California goes broke, halts $3.5 billion in payments

I said many, many times that the U.S. is broke.

Things are much, much worse than you have been told.

This will be the ‘Greatest Depression’.


California, the eighth largest economy in the world, is broke.

“People are going to be hurt starting today,” said Hallye Jordan, speaking on behalf of the state Controller. “There’s no money.”

Since state legislators failed to meet an end of January deadline on an agreement to make up for California’s $40 billion budget gap, residents won’t be getting their state tax rebates, scholarships to Cal Grant college will go unpaid, vendors invoices will remain uncollected and county social services will cease.

At least, temporarily. Services and payments will resume once state legislators come to an agreement on the budget.

“This time, there are real-world consequences,” said H.D. Palmer, spokesman for the California Department of Finance, in a report by KCRA in Sacramento. “Because we have not been able to get to a budget agreement, payments aren’t going to be made.”

“This is an issue of fairness,” said Assemblyman Ted Gaines, R-Roseville, in the KCRA report. “It hurts hardworking families the most. Refunds, in fact, will stimulate the economy, and taxpayers need their money.”

“Included are $515 million in payments to the state’s vendors and $280 million to help people with developmental disabilities. Other public assistance agencies will be left waiting for hundreds of millions of dollars,” reports CNN. “Other public assistance agencies will be left waiting for hundreds of millions of dollars.”

“I see the will during the negotiations even though these are very, very tough things that we talk about, where we go into areas that we have never, ever dreamt of going into and trying to solve,” said Governor Arnold Schwarzenegger. “So you will be very surprised when the whole thing is done. We’re still not there yet. There is still a lot of work that needs to be done but we are moving slowly forward with this process.”

“If there is no deal by Friday, state government workers will take their first furlough day,” reports the San Diego Union Tribune. “Schwarzenegger has ordered state employees to take two days off a month without pay through June 2010 to save about $1.4 billion.”

Read moreCalifornia goes broke, halts $3.5 billion in payments

EU attacks ‘Buy American’ clause

Buy American is meant to ensure that only US goods are used in public works

The EU has increased its pressure on the US to reconsider the “Buy American” clause in the $800bn (£567bn) economic recovery package now before Congress.

The clause seeks to ensure that only US iron, steel and manufactured goods are used in projects funded by the bill.

A European Commission spokesman said it was the “worst possible signal” the Obama administration could send out.

The EU will launch a complaint with the World Trade Organisation (WTO) if the clause remains, the spokesman said.

Related interview: Jim Rogers: If Obamanomics happens it’s all over

The EU and Canadian ambassadors to Washington have already warned that the clause could promote protectionism and trigger retaliatory moves.

The rescue plan has already been approved by the US House of Representatives and is under discussion in the Senate this week.

Mixed trade signals

“There isn’t a great deal of scope for doing much more but if America went ahead and did this we would have to take it up with the World Trade Organisation,” the European Commission trade spokesman, Peter Power, told the BBC’s Chris Mason in Brussels.

British Conservative Members of the European Parliament warned of the dangers of “a new economic iron curtain” being drawn across Europe.

Read moreEU attacks ‘Buy American’ clause

Australia and Japan offer new stimulus plans

HONG KONG:Australia announced a $26.5 billion stimulus plan and a deep interest rate cut on Tuesday as the Japanese central bank said it would start buying shares held by financial institutions to try to ease the burden on lenders in efforts to shield their economies from the worsening downturn.

The announcements followed a flurry of economic data, job cuts and profit warnings in recent weeks that have shown the region is slowing faster than had been expected as demand in the United States and Europe withers.


Related article: Australia launches massive stimulus package (AFP):
Prime Minister Kevin Rudd said the massive stimulus package was aimed at nation building and supporting up to 90,000 jobs “in the face of the unfolding national and international economic emergency.”


“The weight of the global recession is now bearing down on the Australian economy,” said Wayne Swan, Australia’s treasurer, in a statement accompanying the stimulus announcement. “In the midst of this global recession it would be irresponsible not to act swiftly and decisively to support jobs.”

Read moreAustralia and Japan offer new stimulus plans

U.S. Property Owners Lost $3.3 Trillion in Home Value Last Year

About $6.1 trillion of value has been lost since the housing market peaked in the second quarter of 2006


A for sale sign stands outside of a home in Mount Ephraim, New Jersey on Sept. 24, 2008. Photographer: Mike Mergen/Bloomberg News

Feb. 3 (Bloomberg) — The U.S. housing market lost $3.3 trillion in value last year and almost one in six owners with mortgages owed more than their homes were worth as the economy went into recession, Zillow.com said.

The median estimated home price declined 11.6 percent in 2008 to $192,119 and homeowners lost $1.4 trillion in value in the fourth quarter alone, the Seattle-based real estate data service said in a report today.

“It’s like a runaway train gaining momentum,” Stan Humphries, Zillow’s vice president of data and analytics, said in an interview. “It’s difficult to say when we’ll see a bottom to the housing market.”

The U.S. economy shrank the most in the fourth quarter since 1982, contracting at a 3.8 percent annual pace, the Commerce Department said on Jan. 30. Record foreclosures have pushed down prices as unemployment rose. More than 2.3 million properties got a default or auction notice or were seized by lenders last year, according to RealtyTrac Inc., a seller of data on defaults.

About $6.1 trillion of value has been lost since the housing market peaked in the second quarter of 2006 and last year’s decline was almost triple the $1.3 trillion lost in 2007, Zillow said.

Read moreU.S. Property Owners Lost $3.3 Trillion in Home Value Last Year

Channel 4 freezes all salaries for year

Channel 4, the impoverished publicly owned broadcaster at the heart of a debate over the future of UK television, said on Monday it had frozen salaries for all staff and its two most senior staff members were waiving their performance bonuses for 2008.

The decision came as the television industry got down to what one person familiar with the discussions called “the gruntwork” of figuring out how to fill a funding gap of up to £100m that is forecast to emerge in C4’s finances by 2012.

Read moreChannel 4 freezes all salaries for year

Treasury rethink hits defence budget

Britain’s deepening financial crisis has prompted the Treasury to pull back from funding any unexpected costs from fighting in Iraq and Afghanistan, putting further pressure on the core defence equipment budget.

Gordon Brown, as chancellor, set up the Treasury reserve to pay for any equipment urgently needed for operations and half of any unforeseen costs. But Treasury officials have recently told the Ministry of Defence to cover the entire cost of any overruns itself.

The Treasury sees the move as increasing the incentive for the MoD accurately to estimate the costs of operations. But it was attacked as a cost-cutting measure that would put further pressure on the strained military budget and have a negative impact on troops in the field.

Read moreTreasury rethink hits defence budget

Glenn Beck: Economic Apocalypse

Glenn Beck on the coming devaluation of the dollar.

“We have pumped all of this money in (see chart) and devalued our money.”

“How is it not going to be worthless?”

“This has never ever been done by anybody ever before.”

“This is real trouble, not in a thousand years, perhaps the next year.”


Added:
Source: YouTube

Dissent beginning to spread across Russia as crisis bites

Thousands protest at Putin’s handling of economy while rift with Medvedev grows


Supporters of the banned National Bolshevik party protest against Moscow’s rulers

The Kremlin’s rule is beginning to look much shakier than at any time since Vladimir Putin came to power, after a series of protests in cities across its vast landmass this weekend by Russians disgruntled about the economy. And as the country starts to feel the effects of the global credit crunch, there are also signs of a growing rift between Prime Minister Putin, and his hand-picked successor as President, Dmitry Medvedev.

In Vladivostok, 2,000 protesters took to the streets, with some carrying banners reading “Kremlin, we are against you”, and other people chanting directly for the removal of Mr Putin. The Pacific port city, seven time zones away from Moscow, has become a focal point for dissent after riot police broke up a march last year over car imports and detained 100 people. Saturday’s demonstration, under the watchful eye of the police, passed off peacefully.

Nearly every major city had a street rally, and though most were low key, the unusual scale of dissatisfaction is likely to worry the authorities. The Russian economy has been hit hard by falling oil prices, many oligarchs have seen billions of pounds wiped off the value of their shares, and ordinary Russians are feeling the pinch as factories struggle to stay afloat and companies lay off employees.

In Moscow, a motley band of communists, anarchists and liberals gathered at several points across the city to protest against Kremlin rule. At one spot, a dozen protesters taped over their mouths with white tape, held up white placards with no slogans, and handed blank white flyers to passers-by. Bemused by such a conceptual approach to protest, the police rounded them up and arrested them anyway, and the organiser got five days in prison.

Read moreDissent beginning to spread across Russia as crisis bites

Global News (02/02/09)

Riot police clash with protesters at Davos summit (Sunday Herald):
RIOT POLICE fired tear gas and water cannons at bottle-throwing demonstrators in Geneva who protested yesterday against the annual World Economic Forum meeting in the Swiss Alps.

Riot police fire tear gas at Greek farmers (AP)

Heaviest snow in 20 years brings large parts of Britain to a halt (Times Online)

Travel chaos as Europe shivers in heavy snowfalls (ABC News)

California delays $3.5B in payments (CNN Money)

Europeans are finally waking up to the demise of democracy (Telegraph)

Let banks fail, says Nobel economist Joseph Stiglitz (Telegraph)

Personal bankruptcies soar 33% (MSN Money)

Macy’s cutting 7000 jobs (CNN)

Nuclear power workers join wildcat strike action over foreign labour (Guardian)

Italy bans kebabs and foreign food from cities (Times Online)

Huge rise in speed cameras (Telegraph):
The number of speed cameras sites nearly trebled in just six years, according to figures released by the Government.

Jamie’s food fuels pupils’ brain power (Times Online):
An independent study shows the performance of 11-year-old pupils eating Oliver’s meals improved by up to 8% in science and as much as 6% in English, while absenteeism due to ill-health fell by 15%.

Fed Monetizes Debt, Investors Buy Gold (Gold Seek)

Where Are US Consumer Goods Prices Headed? (Lew Rockwell)

WEF 2009: Global crisis ‘has destroyed 40pc of world wealth’ (Telegraph):
The past five quarters have seen 40pc of the world’s wealth destroyed and business leaders expect the global economic crisis can only get worse.

Vladimir Putin faces more protests over economy (Telegraph):
Russian opposition groups are planning new protests over the economy after weekend demonstrations that challenged the authority of Vladimir Putin.

Nuclear workers join UK wildcat strikes (Financial Times)

Number of UK long-term jobless set to soar (Financial Times)

Australia faces first budget deficit for 7 years (Financial Times)

Two children should be limit, says green guru (Times Online)

Folding dealers shock car buyers with unpaid liens (AP)

India risks losing its nuclear ally in Washington (The National)

Wars And Economic Failure Have Been Marching Us Towards One World Government (The International Forecaster)

Welfare Aid Isn’t Growing as Economy Drops Off (New York Times)

Federal Agency Kills Thousands of Birds with Pesticide (Natural News)