KeNo's Housing and Economic Portal: Thursday July 11 Housing and Economic stories

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Brazil, Fortune and Fate Turn on Billionaire - (www.nytimes.com) When the Brazilian billionaire Eike Batista appeared on the Charlie Rose show in 2010, he and his country were on a roll. Brazil’s economy, driven by a worldwide commodity boom, grew a blistering 7.5 percent that year. And Mr. Batista’s prodigious holdings — spanning oil, mining, shipping and real estate — were soaring in value. In the interview, Mr. Batista was asked how rich he would become over the next decade. “A hundred billion dollars,” he said, an amount that would most likely have made him the wealthiest person in the world. Today, with the Brazilian stock market and the value of its currency falling as mass demonstrations hobble the country, Mr. Batista’s billions are evaporating. From a peak of $34.5 billion in March 2012, his wealth has dropped to an estimated $4.8 billion, according to the Bloomberg Billionaires Index. His lenders are growing anxious, and there are concerns that he might have to reorganize — and possibly lose control of — his dwindling empire. The rise and fall of the charismatic industrialist mirrors Brazil’s sudden reversal of fortune.

China Signals No Relief on Cash Squeeze - (online.wsj.com) China's government signaled little respite from the cash crunch that has afflicted its financial system since the beginning of June, suggesting tight conditions could continue to strain markets in the week ahead. A commentary published Sunday by the official Xinhua news agency said there was no shortage of funds in China's financial system. Rather, it said, a combination of speculation and nonbank forms of lending often called shadow finance were contributing to the surge in short-term lending rates. "It's not that there's no money, it's that the money is not in the right places," the commentary said. In a separate statement on Sunday, the People's Bank of China's Monetary Policy Committee made no direct reference to the surge in borrowing costs for banks and repeated commitments to maintaining a prudent monetary policy. Its repetition of boilerplate language on improving liquidity management and maintaining "steady and appropriate growth" of credit suggests China's monetary-policy makers see little urgency in easing the current stress in the financial system. The statement followed the committee's second-quarter meeting.

Brazilians Clash Outside Stadium as Rousseff Pleads Peace - (www.bloomberg.com) Brazilian police had to restrain demonstrators who threatened to disrupt the Confederations Cup soccer tournament yesterday even after President Dilma Rousseff urged protesters to abandon violence and welcome foreign squads gearing up for next year’s World Cup. More than 100,000 marched in cities throughout Brazil yesterday as protests demanding improved public services and less government corruption entered a third week. The biggest demonstration was in Belo Horizonte, where television images showed protesters clashing with police near the stadium where Mexico’s national team beat Japan. Tens of thousands more demonstrated in Sao Paulo, Rio de Janeiro, Brasilia and the southern city of Santa Maria. Police estimate over 5,000 protested in Salvador, where Brazil defeated Italy. The demonstrations were smaller than on previous occasions and some of the first to occur after the president, in a nationally televised address, vowed to improve social services while urging Brazilians to help her host a “great” World Cup. Government financing for new stadiums has become a symbol of misplaced state spending for protesters who demand better health care, education and public transport.

Irish bankers 'hoodwinked' government over bailout, secret recordings show - (www.guardian.co.uk) Taped conversations back up the view that Anglo Irish bankers knew that €7bn would never be enough to save the bank. A top banker with the financial institution that almost bankrupted Ireland boasted that he had picked the figure of €7bn (£5.9bn) they told the Irish government was needed to rescue the Anglo Irish Bank "out of his arse". Taped phone calls between two senior executives at Anglo Irish have compounded suspicions in the Republic that bankers lured the then Fianna Fáil led government during the crash of September 2008 into a costly financial trap by saving the debt-stricken bank with public money. In the end the Irish taxpayer was forced to hand over €30bn to save Anglo Irish Bank from collapse and resulted in the state going cap in hand to the International Monetary Fund, the European Central Bank and the EU to save the country from national bankruptcy. The bank's audio recordings – obtained by The Irish Independent – are of conversations between two senior Anglo Irish managers in September 2008, John Bowe and Peter Fitzgerald. Initially the bank had asked Ireland's central Bank for €7bn to prop up its parlous finances following the Irish property crash. Critics of the bailout have insisted Anglo Irish bank executives always knew that the figure would be far higher – ultimately more than four times higher.

[ Lowenstein] The Federal Reserve’s Framers Would Be Shocked - (www.nytimes.com) ONE hundred years ago today,President Woodrow Wilsonwent before Congress and demanded that it “act now” to create the Federal Reserve System. His proposal set off a fierce debate. One of the plan’s most strident critics, Representative Charles A. Lindbergh Sr., the father of the aviator, predicted that the Federal Reserve Act would establish “the most gigantic trust on earth,” and that the Fed would become an economic dictator or, as he put it, an “invisible government by the money power.” Had the congressman witnessed Ben S. Bernanke’s news conference last week, he surely would have felt vindicated. Investors, traders and ordinary citizens listened with rapt attention as Mr. Bernanke, the Fed chairman, spoke of his timetable for scaling down stimulative bond purchases. “If things are worse, we will do more,” he said of the nation’s economy. “If things are better, we will do less.”

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