Schwarzenegger Issues Executive Order to Address Worsening Budget Crisis
Governor Arnold Schwarzenegger today issued an executive order to prepare state government and its employees for the worsening state budget crisis. Without action to address the fiscal crisis, the Controller, Treasurer and Department of Finance expect the state to run out of cash in February. In order to prepare for this potential scenario, the Governor directed the Department of Personnel Administration to adopt a plan that would go into effect in February to implement a furlough of state employees and supervisors for two days per month and to work with state agencies and departments to initiate layoffs and other position reduction and program efficiency measures to achieve General Fund savings of up to 10 percent.Governor's Open Letter to All State Employees Regarding Furloughs and Layoffs
Dear State Worker,Hedge funds gain access to $200bn Fed aid
Our state's fiscal crisis has worsened dramatically in the past few weeks without legislative action to address our budget crisis. We face an approximately $15 billion General Fund deficit this fiscal year, and that number is estimated to grow to $42 billion over the next 18 months. Without immediate action, the state will not have enough cash to meet its obligations starting in February. ...
Furloughs: Beginning February 1, 2009, and lasting through June 30, 2010, rank-and-file employees will be furloughed two days per month. For employees who are not part of a bargaining unit (i.e., exempt appointees, career executive assignment employees, supervisors and managers), we will implement an equivalent furlough or salary reduction plan effective February 1, 2009. We intend to implement these measures in a way that does not affect your retirement.
Layoffs: I have instructed the Department of Personnel Administration to work with state agencies to initiate layoffs, reductions and other efficiencies to achieve General Fund savings of up to 10 percent starting February 1, 2009. This is in addition to reductions that I have already ordered for the current fiscal year. Employees in General Fund positions in the bottom 20 percent of seniority will receive "surplus" notices within the next month. Employees who receive these notices will not necessarily be laid off, and they will have hiring preference for non-General Fund positions for which they qualify.
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The nation's economy has left many families vulnerable and worried. The last thing we wanted was to compound these worries for our own employees. Nevertheless, we have an obligation to the people we serve to make whatever sacrifices are necessary to maintain essential services and programs.
Sincerely,
Arnold Schwarzenegger
Hedge funds will be allowed to borrow from the Federal Reserve for the first time under a landmark $200bn programme intended to support consumer credit.China May Spur Consumer Spending After Lowering Rates
The Fed said on Friday it would offer low-cost three-year funding to any US company investing in securitised consumer loans under the Term Asset-backed Securities Loan Facility (TALF). This includes hedge funds, which have never been able to borrow from the US central bank before, although the Fed may not permit hedge funds to use offshore vehicles to conduct the transactions.
The TALF is a key plank of the unorthodox strategy set out by the Fed last week as it cut interest rates virtually to zero. Washington insiders expect the programme will be dramatically expanded next year with further capital support from Treasury once the Obama administration takes office.
A senior official in the outgoing Bush administration told the Financial Times it could also be broadened to include new commercial and residential mortgage-backed securities.
China may follow its latest interest- rate cut with steps to spur consumer spending as deepening recessions in the U.S. and Europe pummel exports, one of the main engines of the world's fourth-largest economy.New Zealand Economy Shrinks 0.4% as Recession Deepens
The People's Bank of China yesterday lowered its one-year lending rate by 0.27 percentage point to 5.31 percent and the deposit rate by the same amount to 2.25 percent. The central bank also reduced the proportion of deposits lenders must set aside as reserves by 0.5 percentage point.
Growth in the world's fourth-largest economy is slowing as recessions in the U.S. and Europe stem demand. China's exports fell for the first time in seven years in November, imports plunged and output contracted by a record.
New Zealand�s economy contracted for the third straight quarter, extending the nation�s first recession in 10 years and adding to the prospect the central bank will cut interest rates to a record low next month.Australian pension funds lose $62 billion
Gross domestic product declined 0.4 percent in the three months ended Sept. 30 from the second quarter, when it fell 0.2 percent, Statistics New Zealand said today. The median in a Bloomberg survey of 13 economists was for a 0.5 percent drop.
The highest unemployment in five years and a slumping housing market prompted consumers to cut spending as the global recession reduced demand for exports of milk, timber and meat. Central bank Governor Alan Bollard, who expected a 0.3 percent contraction, is forecast to cut rates next month to the lowest since the nation began using a benchmark in 1999.
The Reserve Bank of New Zealand has slashed the official cash rate by 3.25 percentage points since July to 5 percent.
HFA Holdings Ltd., an Australian hedge-fund manager with $5.8 billion in assets, plunged by a record in Sydney trading after the company halted redemptions from three of its funds.Biden says US economy in 'worse shape' than he thought
HFA shares tumbled 5 cents, or 49 percent, to 5 cents at 11:25 a.m. on the Australian stock exchange, their biggest decline since listing in April 2006. The stock has dropped 97 percent this year, cutting its market value to A$22 million ($15 million).
Australian pension funds have lost A$91 billion ($62 billion) in the year to Sept. 30, the equivalent of about 8 percent of the nation�s economic output, as the global credit crisis devalued assets globally, according to Australian Prudential Regulatory Authority data released yesterday.
Vice president-elect Joseph Biden, in his first interview since the November 4 election, told ABC TV that the US economy was in "much worse shape" than he thought and needed a second stimulus package to prevent it from tanking.Obama Expands Recovery Plan, Aims for 3 Million Jobs
He said a second big stimulus package would be needed to keep from "absolutely tanking."
"Every single person I've spoken to agrees with every major economist. There is going to be real significant investment, whether it's 600 billion or more, or 700 billion, the clear notion is, it's a number no one thought about a year ago," he added.
Obama on Friday also said that a "bold" stimulus plan was needed to pull the US economy out of recession.
"I won't give you a number, because we are still making these evaluations," Obama said at a press conference.
"What we've seen, in terms of the evaluation of economists from across the political spectrum, is that we're going to have to be bold when it comes to our economic recovery package."
Obama expressed confidence in his ability to steer the country out of recession but warned a solution to the "daunting" challenges he will inherit when he takes office.
"It will take longer than any of us would like -- years, not months. It will get worse before it gets better," Obama said.
President-elect Barack Obama, faced with a deteriorating economy, is expanding his stimulus package with a goal of creating or saving 3 million jobs over two years, a transition aide said last night.Where'd the bailout money go? Shhhh, it's a secret
The new target, revised from 2.5 million jobs he previously announced, came at the suggestion of Christina Romer, Obama�s pick to head the Council of Economic Advisers, during a Dec. 16 meeting with the president-elect�s top economic advisers, the aide said, speaking on condition of anonymity. Romer said the short, medium and long-term economic forecasts have worsened since Obama outlined the plan on Nov. 22, the aide said.
Obama, who takes office Jan. 20, is making job creation his first priority as government reports suggest unemployment will grow further in the worst economy since World War II.
It's something any bank would demand to know before handing out a loan: Where's the money going?Taxpayers paying for sponsorships on sports teams, stadiums and college bowl games
But after receiving billions in aid from U.S. taxpayers, the nation's largest banks say they can't track exactly how they're spending the money or they simply refuse to discuss it.
"We've lent some of it. We've not lent some of it. We've not given any accounting of, 'Here's how we're doing it,'" said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. "We have not disclosed that to the public. We're declining to."
The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what's the plan for the rest?
None of the banks provided specific answers.
"We're not providing dollar-in, dollar-out tracking," said Barry Koling, a spokesman for Atlanta, Ga.-based SunTrust Banks Inc., which got $3.5 billion in taxpayer dollars.
Under the financial bailout, taxpayers are becoming silent investors in numerous banks and other financial institutions. The funny thing is, I don�t really think we will ever see any return on our investment. Many of the bailout recipients have paid big bucks for naming rights on everything from sports stadiums to soccer teams to college bowl games.Warner threatens YouTube on music
Here�s a quick listing of some of the more notable examples:
Citi Field� Fresh out of double dipping for more federal cash, Citigroup is poised to have the new New York Mets ball park named for them.
AIG � The front of the jersey of Manchester United is emblazoned with a large AIG, the team�s sponsor. However, considering the $150 billion U.S. taxpayers have poured into the company, perhaps �U.S. Taxpayer� would be a more appropriate moniker.
NFL � Several NFL teams are banking on the stadiums, the Carolina Panthers play at Bank of America stadium, and the Baltimore Ravens play at M&T Bank stadium.
College Bowl season kicks off with the EagleBank Bowl, played in the nation�s capital and named for one of the applicants for the financial bailout package. Formerly known as the Citrus Bowl, the Capital One Bowl will be played New Year�s Day in Orlando, FL. Later that same day, the Nittany Lions will be playing in the granddaddy of bowl games, the Rose Bowl Presented by Citi.
Warner Music Group has told YouTube, the video sharing site, to remove music videos by its artists from the site.Mike "Mish" Shedlock
Contract negotiations have ended because Warner wanted more money for having its music on YouTube.
"We simply cannot accept terms that fail to appropriately and fairly compensate recording artists, songwriters, labels and publishers for the value they provide," Warner said in a statement.
Sources close to Warner said the amount it received from YouTube was "staggeringly low".
In a statement on the YouTube blog, the company - which is owned by Google - said: "Every day we work with the music community to license your favourite music for you to use on YouTube. But music licensing is very complicated.
"Sometimes, if we can't reach acceptable business terms, we must part ways with successful partners. For example, you may notice videos that contain music owned by Warner Music Group being blocked from the site."
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