New York City Budget Deficits May Be Larger Than Mayor Predicted, Liu Says – New York City Comptroller John Liu said looming budget deficits in the most populous U.S. city will be bigger than Mayor Michael Bloomberg anticipates. Although the city experienced less economic turbulence than most of the U.S. during the recession that began in December 2007, it faces budget gaps of $3.6 billion, $6 billion and $6.6 billion in the next three fiscal years, a report by the comptroller’s office said today. Bloomberg’s Nov. 4 financial plan anticipated deficits of $2.4 billion, $4.8 billion and $5.6 billion in 2012, 2013 and 2014. The city’s fiscal year starts July 1.
Ind. may cut Medicaid services to check costs— The General Assembly likely will cut some optional Medicaid services rather than resort to raising taxes to check the overall growth in the government health insurance program at a time Indiana revenues still lag behind current overall spending, a key legislative budget writer said Wednesday. State Senate Appropriations Chairman Luke Kenley, R-Noblesville, said he and other members of the State Budget Committee were "speechless" after the state Medicaid actuary projected Indiana’s share of the program’s costs will rise by about 25 percent this fiscal year and next, or by $1.46 billion and $1.84 billion respectively, and by nearly 9 percent, or $2.00 billion, in the 2013 fiscal year unless some services are cut. Actuary Robert Damler of the private firm Milliman said the Legislature can cut some optional services such as chiropractors, podiatrists and adult dental services to reduce its overall Medicaid bill. .
New data from RealtyTrac shows that foreclosure activity last month fell to a level not seen since November 2008, after problems with paperwork prompted case reviews, foreclosure suspensions, and re-filings of affidavits by mortgage servicers.
Foreclosure filings nationwide in November dropped 21 percent from the previous month and 14 percent from a year earlier. For the first time since February 2009, RealtyTrac says the total number of filings for the month dipped below the 300,000 mark. The company tracked foreclosure filings – including default notices, scheduled auctions, and bank repossessions – on 262,339 U.S. properties during November.
9 TRILLION Dollars Missing from Federal Reserve,Fed Inspector General Can’t Explain Rep. Alan Grayson asks the Federal Reserve Inspector General about the trillions of dollars lent or spent by the Federal Reserve and where it went, and the trillions of off balance sheet obligations. Inspector General Elizabeth Coleman responds that the IG does not know and is not tracking where this money is.
The index is down 3.93% over the last year, and off 30.2% from the peak. The index is 2.2% above the low set in March 2009, and I expect to see a new post-bubble low for this index – possibly as early as next month or maybe in early 2011.
Foreclosures Fall to Lowest Level Since 2008 on Robo-Signing Delays – That equates to one in every 492 U.S. homes hit with a foreclosure notice or taken back by the lender during the month, compared to one in every 389 homes during October. James Saccacio, RealtyTrac’s CEO, said “While part of the decrease can be attributed to a seasonal drop of 7 to 10 percent that typically occurs in November, fallout from the foreclosure robo-signing controversy forced lenders and servicers to hit the pause button on many foreclosures while they scrambled to revamp their internal procedures and revise or resubmit questionable paperwork.” According to RealtyTrac’s report, a total of 78,955 properties received default notices in November, a 21 percent decrease from the previous month and a 31 per-cent decrease from November 2009. While the robo-signing scandal may have impacted the short-term numbers, this marked the 10th straight annual decline in default notices.
ECB Boosts Capital Base by $6.6 Billion to Protect It From Losses on Bonds – The European Central Bank will almost double its capital base to help protect it from losses as the institution buys bonds of governments from Portugal to Ireland to fight the sovereign-debt crisis. The Frankfurt-based central bank will boost its capital by 5 billion euros ($6.6 billion) to 10.76 billion euros, it said in a statement today. The change will take effect from Dec. 29. The capital increase suggests the ECB is concerned that its program to buy bonds of strained governments, which now totals 72 billion euros, may saddle its balance sheet with losses. Policy makers have increased pressure on governments to do more to end Europe’s debt crisis on concern the ECB is shouldering too much of the burden.
Junk Spreads Tumble to Lowest Since ’07 as Fed Prints CashRelative yields on junk bonds narrowed to a three-year low as investors gained confidence in Federal Reserve Chairman Ben S. Bernanke’s efforts to stimulate the economy. The extra yield investors demand to own high-risk debt rather than government bonds has dropped 82 basis points this month to 540 basis points, or 5.4 percentage points, the lowest since Nov. 16, 2007, according to Bank of America Merrill Lynch’s U.S. High-Yield Master II index. Goldman Sachs Group Inc. and JPMorgan Chase & Co. are advising clients to buy speculative-grade debt in 2011, even after gains of 14 percent this year and a record 57.5 percent in 2009. Economists are boosting growth forecasts after President Barack Obama agreed to extend tax cuts enacted by his predecessor and as Bernanke seeks to reduce unemployment and avert deflation by buying Treasuries.