasing their water systems to private operators—more than five times the number of completed privatization deals in a typical year over the last two decades. The first comprehensive report to quantify and analyze municipal water system sales and concessions in the U.S., Trends in Water Privatization: The Post-Recession Economy and the Fight for Public Water in the United States also finds that the typical water system poised for privatization in 2010 served 45 times as many people as those leased or sold over the last twenty years. The average system up for privatization in 2010 served nearly 283,000 people, whereas those that had been privatized served an average of 6,285 customers.

Value Sinking Fastest at Homes Priced Low to Start – DURING the great housing bubble, it was the least expensive homes whose prices went up the most. And now it is those homes that are suffering the most.  The S.&P./Case-Shiller indexes released this week showed widespread declines in home prices in the third quarter of this year as the market suffered from the removal of temporary tax credits that had led to a small rally in home prices earlier in the year. No region had lost more than 5 percent in a quarter since mid-2009, but that happened to Phoenix in the third quarter.  For 16 major regional areas, S.& P. publishes separate indexes for the top, middle and bottom thirds of homes in the area, as measured by price. Those figures show that from the beginning of the decade through each area’s peak, prices of lower-value homes rose faster than either of the other groups.  The latest figures show that prices of lower-cost homes have fallen further from the peak in each of the 16 areas.  As a result, the pain of lower prices is being felt most strongly by homeowners who are most vulnerable, both because they may have taken out mortgages whose interest rates rose after initial teaser periods ended and because those owners are more likely to be facing prolonged unemployment.

Barry Eichengreen: Ireland’s rescue package – Disaster for Ireland, bad omen for the Eurozone Irish interest spreads did not fall and contagion continues. Here one of the world’s leading international economists explains why. Short-sighted, wishful thinking by EU and German leadership designed a package that is not economically feasible in the long run (it would trigger a vicious debt deflation spiral) and it is not politically sustainable in the short run. The Eurozone had better have a Plan B for when the new Irish government rejects the package next year and imposes a haircut on Irish bank bondholders.


How to resign from the club – Economist – MEMBERSHIP of the euro is meant to be for keeps. Europe’s currency union is supposed to be immune from the sort of speculative attack that cracked the exchange-rate mechanism, the system of currency pegs that preceded it, in 1992-93. A lesson from that time is that when the foreign-exchange markets are far keener on one currency than another, even the stoutest official defence of a peg between the two can be broken. Inside the euro zone, no one can be forced to devalue because no one has a currency to mark down.  The strains in euro-zone bond markets this year show that there are other ways for markets to drive a wedge between the strong and the weak. Concerted selling of their government bonds has forced Greece and now Ireland to seek emergency loans from other European Union countries and the IMF. Portugal may soon join them in intensive care. Spain is in the markets’ sights and the trouble is spreading to Italy, home of the world’s third-largest market for public debt. The idea of breaking up the currency zone raises at least three questions. First, why would a country choose to leave? Second, how would a country manage the switch to a new currency? Third—and perhaps most important—would leavers be better off outside the euro than inside it?


Millions Bracing for Cutoff of Unemployment Checks – More than two million jobless Americans are entering the holiday season seized with varying levels of foreboding, worry or even panic over what lies ahead as they cope with the expected cutoff of their unemployment benefits.  Their economic fates are now connected on a taut string to skirmishing between Democrats and Republicans in Washington over whether to extend federal financing for unemployment benefits for the long-term jobless.  Tuesday marked the expiration of a pair of federal programs that had extended unemployment benefits anywhere from 34 to 73 weeks on top of the 26 weeks already provided by the states.  Some recipients have already received their final checks. If the impasse remains unresolved, others will see their payments lapse in the coming days or weeks, depending on how long they have been receiving benefits.  By the end of December, more than two million are set to lose their extended benefits, according to estimates by the National Employment Law Project, and about a million more by the end of January.

European Central Bank ‘doctrine’ has turned markets into reality shows – The ECB’s refusal to tackle the ostracism of struggling countries by bond investors leaves us all watching a battle for survival. Like Big Brother, millions of people are watching how a group of people – in this case, countries – fight each other, with the only aim of self-survival. Never mind that these nations are part of a wider European Union: let Greece, Ireland, Portugal, even the much bigger Spain go bust, as long as those in control – read Germany and the European Central Bank (ECB) – don’t lose the comfort of their driving seats. The ECB’s stubborn refusal on Thursday to roll up its sleeves and start buying the bonds of troubled countries felt like a foot in the shoulder of Italy, Spain, Portugal and Ireland, sinking them just a little bit more. Investors have massively sold the sovereign bonds issued by those countries, thinking that their ailing economies and high debts will make it very difficult for them to pay back. They are right: who would lend money to a friend making £20,000 a year, who wants to buy a £1m home? Ireland and Spain have lived well above their means over the past decade – but its citizens and politicians, well aware of it, preferred to continue with the bonanza, as long as it lasted.

Empire of schmucks – With the news this week that the Fed pumped money into European institutions during the darkest hours of the recent and continuing economic crisis without so much as a press release or a demand for better cheese prices, it is clear that even with all those big geopolitical shifts we have been hearing so much about, the United States remains the world’s sole Schmuck Superpower.  Oh sure, whoever it was that was stamping "Approved" on all those requests at the Fed’s "Foreign Banks Only" teller window no doubt thought it was in the self-interest of the United States to keep the global economy from imploding. But look at all the grumbling that Europeans do when asked to help preserve their own common currency and the economic health of their own neighborhood. Or, if you wish to look in the other direction, consider the not exactly Kumbaya spirit of the currency "wars" that define trans-Pacific monetary relations. In the end, you’ve got to wonder, what’re we thinking? After all, if China is the country sitting on the biggest pile of cash and the EU is China’s number one trading partner, shouldn’t they have responsibility for footing the bill for all those overly cushy European pension plans that promised retirement seemingly within weeks of graduating from college?

The fiscal commission’s failure – I’m fascinated by the various headlines reporting the deficit commission’s 11-7 vote. Some treat the plan as some kind of independent entity which was lobbying for votes: the WSJ runs with “Deficit Plan Fails to Win Panel Support,” while Reuters plumps for “Deficit-cut plan falls short, offers framework” and Fox News has “Deficit Commission Report Fails to Advance to Congress.” The Washington Post goes long: “Deficit plan wins 11 of 18 votes; more than expected, but not enough to force action.” Other headlines concentrate on the panel as the key actors, and the range of views here is very wide. Bloomberg says bluntly that “Debt Panel Rejects $3.8 Trillion Budget-Cutting Plan,” in line with the FT’s “Panel reject US budget deficit plan”. Politico is a bit softer — “Debt panel falls short on votes” — while NPR is positively upbeat: “Majority Of Deficit Commission Endorses Plan; Not Enough To Make It Automatic.” Ezra, too, looks on the bright side, plumping for “The fiscal commission succeeded — sort of.”

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