With Friends Like Moody’s… – Good to see Moody’s rebuilding its franchise. Their aura of mystery is still reassuringly intact, two years after the subprime CDO ratings fiasco, as a bemused Firedoglake notes, in connection with two diametrically opposed, and politically charged, opinions about the tax cuts and their projected effect on the US credit rating: Can someone tell me why the same guy, at the same ratings agency, does a 180 in less than one week, when the deal hasn’t changed an iota? A cynic might think that the Dec 7th report was Moody’s putting all its credibility behind the deal to extend the tax cuts, while the Dec 12th report was Moody’s putting all its credibility behind a move to ensure Obama got no political credit for it, once the deal, that they had implicitly supported a week earlier, was looking much more certain. That type of maneuver will have a familiar feel to the bedraggled Obama, one suspects. Anyhow, if you are shocked, shocked at the idea of credit rating agencies working a political angle, you can comfort yourself with the thought that no stratagem underpinned by all Moody’s credibility is going to be very threatening.
Minnesota faces ‘unsustainable burden’ for long-term care – Minnesota faces an "unsustainable burden" on taxpayers for nursing homes and other long-term care as the population ages, but it can significantly lower those costs by making it easier and more attractive for people to invest in their own care, a new report from the Citizens League says. To do so, the report recommends revamping the federal-state Medicaid program — which it says now encourages people not to save for their care — and adding new products to help people use home equity or savings to pay for long-term care. Without action, as the older population doubles and health care costs continue rising, the government cost of long-term care in Minnesota will soar from about $1.1 billion this year to $5 billion by 2035, the report says. A person has a 70 percent chance of needing some type of long-term care after age 65, costing an average of $48,000, the report said. For about 6 percent of those people, costs will exceed $100,000.
Flint moving ahead with police layoffs, after city breaks murder rate record – Flint has set a new record for murders in the city in a single year. This comes at a time when the city plans to lay off 20 police officers later this week. Flint recorded its 62nd murder of the year on Monday. That broke Flint’s previous record of 61 murders in a year set back in 1986, when the city of Flint was much larger. There are no suspects in Flint’s 62nd homicide of the year. And beginning Friday, there will be fewer police officers in Flint. The city has issued layoff notices to about a hundred employees, including 20 police officers. The layoffs are intended to help reduce the city’s projected 5 million dollar budget deficit.
France’s Sarkozy says time to consider SDR role – (Reuters) – French President Nicolas Sarkozy said on Monday that his G20 agenda to reform the international monetary system would look at widening the role of the IMF’s Special Drawing Rights and tackling international capital flows. France, which took over the presidency of the G20 group of industrial and developing nations last month, is sounding out governments on ways to reform a monetary system dominated for decades by the U.S. dollar with the aim of creating greater global stability. "We need to start thinking about the relevance of a system based on accumulation of dollar reserves," Sarkozy said, adding that France would float proposals during the next year. "Does not this system make part of the world dependent on American monetary policy? Should we not reflect on the role of the SDR (Special Drawing Rights) and on the internationalisation of other currencies?" asked Sarkozy, in a speech to mark the 50th anniversary of the Organisation for Economic Co-operation and Development (OECD). French officials have said they hope to encourage greater use of the Chinese yuan as a reserve currency during their G20 presidency, including talks on a possible timetable for its inclusion in the basket of currencies which underpin the International Monetary Fund’s Special Drawing Rights.
China to raise inflation target in dovish signal (Reuters) – China will set a 4 percent target for consumer inflation next year, up from this year’s 3 percent objective, state television said on Tuesday, an indication that the government will desist from aggressive tightening even as price pressures mount. The slightly higher threshold for inflation was consistent with another report in official media earlier in the day that China will aim to cap new loans at about 7.5 trillion yuan ($1.1 trillion) next year, a more generous ceiling than many in the market had been expecting. "The main targets for economic and social development set by the central government for next year are that GDP will grow by about 8 percent and the consumer price index will be capped at about 4 percent," CCTV quoted Zhang Ping, head of the powerful National Development and Reform Commission, as saying.The 8 percent growth target is, as in past years, likely to be a moot point. Most economists think the world’s second-largest economy will grow about 9 percent next year.
New York State May Face Deficit Topping $11 Billion as Bonuses Set to Fall – New York state’s deficit may be 22 percent wider than estimated by the Budget Division because tax revenue, including from Wall Street bonuses, may be less than expected. The division has forecast a 13 percent increase in taxable cash bonus payments to $39.7 billion, according to Erik Kriss, a spokesman. By contrast, Options Group, an industry consultant, estimates the annual payments will drop from a year earlier. Capital gains revenue also may fall short of estimates.“The next administration will have to contend with a snowballing budget deficit that’s growing fast and picking up speed,”
Wash. gov seeking pension, health care savings – Washington Gov. Chris Gregoire is asking the Legislature to make changes to the state’s health care and pension systems to help address costs as the state grapples with a projected $5 billion deficit for the next two-year budget. Gregoire told reporters Monday she is proposing ending automatic yearly pay increases for some state pension plans, a move she says would save the state $368 million for the 2011-2013 budget and would cut the state’s unfunded pension liability of $7 billion by nearly 60 percent. Gregoire also wants to end early retirement incentives for future state employees who are in later pension plans and choose to retire before age 65. She says doing so will save the state and local governments $2.2 billion over the next 25 years.
Virginia Retirement System underfunded, JLARC says The combined unfunded liability of the Virginia Retirement System and other state-supported pension plans amounts to $17.6 billion, a report by the legislature’s watchdog agency concluded Monday. That means that contributions by the state and local governments likely will have to increase in the next biennium, said Tracey Smith, an analyst with the Joint Legislative Audit and Review Commission. The rate of return would have to be 44 percent for contribution rates to remain where they are, she said. The rate of return this year has been 11 percent, which is good, she added.
Medicaid costs surge past $10 billion, devouring uptick in tax receipts – Massachusetts taxpayers have delivered more revenue to the state Treasury nearly every month since October 2009, but the Patrick administration still faces a significant budget gap largely because of soaring costs in the state Medicaid program, which has attracted almost a quarter million new enrollees since June 2006 while playing a major role in helping Massachusetts achieve the lowest rate of uninsured individuals in the nation. In addition, 75 percent of the estimated 410,000 individuals newly insured in Massachusetts since passage of the 2006 health reform law under Gov. Mitt Romney have found coverage through publicly subsidized programs, including the expanded Medicaid or MassHealth system, according to a state report released on Friday. Only 25 percent of the newly insured got coverage through employers, of which 76 percent offer insurance in Massachusetts, or by purchasing coverage on their own.
Official: Germany Willing To Boost ECB Capital – Germany would be willing to support the European Central Bank with more capital if the bank said that was necessary, a government official said – a step that would reinforce the ECB’s finances as it tries to contain the continent’s debt crisis. Should the ECB ask eurozone governments to boost its capital base, it would be the first capital increase for the Frankfurt-based central bank in its 12-year history. The bank’s balance sheet has been strained over the past year as it has bought up bonds from governments with shaky finances such as Greece, Ireland and Portugal. The bond purchases, which drive down yields and stabilize bond markets, have been a key step in the easing of market turmoil in recent weeks. The bank has been under pressure to step up its purchases to help keep surging funding costs from pushing Portugal, or more dangerously much larger Spain or Italy, into seeking an international bailout.
U.S. Retail Sales Rise Above Forecast as Consumers Recover - Sales at U.S. retailers increased more than forecast in November and optimism among small businesses rose to a three-year high, signaling the economy was gaining momentum as the holiday season began. The 0.8 percent gain in purchases followed a 1.7 percent jump in October that was larger than previously estimated, Commerce Department figures showed today in Washington. The National Federation of Independent Business’s sentiment gauge rose by 1.5 points to 93.2, the highest since December 2007, as more companies projected sales will grow. Stocks rose and Treasuries fell as the figures confirmed a yearend-sales rebound at retailers like Target Corp. and Macy’s Inc. Even as the world’s largest economy strengthens heading into 2011, high unemployment and the risk of a prolonged drop in prices remain concerns for Federal Reserve policy makers meeting today.