The Federal reserve Bank of New York has just started a monthly report on the U.S. economy.
Here is the first 18 page report for the month of June.
Update:
Here is the July report.
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Tuesday, June 23, 2015
Chicago Public Schools Bond Fire
We have recently brought the problems of the City of Chicago and the Chicago Board of Education budgeting, financing, and outstanding bonds to readers attention through three articles by Kristi Culpepper.
Since then the Illinois General Assembly fortunately failed to pass a property tax freeze, passed a delay program for Chicago pension funding payments (which has not yet been signed into law), and the City of Chicago has authorized the issuance of $1.1 billion in GO fixed rate bonds to be used to restructure short term outstanding debt and pay other current obligations, including $75 million in back police pay. The City of Chicago had earlier issued an over subscribed fixed rate bond issuance that allowed it to convert $918 million in variable rate bonds to fixed rate bonds.
The Chicago Board of Education is, with the help of a former banker as Board President, in far worse financial condition with variable rate debt which lacks the backing a credit facility, a need to terminate its swap payments by probably depleting its $174 million debt service stabilization fund, the CBOE is looking at a $350 million budgeting shortfall and the school system could be out of cash as early as this summer, and the CBOE looking for a $200 million line of credit and $935 million to address its next year deficit.
Kristi Culpepper covers the CBOE bond risks is far more detail in this new article which you should read. She does an outstanding analysis.
Update:
The legislation to delay pension funding is being held hostage to the Illinois budget impasse between the governor and the General Assembly with the State without a budget for over a month while the Governor insists on diminishing collective bargaining rights. Meanwhile, the Chicago Public School System has pulled its one year contract offer demanding a multi-year contract and that teachers pay full pension costs with no School system contribution, which may precipitate another teacher's strike.
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Since then the Illinois General Assembly fortunately failed to pass a property tax freeze, passed a delay program for Chicago pension funding payments (which has not yet been signed into law), and the City of Chicago has authorized the issuance of $1.1 billion in GO fixed rate bonds to be used to restructure short term outstanding debt and pay other current obligations, including $75 million in back police pay. The City of Chicago had earlier issued an over subscribed fixed rate bond issuance that allowed it to convert $918 million in variable rate bonds to fixed rate bonds.
The Chicago Board of Education is, with the help of a former banker as Board President, in far worse financial condition with variable rate debt which lacks the backing a credit facility, a need to terminate its swap payments by probably depleting its $174 million debt service stabilization fund, the CBOE is looking at a $350 million budgeting shortfall and the school system could be out of cash as early as this summer, and the CBOE looking for a $200 million line of credit and $935 million to address its next year deficit.
Kristi Culpepper covers the CBOE bond risks is far more detail in this new article which you should read. She does an outstanding analysis.
Update:
The legislation to delay pension funding is being held hostage to the Illinois budget impasse between the governor and the General Assembly with the State without a budget for over a month while the Governor insists on diminishing collective bargaining rights. Meanwhile, the Chicago Public School System has pulled its one year contract offer demanding a multi-year contract and that teachers pay full pension costs with no School system contribution, which may precipitate another teacher's strike.
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Friday, June 5, 2015
Biofuels Subsidies Raise Global Food Prices
On my radio show, I repeatedly discussed the subject of biofuels subsidies which divert corn grain products from the food supply to motor vehicle fuels. Tim Taylor has a new article which nails the resulting global food price increases and how biofuels are economically inefficient and counter productive as a policy.
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Getting Bank Lending, Capital Flight, and Target2 Payments Right Part 2
Frances Coppola has published an excellent article on Hans Werner Sinn's economic mistakes which compliments my recent article on the same subject, although my article referenced a recent Bank of England working paper on how bank lending works, which is not getting sufficient attention.
Sinn has been consistently confused and wrong.
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Sinn has been consistently confused and wrong.
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Tuesday, June 2, 2015
Dysfunctional Politics & the Beginning Depression
Here is a draft post from 2009/early 2010 on dysfuntional politics and economic policy and potential social upheaval and protests in countries. How prescient was it?
We have noted in past radio shows and prior posts how the FED appears to be using unemployment to hold down inflation. We have noted that the "Recovery" appears to be focused solely on the return of the status quo prior to the Financial Crisis of the financial system and the resumption of risky but profitable business trading. Volcker has commented on the fact that no economy, which has 30% of its GDP from synthetic financial services, can continue without risking another financial crisis. In fact, we have noted the "Recovery" appears to be setting the stage for the very same financial crisis.
In a long post Edward Harrison has written on his belief that the Recession is over but the Depression has just begun. His argument is essentially that the political process, of which Congressional actions are only one example, has created a dysfunctional economic debate, economic recovery policies, and a divisive political debate which serves the special interests but not the Nation. He goes into some detail on what it means globally as well as nationally and what needs to be addressed. While I do not entirely agree with him, his arguments are very worthy of consideration for anyone who is desirous of dealing with the economic conditions as they exist.
It is well known that I believe Geithner and Summers need to go, because they serve Wall Street more than the Nation. Washington'sblog has been very good at delineating Summer's insistence on his way or no way to the point where Volcker is now in Europe speaking for financial reform because Summers has muzzled and isolated him in the United States. Still, there is opposition loyal to President Obama which are attempting to debate and contradict him, however, dangerous that may be. Despite what Summer's says, unemployment will continue to rise and it cannot be ignored. Read the post "Larry Summer's is like the guy who yells the Sun really does revolve around the Earth ..." and sharpen your critical skills.
In past radio shows we have talked about food shortages and riots, economic protests, and even a Joint Special Operations University faculty member's speech at a former intelligence officers conference about the possibilities that prolonged economic crisis could cause social upheaval in countries. My first career was intended to be military and I still do extensive readings on military subjects including papers and publications at the War College and the JSOU. It again appears that there will be food and commodity shortages with increasing prices in 2010. There are two scenarios which could evolve with one being demonstrations, riots, and perhaps revolution in some parts of the world and the other being that the population will become so demoralized by their treatment from the elite who run their governments that they will be passive and do what they are told. Here is one recent article that lists a variety of sources from the establishment and from the fringe for your critical review. For the argument that people have been broken and demoralized, although there are more scholarly books which have been published over that last 60 years.
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We have noted in past radio shows and prior posts how the FED appears to be using unemployment to hold down inflation. We have noted that the "Recovery" appears to be focused solely on the return of the status quo prior to the Financial Crisis of the financial system and the resumption of risky but profitable business trading. Volcker has commented on the fact that no economy, which has 30% of its GDP from synthetic financial services, can continue without risking another financial crisis. In fact, we have noted the "Recovery" appears to be setting the stage for the very same financial crisis.
In a long post Edward Harrison has written on his belief that the Recession is over but the Depression has just begun. His argument is essentially that the political process, of which Congressional actions are only one example, has created a dysfunctional economic debate, economic recovery policies, and a divisive political debate which serves the special interests but not the Nation. He goes into some detail on what it means globally as well as nationally and what needs to be addressed. While I do not entirely agree with him, his arguments are very worthy of consideration for anyone who is desirous of dealing with the economic conditions as they exist.
It is well known that I believe Geithner and Summers need to go, because they serve Wall Street more than the Nation. Washington'sblog has been very good at delineating Summer's insistence on his way or no way to the point where Volcker is now in Europe speaking for financial reform because Summers has muzzled and isolated him in the United States. Still, there is opposition loyal to President Obama which are attempting to debate and contradict him, however, dangerous that may be. Despite what Summer's says, unemployment will continue to rise and it cannot be ignored. Read the post "Larry Summer's is like the guy who yells the Sun really does revolve around the Earth ..." and sharpen your critical skills.
In past radio shows we have talked about food shortages and riots, economic protests, and even a Joint Special Operations University faculty member's speech at a former intelligence officers conference about the possibilities that prolonged economic crisis could cause social upheaval in countries. My first career was intended to be military and I still do extensive readings on military subjects including papers and publications at the War College and the JSOU. It again appears that there will be food and commodity shortages with increasing prices in 2010. There are two scenarios which could evolve with one being demonstrations, riots, and perhaps revolution in some parts of the world and the other being that the population will become so demoralized by their treatment from the elite who run their governments that they will be passive and do what they are told. Here is one recent article that lists a variety of sources from the establishment and from the fringe for your critical review. For the argument that people have been broken and demoralized, although there are more scholarly books which have been published over that last 60 years.
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