U.S. Economic/Financial News

It's Not Just the States Cutting to the Bone

March 3 (EIRNS)—U.S. cities will face budget deficits totalling at least $12-$19 billion in Fiscal 2011, even under the unlikely assumption they receive large state subsidies through the stimulus act; the combined city deficits could be as high as $25-30 billion, according to a new report. Against this, the Federal FY2011 budget will include only $2.8 billion in aid to the cities from the stimulus.

Two-thirds of American cities already have put in place hiring freezes or layoffs; 62% have delayed or cancelled capital projects; 11% have cut social services; and 25% have increased property tax rates.

But over the three-year period FY2011-13, cities' combined budget deficits could reach $83 billion, resulting in a massive takedown of city government at the same time many states follow the California path to collapse and ungovernability.

Schwarzenegger's Legacy: Maternal Mortality Triples in California

March 6 (EIRNS)—In the last decade, the number of women who died within 42 days after giving birth has tripled in California. According to a forthcoming report from the California Department of Health, leaked to ABC News, the maternal mortality rate has gone from 5.6 per 100,000 live births, to 16.9 per 100,000, a threefold increase. This is above the rate for the entire United States, which is already bad, at 11 deaths per 100,000 live births, putting it at 40th place worldwide, in a 2005 World Health Organization ranking. In January, a leading accreditation and certification group, the Joint Commission, issued an alert stating that "current trends and evidence suggest that maternal mortality rates [in the U.S.] may be increasing."

A common cause of death after childbirth is stroke, caused by blood clots having formed in the legs during pregnancy. The California report points to increased obesity and use of caesarean sections in delivery as likely causes.

9 Million U.S. Households Can't Cover Winter Heating Bills

March 4 (EIRNS)—A record number—over 9 million households—are expected to seek help to pay Winter electric, heating oil, and natural gas bills, because they don't have the means. This number is up 15% over last year, and the incidence of households suffering power shut-offs is also high, and rising. The Federal program doling out help (LIHEAP—Low Income Home Energy Assistance Program) is being hit by record requests (administered through the states). In Washington, applications are up 42% over last year. In Michigan, up 38%. In Colorado, 20% of those appealing for help were already in crisis, either without heat or soon to lose it. Some cold-weather states have enacted moratoria against power cut-offs in Winter, but these bans start to expire in March and April.

In the Northeast and rural Midwest, there are chain-reactions of non-payment to fuel oil distributors, and similar dislocations hitting what remains of local enterprise. Congressmen from several of these states, including James Oberstar (D-Minn.) and Carolyn McCarthy (D-N.Y.), released a letter this week, calling for more LIHEAP funding, reporting that "a recent survey ... of more than 1,200 poor families found that 32% went without food for at least a day, 42% went without medical or dental care, and 38% did not fill prescriptions," to try to keep the heat on.

Dimon Says California Greater Threat Than Greece

Feb. 28 (EIRNS)—Jamie Dimon, the parasite who heads the JP Morgan Chase looting apparatus, told his underlings at their recent annual meeting that investors should be more worried about the risk of default of the state of California than of Greece's current debt woes. "There could be a contagion" if a state the size of California has problems making debt payments, he said, according to the Feb. 26 London Telegraph.

Dimon said that his and other U.S. financial institutions are largely immune to the European debt crisis. California poses more of a risk, he said, because of its $20 billion budget deficit—which Gov. Arnold Schwarzenegger is trying to reduce by coming up with more ways to kill greater numbers of the state's population.

Last week, John Chiang, the state's comptroller, said that if a workable plan to reduce the deficit and increase cash levels is not reached soon, he will have to return to issuing IOUs. Last Summer, California issued $3 billion in IOUs to creditors, including residents who were owed tax refunds. "I can't write checks without money; that's against the law. My main goal is to keep the state afloat, but I won't be able to do it without the help of new legislation," said Chiang.

Nuclear Plant Project Engineers To Be Laid Off, as TVA Work Finishes

March 2 (EIRNS)—More than 600 engineers and support staff, who have been working for two years on the TVA's Watts Bar nuclear plant Unit 2, will be out of work by September, as the design phase of the work is completed. This, because there are no other nuclear power plant projects underway, and nowhere (in the U.S.) for the staff to go.

In 2007, TVA decided to spend about $2.5 billion to finish the plant, which was 80% complete when construction was halted in the mid-1980s. Watts Bar Unit 1, which went operational in 1996, is the last nuclear plant built in the United States. Unit 2 is the only nuclear power plant in the United States that is currently under construction.

Although a dozen or so other utilities have submitted license applications with the Nuclear Regulatory Commission, the approval process is expected to take two or more years. Recently, thanks to the financial crisis and economic collapse, some of the companies have put their applications on hold. Even the Georgia project for two new reactors at the Vogtle site, which recently was granted provisional Federal loan guarantees, will not be in the nuclear engineering design phase soon enough to keep the mere handful of qualified U.S. engineers employed. Perhaps they will be getting job offers from overseas.

Four More U.S. Banks Are Shut Down

March 6 (EIRNS)—Four more U.S. banks bit the dust yesterday, in four states, bringing the number of closures this year to 26. Regulators closed 140 banks in 2009.

The four banks were Sun American Bank of Boca Raton, Fla., Centennial Bank of Odgen, Utah, Waterfield Bank of Germantown, Maryland, and Bank of Illinois, of Normal, Ill. First-Citizens Bank & Trust Co., of Raleigh, N.C. will assume Sun American's deposits and purchase all its assets, the FDIC reported. This is the fourth time First-Citizens has purchased the assets of a failed bank since last July. No buyers were found for Waterfield or Centennial. Heartland Bank & Trust of Bloomington, Ill. will assume Bank of Illinois's deposits.

FDIC Chairman Sheila Bair told Reuters she expects bank failures to remain high this year, against a backdrop of rising unemployment, crash of housing prices and soaring loan defaults.