Actual finance blog

The federal budget deficit is on pace to break the $1 trillion mark for a third straight year, putting pressure on Congress and the Obama administration to come up with a plan to rein in government spending.

The deficit through the first eight months of this budget year totaled $927.4 billion, the Treasury Department said Friday. Three years ago that would have ranked as the highest ever for a full year. Instead, it is running almost even with last year’s pace, when the deficit grew to $1.29 trillion, and behind the 2009 deficit that hit a record $1.41 trillion.

The imbalance for May was $57.6 billion, compared to $135.9 billion for the same month last year. But much of that improvement came from a $45 billion write down in the estimated cost of the financial bailout program.

Soaring deficits have prompted Republicans to insist on deep spending cuts before agreeing to raise the $14.3 trillion borrowing limit, which the government hit in May.

A new Washington Post-ABC News poll showed that a large majority of Americans believe the country could suffer serious harm if Congress fails to broaden the government’s borrowing authority. But barely half of those polled said they support such an increase.

The White House and Democrats want to trim the deficit through spending cuts and also by ending tax cuts for the wealthy, which were first passed when President George W. Bush was in office and later extended by Obama.

Republicans reject that approach, saying it amounts to a tax increase. Their plan would focus exclusively on cutting spending. They have also proposed further tax cuts for the wealthiest Americans.

The government had a surplus of $127 billion in 2001, the year President George W. Bush took office. It was projected to run surpluses totaling $5.6 trillion over the next decade.

But by 2002, the country was back in the red. The deficits grew after Bush won approval for broad tax cuts, pushed a major drug benefit program for seniors _ which wasn’t offset with revenue to pay for it _ and the invasions of Iraq and Afghanistan were launched.

In 2008, Bush’s last full year in office, the deficit had grown to $454.8 billion, a record at the time. And when the economy soured, it jumped into the $1 trillion-plus range.

The Bush administration pushed a $700 billion bailout program in 2008 to rescue the nation’s banks, financial firms and automakers. The following year, the Obama administration continued the bailouts and also backed a $787 billion stimulus program to boost the economy.

Higher spending for unemployment insurance and food stamps, and the sharp contraction in tax revenues, also widened the deficit. And it grew even more this year after Obama and congressional Republicans signed off on a deal that extended the Bush tax cuts for two years and also reduced Social Security payroll taxes for one year.

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A judge has appointed a receiver to take over management of the Suson Pines Apartments in South St. Louis County. It’s the third residential property owned by Gannon International placed in receivership this year.

MLP Investments took over management of Suson Pines after a federal judge approved appointing a receiver on June 2.

PNC Bank sought the appointment of a receiver in connection to a loan it made to an affiliate of Creve Coeur-based Gannon that is secured by Suson Pines. In a federal lawsuit, PNC alleges Gannon is in default on a promissory note and owes more than $13 million.

The Suson Pines Apartments at 5625 Suson Hills Drive has 336 units on 36 acres business cards.  

PNC filed a lawsuit in April against several affiliates of Gannon International and its chief executive, William Franke, alleging Gannon is in default on loans secured by real estate. MLP Investments has also been appointed receiver to take over management of two other Gannon-owned properties: Springwood Apartments in Bel-Ridge and the Aspen Cove Townhomes in Ellisville. PNC alleges Gannon is in default on a $5.7 million loan secured by Springwood and $272,438 for Aspen Cove.

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The impact of a two-month strike at a big Winnipeg manufacturer of aircraft parts is escalating and spilling into southern Ontario.

About 100 members of the Canadian Auto Workers held up employees and production on Thursday morning at a Magellan Aerospace operation in Kitchener and the union promises similar actions at other company plants to increase pressure for a settlement of the Winnipeg strike.

The Canadian dollar was higher against the American currency Wednesday amid falling commodity prices and positive economic news.

The loonie rose 0.3 of a cent to 104.72 cents U.S. following a similar sized gain on Tuesday.

Higher commodities, particularly oil, are supportive of the currency. But oil and metals were lower Wednesday amid mixed signs of energy demand in the U.S. while metal prices declined on worries about a slowing of the Chinese economy.

South Africa’s jobless rate, the highest of 61 countries tracked by Bloomberg, increased to 25 percent in the first quarter as Africa’s biggest economy failed to create employment for new job-seekers.

The unemployment rate rose from 24 percent in the fourth quarter, Statistics South Africa said in a report released in the capital, Pretoria, today. The number of people in work fell by 14,000 to 13.1 million.

Jobs were cut in the agriculture and retail industries as employers reduced their workforce at the end of harvests and the year-end holiday period. While economic growth has picked up, reaching an annualized 4.4 percent in the fourth quarter, that wasn’t sufficient to create jobs for school-leavers seeking employment for the first time.

“Usually in the first quarter you see new entrants coming into the labor market, so you see unemployment going up,” Peter Buwembo, acting executive manager for labor statistics, told officials in Pretoria today. “The informal sector is turbulent.”

Employment in informal, non-farming industries dropped by 46,000 in the first quarter, while jobs in agriculture slumped by 24,000, the statistics agency said. The formal sector added 56,000 jobs, with manufacturing employment increasing by 20,000 and financial services jobs rising by 37,000.

“The formal sector has seen recovery,” Buwembo said. “It is starting to grow.”

Jobs Target

The government has estimated it needs economic growth of at least 7 percent a year over the next decade to meet a goal of slashing the jobless rate to 15 percent. Finance Minister Pravin Gordhan estimated in his budget speech in February the economy will expand 3.4 percent this year.

Joblessness has fueled inequality and crime and led to violent protests in townships across Johannesburg last year. President Jacob Zuma is under pressure from labor union allies to speed up job creation as the ruling African National Congress contests municipal elections on May 18.

The weak recovery in the jobs market may prompt the Reserve Bank to delay raising interest rates until later in the year, said Peter Attard Montalto, an economist at Nomura Plc in London. The central bank has kept its benchmark interest rate at 5.5 percent this year, citing rising fuel and food costs as the biggest risks to inflation.

The data “certainly reinforces our view of rate hikes later rather than sooner,” Montalto said in an e-mail today.

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As Japan’s prime minister visited tsunami-ravaged coastal areas for the first time Saturday, frustrated evacuees complained that the government has been too focused on the nuclear crisis that followed the massive wave.

Nearly every day some new problem at the stricken Fukushima Dai-Ichi nuclear plant commands officials’ attention _ Saturday it was a newly discovered crack in a maintenance pit that is leaking highly radioactive water into the sea.

“The government has been too focused on the Fukushima power plant rather than the tsunami victims. Both deserve attention,” said 35-year-old Megumi Shimanuki, who was visiting her family at a community center converted into a shelter in hard-hit Natori, about 100 miles (160 kilometers) from Rikuzentakata, where Prime Minister Naoto Kan stopped Saturday. More than 165,000 people are still living in shelters.

Kan’s government has been frantically working with Tokyo Electric Power Co. to solve the crisis at the nuclear complex, which has been spewing radioactivity since cooling systems were disabled by the 9.0-magnitude earthquake that preceded the tsunami on March 11.

On Saturday, nuclear safety officials announced that they had found water with levels of radioactive iodine far above the legal limit leaking from an 8-inch (20-centimeter) crack in the maintenance pit into the Pacific Ocean.

They said the crack was likely caused by the quake and may be the source of radioactive iodine that started showing up in the ocean more than a week ago.

People living within 12 miles (20 kilometers) of the plant have been evacuated and the radioactive water will quickly dissipate in the sea, but it was unclear if the leak posed any new danger to workers. People have been uneasy about seafood from the area despite official reassurances that the risk of contamination is low.

The cracked pit houses cables for one of the six nuclear reactors, and the concentration of radioactive iodine was the same as in a puddle of contaminated water found outside the reactor earlier in the week. Because of that, officials believe the contaminated water is coming from the same place, though they are not sure where.

A nuclear plant worker who fell into the ocean Friday while trying to board a barge carrying water to help cool the plant did not show any immediate signs of being exposed to unsafe levels of radiation, nuclear safety officials said Saturday, but they were waiting for test results to be sure.

Radiation worries have compounded the misery for people trying to recover from the tsunami. Nearly 25,000 are feared dead _ 11,800 confirmed _ and in addition to those living in shelters, tens of thousands more still do not have electricity or running water.

Kan’s visit Saturday to Rikuzentakata was his first to survey damage in one of the dozens of villages, towns and cities slammed by the tsunami.

“The government fully supports you until the end,” Kan told 250 people at an elementary school serving as an evacuation center quick payday loan. He earlier met with the mayor, whose 38-year-old wife was swept away.

He bowed his head for a moment of silence in front of the town hall, one of the few buildings still standing, though its windows are blown out and metal and debris sit tangled out front.

Kan also stopped at the sports complex being used as a base camp for nuclear plant workers, who have been hailed as heroes for laboring in dangerous conditions. He had visited the nuclear crisis zone once before, soon after the quake.

Workers have been reluctant to talk to the media about what they are experiencing, but one who spent several days at the plant described difficult conditions in an anonymous interview published Saturday in the national Mainichi newspaper.

When he was called in mid-March to help restore power at the plant, he said he did not tell his family because he did not want them to worry. But he did tell a friend to notify his parents if he did not return in two weeks.

“I feel very strongly that there is nobody but us to do this job, and we cannot go home until we finish the work,” he said.

Early on, the company ran out of full radiation suits, forcing workers to create improvised versions of items such as nylon booties they were supposed to pull over their shoes.

“But we only put something like plastic garbage bags you can buy at a convenience store and sealed them with masking tape,” he said.

He said the tsunami littered the area around the plant with dead fish and sharks, and the quake opened holes in the ground that tripped up some workers who could not see through large gas masks. They had to yell at one another to be heard through the masks.

“It’s hard to move while wearing a gas mask,” he said. “While working, the gas mask came off several times. Maybe I must have inhaled much radiation.”

Radiation is also a concern for people living around the plant. In the city of Koriyama, Tadashi and Ritsuko Yanai and their 1-month-old baby have spent the past three weeks in a sports arena converted into a shelter. Baby Kaon, born a week before the quake, has grown accustomed to life there, including frequent radiation screenings, but his parents have not. Their home is fine, but they had to leave because it is six miles (10 kilometers) from the nuclear plant.

Asked if he had anything he would like to say to the prime minister, the 32-year-old father paused to think and then replied: “We want to go home. That’s all, we just want to go home.”

In Natori, where about 1,700 people are living in shelters, others had stronger words for Kan. Toru Sato, 57, lost both his wife and his house in the tsunami and said he was bothered that Kan’s visit to the quake zone was so brief _ about a half day.

“He’s just showing up for an appearance,” Sato said. “He should spend time to talk to various people, and listen to what they need.”

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While Japan undergoes the agony of a nuclear accident, the future of Canada

Sirens wailed Friday along a devastated coastline to mark exactly one week since an earthquake and tsunami triggered a nuclear emergency, and the government acknowledged it was slow to respond to the disasters that the prime minister called a “great test for the Japanese people.”

The admission came as Japan welcomed U.S. help in stabilizing its overheated, radiation-leaking nuclear complex and raised the accident level for the crisis, putting it on a par with the 1979 Three Mile Island accident in Pennsylvania.

Nuclear experts have been saying for days that Japan was underplaying the severity of the problems at the Fukushima Dai-ichi power plant.

Still, Prime Minister Naoto Kan vowed that the disasters would not defeat his country.

“We will rebuild Japan from scratch,” he said in a nationally televised address, comparing the work with the country’s emergence as a global power from the wreckage of World War II.

“In our history, this small island nation has made miraculous economic growth thanks to the efforts of all Japanese citizens. That is how Japan was built,” he said.

Last week’s 9.0 quake and tsunami set off a cascade of problems by knocking out power to cooling systems at the nuclear plant on the northeast coast. Since then, four of Fukushima’s six reactor units have seen fires, explosions or partial meltdowns.

The unfolding disaster has left more than 6,900 dead _ exceeding the 1995 earthquake in Kobe, Japan, that killed more than 6,400. Most officials, however, put estimates of the dead from last week’s disasters at more than 10,000.

It also has led to power shortages, factory closures, hurt global manufacturing and triggered a plunge in Japanese stock prices.

Chief Cabinet Secretary Yukio Edano admitted that Japan was not prepared for what happened.

“The unprecedented scale of the earthquake and tsunami that struck Japan, frankly speaking, were among many things that happened that had not been anticipated under our disaster management contingency plans,” he said.

“In hindsight, we could have moved a little quicker in assessing the situation and coordinating all that information and provided it faster,” he said.

The twin disasters have officially left more than 6,900 people dead and more 10,700 missing. Emergency crews are facing two challenges: cooling the nuclear fuel in reactors where energy is generated and cooling the adjacent pools where thousands of used nuclear fuel rods are stored in water.

Both need water to stop their uranium from heating up and emitting radiation, but with radiation levels inside the complex already limiting where workers can go and how long they can stay, it’s been difficult to get enough water inside.

Water in at least one fuel pool _ in the complex’s Unit 3 _ is believed to be dangerously low. Without enough water, the rods may heat further and spew radiation.

“Dealing with Unit 3 is our utmost priority,” Edano told reporters.

At the stricken complex, military fire trucks sprayed the reactor units Friday for a second day, with tons of water arcing over the facility in desperate attempts to prevent the fuel from overheating and emitting dangerous levels of radiation.

“I think they are racing against the clock,” Yukiya Amano, the head of the U.N.’s International Atomic Energy Agency said of the efforts to cool the complex, after arriving in Tokyo.

Japan’s nuclear safety agency ratcheted up its rating for the Fukushima crisis, reclassifying the nuclear accident from Level 4 to Level 5 on a seven-level international scale. The International Nuclear Event Scale defines a Level 4 incident as having local consequences and a Level 5 as having wider consequences. The 1986 Chernobyl disaster was rated as 7.

While nuclear experts have been saying for days that Japan was underplaying the crisis’ severity, Hidehiko Nishiyama of the nuclear safety agency said the rating was raised when officials realized that at least 3 percent of the fuel in three of the complex’s reactors had been severely damaged. That suggests those reactor cores have partially melted down and thrown radioactivity into the environment.

While Tokyo has welcomed international help for the natural disasters, the government initially balked at assistance with the nuclear crisis. That reluctance softened as the problems at Fukushima multiplied.

On Friday, though, Edano said Tokyo was asking Washington for help and that the two were discussing the specifics of the problem guaranteed personal loan approval.

The U.S. said its technical experts are now exchanging information with officials from Tokyo Electric Power Co., which owns the plant, and with government agencies.

A U.S. military fire truck was also used to help spray water into Unit 3, according to air force Chief of Staff Shigeru Iwasaki, though the vehicle was apparently driven by Japanese workers. The Tokyo Fire Department said five of their trucks have joined in dousing operations at the unit.

The U.S. has also conducted overflights of the reactor site, strapping sophisticated pods onto aircraft to measure airborne radiation, U.S. officials said. Two tests conducted Thursday gave readings that U.S. Deputy Energy Secretary Daniel B. Poneman said reinforced the U.S. recommendation that people stay 50 miles (80 kilometers) away from the Fukushima plant.

Low levels of radiation have been detected well beyond Tokyo, which is 140 miles (220 kilometers) south of the plant, but hazardous levels have been limited to the plant itself. Still, the crisis has forced thousands to evacuate and drained Tokyo’s normally vibrant streets of life, its residents either leaving town or staying in their homes.

The Japanese government has been slow in releasing information on the crisis. In a country where the nuclear industry has a long history of hiding safety problems, this has left many people, in Japan and among governments overseas, confused and anxious.

In the disaster zone, tsunami survivors, rescue workers and ordinary people observed a minute of silence Friday at 2:46 p.m. _ the moment a week ago when the quake struck. Many were bundled up against the cold. As a siren blared, they lowered their heads and clasped their hands in prayer.

In the largely destroyed town of Hirota, 70-year-old Tetsuko Ito wept as she hugged an old friend she met at a refugee center. One of her sons was missing and another had been evacuated from his home near the Fukushima complex.

“Every day is terrifying. Is there going to be an explosion at the reactor? Is there going to be word my other son is dead?” she said.

She searched for her missing son for three days, then her car ran out of gas.

“I think he’s dead. If he was alive, he would have contacted someone, somehow,” she said. “My other son is alive, but we don’t know if there’s going to be a nuclear explosion.”

If the situation gets worse in Fukushima, she said her son and his family will have to live at her already crowded house, which escaped the tsunami.

“It’s strange when this destroyed area is a place someone would consider safe,” she said.

Police said more than 452,000 people made homeless by the quake and tsunami were staying in schools and other shelters, as supplies of fuel, medicine and other necessities ran short. Both victims and aid workers appealed for more help as the chances of finding more survivors dwindled.

About 343,000 Japanese households still do not have electricity and about 1 million have no water.

At times, Japan and the U.S. _ two very close allies _ have offered starkly differing assessments over the dangers at Fukushima. U.S. Nuclear Regulatory Commission Chairman Gregory Jazcko said Thursday that it could take days and “possibly weeks” to get the complex under control. He defended the U.S. decision to recommend a 50-mile (80-kilometer) evacuation zone for its citizens, wider than the 12-mile (20-kilometer) band Japan has ordered.

Crucial to the effort to regain control over the Fukushima plant is laying a new power line to the complex, allowing operators to restore cooling systems. Tokyo Electric missed a deadline late Thursday, said nuclear safety agency spokesman Minoru Ohgoda.

Power company official Teruaki Kobayashi warned that experts will have to check for anything volatile to avoid an explosion when the electricity is turned on.

“There may be sparks, so I can’t deny the risk,” he said.

Even once the power is reconnected, it is not clear if the cooling systems will still work.

The storage pools need a constant source of cooling water. Even when removed from reactors, uranium rods are still extremely hot and must be cooled for months, possibly longer, to prevent them from heating up again and emitting radioactivity.

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A group of local residents opposed to expansion plans for the Creemore Springs brewery have taken their fight to the Ontario Municipal Board.

The expansion would triple capacity of the brewery to 150,000 hectolitres per year. It

Stocks appear poised for further gains Monday, after a week in which major indexes reached levels last seen more than two years ago.

Stronger earnings and economic reports helped both the Dow Jones industrial average and the S&P 500 index surpass significant milestones last week. The Dow closed above 12,000 and the S&P 500 index above 1,300 for the first time since 2008.

This week is light on economic data, but plenty of companies will release quarterly earnings.

Ahead of the opening bell Monday, toy maker Hasbro reported a drop in quarterly profit. But Hasbro’s results still beat analysts’ expectations. Loews Corp. said earnings rose 16 percent, even as revenue slipped slightly. Costs fell 5.8 percent.

Lorillard said profits rose 7 percent as the maker of Newport and Maverick brands sold more cigarettes at higher prices. Lorillard rose 4 percent in pre-market trading.

Online company AOL Inc. said early Monday that it will buy the Huffington Post, an online news and opinion website, for $315 million payday loans. Arianna Huffington, the site’s co-founder and political pundit, will join AOL’s management team as part of the deal.

In the afternoon, the Federal Reserve will give its monthly snapshot of Americans’ borrowing. Private economists forecast that consumer borrowing rose at an annual rate of $2.5 billion in December, nearly double the rate of the previous month.

Dow Jones industrial average futures are up 25 points, or 0.2 percent, at 12,070. S&P 500 futures are up 4, or 0.3 percent, at 1,310. Nasdaq 100 futures are up 3, or 0.1 percent, at 2,340.

Stocks made solid gains last week: The Dow rose 2.3 percent and the S&P 500 2.7 percent. Both indexes are trading at levels last seen in June 2008, three months before the worst of the financial crisis.

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