Wednesday July 29 Housing and Economic stories

TOP STORIES:

Commodities crash could turn Australia into a new Greece – (www.telegraph.co.uk) The commodities boom made Australia the lucky country but rising debt and a slump in Chinese demand for resources signal tough times ahead Down Under. Last month Gina Rinehart, Australia’s richest woman and matriarch of Perth’s Hancock mining dynasty delivered an unwelcome shock to her workers in Western Australia: accept a possible 10pc pay cut or face the risk of future redundancies. Ms Rinehart, whose family have accumulated vast wealth from iron ore mining, has seen her fortune dwindle since commodity prices began their inexorable slide last year. The Australian mining mogul has seen her estimated wealth collapse to around $11bn (£7bn) from a fortune that was thought to be worth around $30bn just three years ago. This colossal collapse in wealth is symptomatic of the wider economic problem now facing Australia, which for years has been known as the lucky country due to its preponderance in natural resources such as iron ore, coal and gold. During the boom years of the so-called commodities “super cycle” when China couldn’t buy enough of everything that Australia dug out of the ground, the country’s economy resembled oil-rich Saudi Arabia.

Greek Banks to Open Monday as Tsipras Prepares for Another Vote - (www.bloomberg.com) Greek banks will reopen for basic services on Monday, three weeks after they were shut to prevent their collapse, as Prime Minister Alexis Tsipras prepares for a second parliamentary vote crucial to securing a bailout. Greeks will regain banking services including the ability to deposit checks and access safe deposit boxes, the government said in a decree yesterday. Although customers will continue to face restrictions on cash withdrawals, the daily limit of 60 euros ($65) will be replaced by a cumulative maximum of 420 euros a week. The Athens Stock Exchange, also closed during the month-long confrontation between Greece and its creditors, will stay shut on Monday, as “further regulation is needed,” a spokeswoman for the bourse said in a text message.

Pension Funds Burn Cities as $1 Trillion Shortfall Set to Grow - (www.bloomberg.com) The cost to American cities for their cash-strapped pension funds is starting to look a lot worse, and it’s not because the stock-market rally may be losing steam. Houston was warned by Moody’s Investors Service this month that it may be downgraded because of mounting retirement bills, the latest municipality put on notice as the company ignores bookkeeping gimmicks that let cities mask the size of their debt for years. The approach foreshadows accounting rules for even top-rated issuers that are poised to cause pension shortfalls to swell as new financial reports are released. “If you’re AAA or AA rated and you’ve got significant and visible unfunded pension obligations, you’ve only got one direction to go in terms of rating, and that’s potentially down,” said Jeff Lipton, head of municipal research in New York at Oppenheimer & Co. “It’s the presentation on the balance sheet that is now going to drive urgency.”

Caving to Government Pressure, Visa and MasterCard Shut Down Payments to Backpage.com  - (www.infowars.com)  Visa and MasterCard confirmed that they have cut off payment services for Backpage.com, an online platform for people to advertise goods and services. This was in response to public pressure from Cook County Sheriff Tom Dart, who wrote to executives at both of the payment processors urging them to cut off transactions to Backpage’s adult services. The two companies responded by quickly shutting down payments for the entire site. Backpage hasn’t violated the law, and so Sheriff Dart can’t use the law to take down the website. Instead he’s using a tactic we’ve seen before, getting major financial services companies to put a chokehold on controversial online content producers like WikiLeaks and independent book publisher Smashwords. We don’t need Visa and MasterCard to play nanny for online speech. Payment processors and banks shouldn’t be in the position of deciding what type of online content is criminal or enforcing morality for the rest of society. For one thing, their businesses haven’t been designed to analyze the legal and societal issues at play in various forms of online expression. Second, these businesses will almost always err on the side of shutting down controversial speech—thereby eliminating a nuisance or public affairs problem—rather than taking a principled stance in support of unpopular speech. That’s why courts, not companies, should determine what type of speech is legal on the Internet.

China’s hunt for short-sellers tests legal boundaries - (www.ft.com) In the wake of the Chinese stock market’s dramatic fall early this month, police and securities regulators announced they had launched an investigation into “malicious short selling” in the equity futures market. The announcement was part of measures intended to stabilise the market after it fell 30 per cent from its peak in mid-June, but it also raised the question: What makes short selling “malicious”? The lurid terminology, coupled with a lack of detail on what behaviour is being targeted, has led critics to suspect that the investigation is an extralegal attempt to intimidate would-be sellers. But lawyers say that bearish bets can be illegal if they are based on inside information or made with the intent to influence prices.

OTHER STORIES:

Greek debt crisis: Germany 'may consider' debt relief - (www.bbc.com)
France’s Hollande Proposes Creation of Euro-Zone Government - (www.bloomberg.com)
In Greek crisis, one big unhappy EU family
German Economy Minister criticizes Schaeuble's proposal for temporary Grexit

A Tightrope for Europe’s Central Bank Chief - (www.nytimes.com)
Brazil Lower House Leader Says He’s Not Trying to Create ‘Chaos’ - (www.bloomberg.com)
Ukraine, rebels trade blame over shelling of central Donetsk - (www.reuters.com)