Last Train For the Coast
Howard Katz




The cat is clearly out of the bag concerning the forthcoming bankruptcy of 33 states of the USA.

This moronic New York non-solution to borrow from state pension funds, which now cannot meet their pension requirements, screams bankruptcy. The Administration calling for $50 billion for states and cities would appear to be confirmation of this financial phenomenon. The sign that the financial problems of the states of the USA are going critical and will make the EU situation look like kindergarten, in market terms, will be a stronger euro and stronger gold, sort of like now (9:09 EST). A shift in the recent relationship between gold and the euro would signal that recognition by markets.



State Plan Makes Fund Both Borrower and Lender

By DANNY HAKIMPublished: June 11, 2010 ALBANY -

Gov. David A. Paterson and legislative leaders have tentatively agreed to allow the state and municipalities to borrow nearly $6 billion to help them make their required annual payments to the state pension fund. And, in classic budgetary sleight-of-hand, they will borrow the money to make the payments to the pension fund - from the same pension fund. As word of the plan spread, some denounced it as a shell game and a blatant effort by state leaders to avoid making difficult decisions, like cutting government spending or reducing pension benefits. "It's a classic Albany example of kicking the can down the road," said Harry Wilson, the Republican candidate for comptroller, who holds an M.B.A. from Harvard. Pension costs for the state and municipalities are soaring, a result of enhanced retirement benefits for public employees and the decline in the stock market over the past two years. And, given declines in tax revenue and larger budget shortfalls, the governments are struggling to come up with the money to make the contributions. Under the plan, the state and municipalities would borrow the money to reduce their pension contributions for the next three years, in exchange for higher payments over the following decade. They would begin repaying what they borrowed, with interest, in 2013. More...







This is already happening in the U.S.

South Korea Announces Currency Control Steps



Jim Sinclair’s Commentary
33 states of the USA are headed for a stone wall at 200mph.
QE to infinity.


Illinois suffers new credit rating blow By Nicole Bullock in New York and Hal Weitzman in Chicago Published: June 12 2010 00:10 Last updated: June 12 2010 00:10
Illinois’ unwillingness to tackle its budget woes prompted Fitch on Friday to become the second agency in a week to downgrade the cash-strapped state, which is likely to push up the state’s borrowing costs as it prepares to issue new debt.
Fitch lowered the rating on Illinois’ general obligation bonds from “A+” to “A” and assigned them a negative outlook, signalling it could downgrade the state further. The move came a week after Moody’s moved the state’s general obligation rating to A1 from Aa3. Standard & Poor’s rates Illinois “A+”.
“Something significant needs to happen on either side of the budget – either cutting spending or raising revenues,” said Karen Krop of Fitch. “Now they are relying on deficit borrowing.”
Ms Krop said Illinois has budgeted to raise more than $8bn with bonds in the current and next fiscal years. “There doesn’t seem to be an endgame,” she said.
Illinois’ budget situation is among the worst in the US. The state faces a $13bn budget deficit for the financial year that begins on July 1. More than $6bn of that is unpaid bills from the current year, which have prompted state prisons to let out inmates early, and the state to cut 20,000 teachers and staff.
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Jim Sinclair’s Commentary
QE to infinity is becoming a global problem.
This is a camouflaged contribution not that much different in it economic implications than TARP.


India to inject $1.32 billion to 5 state-run banks
June – 12 (Reuters) – The Indian government will inject 62.11 billion rupees into five state-run banks to help meet their capital and lending needs, a government statement said on Saturday.
The support would be given to Bank of Maharashtra (BMBK.BO), Central Bank of India (CBI.BO), IDBI Bank (IDBI.BO), UCO Bank (UCBK.BO) and Union Bank of India (UNBK.BO), the statement said.
"These Banks would be able to leverage this capital and lend an additional approximate amount of Rs.77,637 crore (776.37 billion rupees) to the productive sectors of the economy giving a push to all round economic activity besides paying additional dividends and tax revenues to the Government," it said. ($1=46.84 rupees)
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Jim Sinclair’s Commentary
This type of soft thinking has precedent in meat animal slaughters. It was stupid then and moronic now.


Economists consider tearing down homes to protect housing market By Elizabeth Razzi Saturday, June 12, 2010
Douglas Duncan, vice president and chief economist for Fannie Mae, raised a provocative idea at a recent meeting of real estate journalists in Austin: Some of the misconceived housing developments built during the boom years might have to be torn down because they don’t make financial sense.
Duncan agreed with Stan Humphries, chief economist at Zillow.com, who warned that a "tremendous shadow inventory" of homes is poised to come on the market. That includes future foreclosures (due to negative equity and continued high unemployment), homes that will end up in foreclosure after failed loan modifications, and homes from what he calls "sideline sellers" who have been biding their time until the housing market improves. Humphries said home prices won’t bottom out until the third quarter of this year, leading to "the second phase of the housing recession": below-normal price appreciation for several years. (The long-term appreciation norm is 3 to 5 percent per year.)
Said Duncan: "Some of that shadow inventory could have to be torn down. It was not economically viable when it was put in place." That includes some boom-time developments in California’s Inland Empire and Central Florida. Duncan said people might find that the cost of sustaining their lifestyle in some developments — including high transportation costs to far-away jobs — is greater than the cost of the home. That could wipe out demand.
Who would pay for tear-downs? What would happen to the people who have hung on to their homes despite the foreclosures all around them? All are unanswered questions.
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They will print money till we run out of trees...

Congress considers more stimulus as economy shows signs of slowing.

Dallas Fed Chairman: White House (& Congress) "Dead Wrong" on Financial Reform. David's comment: "Talk about dissension in the ranks, I think this would qualify. I’m surprised Mr. Fisher hasn’t been replaced yet."

Japan's Prime Minister Naoto Kan warns of 'collapse' under debt pile.

The Drudge Report: Euro to hit dollar parity in 2011, if still exists: analyst

Economist Predicts Greek Default in August

Report: Employers to See 2011 Medical Costs Jump

"A weed is a plant that has mastered every survival skill except for learning how to grow in rows." - Doug Larson