Streams

Financial 411: An Alternate View of State Fiscal Problems

Thursday, January 20, 2011

Morgan Stanley Reports Higher Earnings

The end of last year was kind to Morgan Stanley. Earnings rose 60 percent in the last three months of 2010, propelled in part by the firm's debt underwriting business. Investors hailed the news as a sign that the bank has regained its footing following the financial crisis. Morgan Stanley's results stand in contrast to Goldman Sachs, which yesterday reported lower fourth quarter revenues.

2010 Home Sales Fall to Lowest Level in 13 Years

The number of people who bought previously owned homes fell to the lowest level in 13 years. The National Association of Realtors said fewer than 5 million homes changed hands in 2010. Spokesman Walter Molony said that means there are plenty of great deals out there.

"Because we still have elevated levels of inventory, we're expecting prices to hold pretty even," he said. He points out that home sales picked up significantly in December.

City Unemployment Rate Drops to 8.9 Percent

New York City's unemployment rate fell below nine percent for the first time in 19 months. It was 8.9 percent in December, down from 9.1 percent in November. 

Among the many New Yorkers currently looking for work is Danny Dominguez of the Bronx, who recently lost his job as a court officer. Before that, he worked as a supervisor in a mailroom.

On Thursday, at a job fair, he reflected on his journey. "I went from a great job, to a greater job, and now I'm at a job fair," Dominguez said. "So it's kind of tough for me." He said he hopes his first job fair will be his last.

Markets

Stocks declined today. The Dow was off two points, ending at 11,823. The Nasdaq closed at 2,704, with a loss of 21 points. The S&P 500 also gave up two points, to close at 1,280.

Another View of State Fiscal Crises

For months we've been hearing about the fiscal problems states and local governments across the country are facing. Civil servants have been getting a lot of the blame because of generous health and retirement packages. Mayor Michael Bloomberg took aim at public employee pensions in his state of the city address on Wednesday:

"The labor unions understand that in spite of some bluster here and there, we cannot continue to do what we're doing," he said. "Things are going to have to change."

And it's not just Mayor Bloomberg. Many mayors and governors from both parties are ringing the fiscal alarm. But Iris Lav, with the Center on Budget and Policy Priorities, has a different view. She's the co-author of the study "Misunderstandings Regarding State Debt, Pensions, and Retiree Health Costs Create Unnecessary Alarm." She talks about some of those misunderstandings, and the difference between long-term fiscal problems and short-term challenges.

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