Public Debt

We are now more than a month into the new fiscal year, and still California has no budget. I want the people to be clear about what I am fighting for and why this fight is so critical. Today we stand at a great crossroads. The economic crisis has rocked governments and families around the world and forced us all to confront harsh realities that were ignored for far too long. For California, the reality is that for decades government has been racking up debt by making promises it could not afford.

The Treasury Department is scrapping plans to hire a cartoonist to lighten the mood of employees who manage the nation's $1.2-trillion debt, after a senator questioned its merits. The Bureau of Public Debt had announced it was looking for a contractor to conduct presentations for its employees on the benefits of humor in the workplace and the connection between humor and stress relief. But the effort was canceled because it had become "more of a distraction than an opportunity," said bureau spokesman Kim Treat.

If at first you don't succeed, try again, the saying goes. Then again, a second attempt is no guarantee of success. Carl Icahn received a paltry $583,000 worth of convertible bonds for his extended tender offer for all of Lions Gate Entertainment Corp.'s $316 million in public debt, according to a filing made late Monday with the Securities and Exchange Commission.

CBS Corp. may face an $893-million funding gap for bonds maturing next year even after slashing its dividend 81% to save cash, a Barclays Capital credit analyst said. CBS may have to sell new debt to help pay off $1.4 billion of bonds due in July 2010, Scott Shiffman wrote in a note to clients. The company may be less likely to draw on its $3-billion revolving credit facility, which will probably have to be replaced before it expires at the end of 2010, he said.

Make no mistake about it, the Internal Revenue Service wants Americans to pay their delinquent tax bills. The trouble is, it doesn't seem to have the staff to collect from those taxpayers who have been remiss. So the agency no one likes to hear from is turning to the industry no one likes to hear from: private debt-collection firms.

His three decades as a rabble-rouser now behind him, President-elect Luiz Inacio Lula da Silva took his first steps Monday as a statesman, telling Brazilians he would be a responsible steward of their nation's troubled economy and that his government would honor Brazil's foreign debt.

A leftist candidate's victory in the first round of Brazil's presidential election sent markets here reeling Monday, amid deepening pessimism over whether Latin America's biggest country can avert a debt default and economic implosion that could spill into neighboring countries. Workers' Party candidate Luiz Inacio Lula da Silva took 46.4% of the vote in Sunday's election, short of the 50% needed to win outright but enough to make his ascension to the presidency a virtual certainty after an Oct.

The International Monetary Fund said in a report Saturday that it welcomed Lebanon's proposals to reform disastrous public finances but warned debt levels would be dangerously high even if all went as planned. The report, a translation of which appeared in Prime Minister Rafik Hariri's Al Mustaqbal newspaper, followed consultations with IMF officials on Lebanon's strategy for handling its $25-billion public debt, which exceeds 160% of gross domestic product.

On paper, China's economy looks great: Growth is moving forward at a rate of 7.9% a year, companies are racing to modernize, and the country is on the brink of joining the World Trade Organization. A closer look, however, reveals an unsettling scene. Reforms are throwing tens of millions out of work. Public debt is rising, export growth falling, and banks are drowning in a sea of bad loans. Rural incomes are lagging, and drought has left 23 million Chinese without enough drinking water.

Japanese Prime Minister Junichiro Koizumi pledged today to reduce the country's debt by financing all spending except debt repayment without additional borrowing. In his first policy speech since being elected prime minister, Koizumi said the government will rely on taxes and other revenue to pay for programs, rejecting borrow-and-spend policies that have failed to pull the economy out of a decade-long slump.