Huge debt at all levels is a crisis that plagues global economies at all levels, from the individual to the nation state, and all are under the influence of the deflationary black hole that's sucking everyone and everything into it... Here are some more bad news bears headlines...
"San Bernardino, California, filed for municipal bankruptcy after disclosing a $46 million shortfall in the city’s budget, the third California city to seek court protection from creditors since June 28.
California cities from the Mexican border to San Francisco Bay are confronting rising pension costs as they contend with growing unemployment and declining property- and sales-tax revenue. The costs stem from decisions made when stock markets were soaring and retirement funds were running surpluses...
Pension liabilities in the California cities of Fairfield, Inglewood, Pomona, San Bernardino, Stockton and Vallejo rose 6 percent to $4.3 billion for the year ending June 30, 2010, from $4.1 billion in 2009, according to the most recent data available from the California Public Employees’ Retirement System. In the northern California municipality of Fairfield, near the Napa Valley winegrowing region, 18 percent of the general-fund budget goes toward pension costs, up from 14 percent in fiscal 2008, said David White, the deputy city manager."
"New orders for factory goods unexpectedly fell in the United States in June, a fresh sign that the slowdown in the country’s manufacturing sector will probably stretch into the second half of the year.
The Commerce Department said on Thursday that new orders for manufactured goods dropped 0.5 percent during the month. Economists in a Reuters poll had forecast a rise of 0.5 percent.
American factories appear to be one of the sectors most vulnerable to Europe’s festering debt crisis. The trend in American manufacturing has appeared softer and has added to concerns the economic recovery is losing steam. The decline in new orders in June will probably mean softer output down the road, which could weigh on economic growth."
"Major automakers reported U.S. auto sales for July that were somewhat softer than expected as high U.S. unemployment and weak consumer confidence kept would-be buyers on the sidelines.
Industry sales were on track to jump 9 percent in July to 1.1 million vehicles, less than the growth of 10 percent or more expected by many analysts. Kelley Blue Book estimated that the annual sales pace for the month was on track to fall just shy of 14 million. Analysts expected the sales rate to be 14 million.
July auto sales showed the continuation of what has been a slowdown in growth since the late spring. Sales early this year shot past even the most bullish forecasts, but starting in May, the rate of improvement started to weaken."
"The Spanish economy continues its adjustment process. But the results in terms of deficit reduction, remain meager. Very meager. To the extent that in the first half of the year-on-national accounts, government spending-which really is committed to spend but have not been paid, have grown by 17.6% over the same period of 2011 .
Or what is the same, the central government already has obligations amounting to 87.967 million. The resources, however, only amounted to 44.879 million (-4.1%), which means that during the first six months of the year the state has spent almost double."
"* Spreading euro crisis plagues global economies
* Euro zone factory PMI hits lowest since June 2009
* China official PMI slips to eight-month low
* U.S. manufacturing contracts for second straight month - ISM
* Hopes fading for dramatic central bank action this week"
"A friend of mine has a business that manufactures and supplies specialized industrial equipment where:
- his customer base is largely comprised of American and Canadian Fortune 500 multi-plant companies controlled by head offices that operate in the chemicals, food, mining, and plastics sectors;
- the price of each of the principal units he sells averages about Cdn$75,000;
- there is both a large amount of knowhow and a proprietary component to the equipment sold;
- individual orders (comprising multiple units and related ‘systems’) can range up to Cdn$500,000 and higher;
- when in place and operating, the units and accompanying software typically have a payback of less than 18 months and usually a much shorter payback time than that; and,
- a portion of that payback relates to labour savings, as installation typically results in the purchaser plant requiring at least one less worker per unit installed.
My friend recently told me that he is increasingly running into the following problem:
- his typical project is analyzed for return on investment at the plant level, but must then be approved at head office;
- he is finding that even where production efficiencies and plant saving are obvious, he is having difficulty – particularly with persons employed in plants in the United States – getting them to forward their ‘approved analysis’ to their head offices for final approval; and,
- he has been told in some instances ‘in so many words’ by plant personnel that they are ‘concerned for their jobs’ in the current economic environment.
To the extent this is a fair summary of what I was told, clearly there is ‘negative economic circularity’ at work (no pun intended) here."
"The letter from Bank of America Home Loans got right to the point. “We are pleased to inform you that we have approved your Home Equity Account for participation in a principal forgiveness program offered as a result of the Department of Justice and State Attorneys General global settlement with major mortgage servicers.” In the letter, which I obtained from an anti-foreclosure activist, Bank of America offered the homeowner full forgiveness of their entire home equity loan balance of over $177,000. But then Paragraph 5 came with an ominous warning: “Please be aware that we are required to report the amount of your cancelled principal debt to the Internal Revenue Service.”
Under current law, a principal reduction like this would be exempted from tax liability. However, that law, the Mortgage Forgiveness Debt Relief Act, expires at the end of the year, and after that, any mortgage debt forgiveness provided to a borrower will count as gross income for tax purposes, potentially costing millions of families several billion dollars. In the above case, the borrower would be required to pay taxes on the entire $177,000 amount forgiven by the bank, as if it were earned income. And that’s money that struggling homeowners simply don’t have."