News Day: It’s the economy (and the budget deficit and the CitiGroup and AIG bailouts)

More March 2 stories: The weather! / Facebook and Lent / Recount / Scam alert / Momos and pizza / Head scarves and gangbangers? / Some good news! / Welfare freeze / Miss North Dakota arrested in Iran

Stormy weather ahead Billions in bad news is expected when State economist Tom Stinson issues the next state budget forecast on Tuesday, writes Bill Salisbury in the PiPress. In December, Stinson forecast the $4.85 billion deficit that has had everybody from the capitol to city hall scrambling to slash budgets, and the betting is that the new prediction will be $6 or $7 billion.

According to the PiPress, Stinson and his team “have been crunching wage and employment data 10 to 12 hours a day, seven days a week, to come up with the most accurate prediction possible.” A fascinating Q&A includes these nuggets:

Q Is this situation unprecedented?
A No, we had the Great Depression. We’re going to lose 2.5 percent in real GDP in 2009. During the Great Depression, between 1929 and 1932, we lost 25 percent. Then we had an unemployment rate of 25 percent. We’re not going to have a 25 percent unemployment rate now.
But still, this is very serious. It’s going to take us until 2011, 2012 to get back to where we were in the middle of 2007.

Q Do you think much about what’s at stake for average Minnesotans in your forecasts?
A Oh, Christ, yes! The idea that economists don’t have feelings is something that, if you talk to my staff, you’ll find out that they’re more conscious of this than anybody else as to what’s going to happen. What we do is very serious.

Meanwhile, bad numbers got worse Friday, as the Commerce Department reported that, during the fourth quarter of 2008, the economy contracted at a 6.2 percent annual rate, rather than the previously-estimated 3.8 percent.

Bailout bleed continues Money keeps flowing out of the federal treasury to giant corporations stumbling toward Armageddon. This morning, the feds agreed to add $30 billion to the AIG bailout. At this point, the NYT reminds us, the new $30 billion comes on top of “a $60 billion loan, a $40 billion purchase of preferred shares and $50 billion to soak up the company’s toxic assets.” Baseline Scenario describes the scary timeline: September, October, and November “rescue” infusions of cash and credit, each of which was supposed to stop the slide, and none of which worked.

By way of comparison, bailout aid to Citigroup totals $50 billion and Bank of America has gotten $45 billion. On Friday, a new fed deal for Citigroup, explains Baseline Scenario, means that the government will kick in money to sweeten the deal for preferred shareholders to convert their stock into common shares. The government would end up with a 36 or 37% ownership share in Citigroup (up from the current eight percent stake), which could be a less-than-bad deal if and when Citigroup recovers and becomes a profitable firm again.

MinnPost meteorology Channel 5’s Dave Dahl is on video on MinnPost, explaining all the whys and wherefores of March blizzards. Is weather video now a regular feature on MinnPost? Or have I just been missing it? I could live without the video stopping and starting ten times as it loads, and the “Monsters of March” also seems a slightly overblown moniker for our traditional tournament blizzards. Still, like any good Minnesotan, I’m a sucker for weather news in almost any form, and happy that “meteorological winter” is over, even if we do expect more blizzards.

Signs of the times Giving up Facebook for Lent (hat tip to Molly Millett in the PiPress)

Minnesota is not Florida Obviously – just look at the snowbanks. But Hamline University prof David Schultz, who teaches classes on election law and government ethics, has something other than the weather in mind. Schultz writes in MinnPost that the MN election and recount are fair, and nothing like Florida’s 2000 fiasco. So why is the recount dragging on and on and on?

Coleman’s use of Bush v. Gore is tactical, aimed at building an appeal when he loses the current case in St. Paul. His legal team has failed to offer any real evidence of an equal-protection violation, yet it persists in raising this claim. This claim, along with a recent YouTube video by GOP leaders asking for donations to Coleman’s legal defense fund, suggest that they aim to delay resolution of this matter as long as possible. Keeping Franken out prevents the seating of a 59th Democrat and moving Democrats one seat closer to a filibuster proof majority.

Scam alerts My current favorite is the email “from the IRS,” which I must have received and deleted at least ten times this week. Another on-going scam is a phony letter from Publishers Clearing House, with a nice fat check and instructions to deposit the check and then wire back money to cover fees. You send real money and then the fake check bounces.

Serious legislative business from St. Cloud Rep. Steve Gottwalt (R-St. Cloud) thinks the state should focus on what Muslim women wear on their heads. The Strib reports that he wants to ban any kind of headwear on drivers’ licenses, talking about “gangbangers wearing their hats differently” and law enforcement’s need to identify people. Give me a break – just like schools, law enforcement and drivers license photos can distinguish between “gangbangers” and religious hair covering.

Some good news! AP reports: ” In a stunning improvement in children’s health, far fewer kids have high lead levels than 20 years ago.” Federal researchers found 1.4 percent of young children with elevated lead levels in 2004, compared to nearly 9 percent in 1988.

Momos and pizza That was the menu for Phul Maya’s birthday party, and MPR’s Laura Yuen probably got a sample, as she reported on the Bhutanese culture of Minnesota’s newest refugees.

No raises since 1986 Jean Hopfensperger reports in the Strib that MN welfare benefit levels have remained the same since 1986 — $437 a month for a single parent with one child and $532 for a single parent with two children. About 2,000 more welfare cases are open this year than last year, with 37,100 cases representing 101,000 parents and children.

Besides the $437 grant, a single parent with one child gets $285 in food stamps. Only one family in six gets any housing subsidy. Hopfensperger reports that “if welfare benefits had kept pace with inflation, families today would be receiving $841 for a family of two and $1,025 for a family of three.”

U.S. journalist arrested in Iran Roxana Saberi, a freelance journalist who has reported for NPR and BBC and other news organizations, was arrested in Tehran almost a month ago. The 1997 Miss North Dakota, daughter of an Iranian-born father and a Japanese-born mother, called her father on February 10 to say she had been kept in detention for ten days on charges of buying a bottle of wine. Saberi has been reporting from Iran for six years, but officials revoked her press credentials more than a year ago.

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