U.S. Economic/Financial News
States Pile up Billions More in Deficits
Jan. 14 (EIRNS)Texas announced a $9 billion shortfall on Jan. 13, making it the latest state budget catastrophe among others. Daily, the estimated $140-200 billion current and next budget year shortfalls across the nation get bigger. Also making headlines are Massachusetts, Michigan, Nevada, and Maryland for their $1-2 billion-plus shortfalls, which have their newly convened legislatures and governors frantically looking for cuts to make.
* Texas: Comptroller Susan Combs issued the latest revenue picture on Jan. 13, a $9 billion deficit. It is comprised of a $2.2 billion drop in the state general revenues over the two-year budget cycle, and a $6.9 billion smaller cash balance than the state had two years ago, she said. For now, the legislature, opening today, hopes to cover the shortfall from its rainy-day fund.
* Massachusetts: Gov. Duval Patrick, juggling a $1 billion-plus deficit, may cut $500 million in aid to towns and cities along with "drastic" cuts to jobs and services. If mid-year cuts to local aid are needed, localities would begin to slash services and lay off teachers and police.
* Michigan: A two-year $2.5 billion-plus deficit was announced on Jan. 9 by the state's revenue forecast committee$917 million of which is in this year's budget. The state already made $134 million in cuts in December closing a prison and two other facilities. The state's Senate Fiscal Agency reports that any Federal stimulus money, if it comes, would not be enough to plug the $1.63 billion hole in budget year 2010.
* Nevada: There is a $2.4 billion two-year shortfall, the state's budget director said. Many expect Gov. Jim Gibbons' speech to the legislature on Jan. 15 to call for a 6% cut in teachers' and state employees' salaries.
* Maryland: Gov. Martin O'Malley, who has already cut $300 million, including ordering five unpaid furlough days for 67,000 state employees, may have to cut another $400 million in this year's budget as the current deficit is now at $1.9 billion. Some expect his new budget proposal to include cutting aid to counties, at the same time that the state would shift $600 million in teacher pension costs to those counties! Other possibilities are: raise college tuition, cut aid to community colleges, local police, and health departments.
U.S. Maglev Projects to Get Funds for 2009
Jan. 14 (EIRNS)Maglev rail projects for the U.S. will receive some Federal funding this year, by an act of the 110th Congress. In addition, many maglev advocates are increasing their lobbying efforts to put serious maglev development into the surface transportation bill to be debated early in the 111th Congress.
Four of the eight proposed maglev routes will get some of a $90 million Federal allocation. The funds should be distributed by mid-year. In the context of the debate on how to get a economic recovery started, USA Today's business traveler columnist called for the U.S. to build maglevs, in his Jan. 13, column, among other high-speed rail initiatives.
The already authorized $90 million, while not much, is expected to have a "major impact on economic development and construction industry markets," the U.S. Maglev Coalition asserts. The Federal monies will be an 80/20 match, thus involving state public and private funds for further "preconstruction activities and capital costs of fixed guideway infrastructure of maglev projects," as mandated by Congress. The funds will be split among four approved projects: Las Vegas to Primm, Nevada, which gets half the money ($45 million); Baltimore to Washington, D.C.; Pittsburgh to its airport; and Atlanta to Chattanooga. One industry source expects the Federal Railroad Administration to split the remaining $45 million among the three other projects, although it could go to just one of them.
Reality Strikes: Pickens' Windmill Hoax Is 'Deader than Hell'
Jan. 13 (EIRNS)The reality of the world financial and economic breakdown is now even dashing the delusions of windmill fanatic T. Boone Pickens. In an article in the Jan. 13 Wall Street Journal, Pickens put it this way: "The wind stuff is deader than hell right now."
Pickens put his huge Texas wind farm on hold in the Fall, as the bottom of the financial markets was falling out. By October, the value of Pickens' equity hedge fund, BP Capital, fell by around 60% from its peak. Then, in November, California voters soundly defeated his referendum to promote natural-gas vehicles in their statea project which Pickens, the largest owner of natural-gas filling stations in the country, had heavily funded.
Without conning the Congress into massive subsidies, Pickens' windmill scheme is a wind-egg.
The Journal points out that the nation's first offshore wind farm, scheduled for Federal waters off Cape Cod, seems headed in the same direction. Massachusetts politicians, generally green as they come, like Senators Ted Kennedy and John Kerry, are adamantly opposed.
New Record Set for U.S. Home Foreclosure Filings
Jan. 15 (EIRNS)RealtyTrac reported Jan. 14 that home foreclosure filings (i.e., initiations of foreclosures) surpassed 3 million in 2008. This was an increase of 81% from 2007, and of 225% from 2006. Houses in some stage of foreclosure totalled 303,410 in December 2008, up 17% from November, and up nearly 41% from December 2007. Further, banks repossessed more than 850,000 properties in 2008, compared to about 440,000 in 2007. RealtyTrac senior vice president Rick Sharga said that these filings came despite foreclosure moratoriums, and they had not expected a near-record month. He concluded, "I believe January will be a record-setting month. We're in for a very difficult year."
A Literal Dark Age: Electric Utility Shutoffs
Jan. 16 (EIRNS)Early in his first 100 days, President Franklin Roosevelt signed the legislation creating the Tennessee Valley Authority (TVA), which brought electricity, for the first time, to more than 5 million people in seven states in the Southeast. Now, in this worldwide collapse, the clock is running backward. Last year, a greater number of people lost their electricity because they could not afford to keep it, than had gained access to electricity from the TVA, 75 years ago.
According to a survey by the National Association of Regulatory Utility Commissions (NARUC), for the Winter heating season that ended last May, 40 million electric and gas residential consumers held nearly $8.7 billion in past-due accounts. This resulted in an unprecedented 8.7 million customers having their electricity or gas service terminated for non-payment. In depression-wracked Michigan, Consumers Energy shut off 7,215 electricity customers in May 2008, as compared to 1,407 a year before. Michigan Gas Utilities disconnected 880 customers, having disconnected none the previous year.