KeNo's Housing and Economic Portal: Tuesday May 18 Housing and Economic stories

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Public transport strike snarls Portuguese cities (finance.yahoo.com) Commuters in Portugal's main cities struggled into work Tuesday as public transport workers went on strike over a pay freeze. Police said traffic was heavy and there were delays on roads into the capital, Lisbon, and the second-largest city Porto. Commuters were traveling by car Tuesday morning, after train engineers, bus drivers and ferry staff walked off the job. Portugal's Socialist government has introduced a pay freeze for civil servants and staff at publicly owned companies. The measure is part of an austerity plan to reduce the country's debt burden. The national rail company, Caminhos de Ferro Portugueses, which runs dozens of suburban trains, said only international services were running. There were no rush-hour ferries from the heavily populated suburbs on the south bank of River Tagus into Lisbon. However, Lisbon's subway system was running, and some minimum bus services were in operation as required by law. In Porto, the city's trams were operating normally.

Greek Junk Contagion Presses EU to Broaden Bailout After Rout - (www.bloomberg.com) Europe’s worsening debt crisis is intensifying pressure on policy makers to widen a bailout package beyond Greece after a cut in the nation’s rating to junk drove up borrowing costs from Italy to Portugal and Ireland. As German Chancellor Angela Merkel delays approval of a 45 billion-euro ($59 billion) Greek rescue, the crisis is spreading. Portugal’s benchmark stock index yesterday fell the most since the aftermath of Lehman Brothers Holdings Inc.’s collapse, while the extra yield that investors demand to hold Italian and Irish debt over bunds rose to a 10-month high. The danger for European officials is that the fiscal turmoil which started six months ago with fudged Greek budget data will spin out of their control. As Greece waits for its euro-region partners to disperse funds, the European Union has announced no concrete plans to help other nations should aid be needed. The euro yesterday weakened to the lowest in a year. “Policy makers need to get ahead of the curve,” Eric Fine, who manages Van’s Eck’s G-175 Strategies emerging-market hedge fund. “This is no longer a problem about Greece or Portugal, but about the euro system.”

Governments will hold a summit by around May 10 to discuss Greece, EU President Herman Van Rompuy said today in Tokyo.

Greek Two-Year Note Yield Climbs to More Than 17% on S&P Cut - (www.businessweek.com) Greek two-year government note yields surged to more than 17 percent after Standard & Poor’s cut the nation’s credit rating by two levels to BB+, or junk.

The bond traded at 80.3 percent of face value as of 4:27 p.m. in London.

BES Investimento Scraps Bond Sale Amid Global Rout –(www.businessweek.com) BES Investimento do Brasil scrapped an international bond offering of as much as $350 million, capping a week of canceled sales from India to Korea after a global market rout pushed up emerging-market borrowing costs. BES Investimento do Brasil postponed the offering because it would have been more expensive given the “market volatility,” Paulo Augusto Saba, the bank’s managing director for global markets, sales and fixed-income trading in Brazil, said in a phone interview. BES was planning to issue five year bonds, he said. “If we were to do the issuance now, we would have to pay much more, and we didn’t need to do so,” Saba said in a phone interview from Sao Paulo. “I want to do a beautiful deal. I don’t want to do a Frankenstein deal in the market.” Global markets plunged this week as concern governments will struggle to fund themselves triggered a selloff in riskier assets. Emerging-market bonds slumped, pushing up the extra yield investors demand to own developing-nation dollar bonds instead of U.S. Treasuries by four basis points to 3.20 percentage points, the highest level since Nov. 30, at 5:20 p.m. New York time, according to JPMorgan Chase & Co.’s EMBI+ Index.

15,000 Illinois Protesters Chant "Raise My Taxes"; Unions Getting More Aggressive and Obnoxious; Record Turnout in N.J. Tells Unions to Go to Hell - (Mish at globaleconomicanalysis.blogspot.com) In Illinois, union protesters staged a huge rally in Springfield, demanding higher taxes for their self-serving agenda. Please consider Thousands of protesters at Illinois Capitol to press for tax increase. Thousands of protesters bused down by labor unions and social service advocates rallied at the Capitol today in an attempt to pressure state lawmakers into raising the income tax to avoid more budget cuts. A spokesman for Illinois Secretary of State Jesse White estimated the rally crowd at 15,000, with more than 12,000 marching around the building. That would appear to make it the largest Capitol protest since the Equal Rights Amendment crowds a quarter-century ago. Bus after bus pulled up on streets surrounding the Capitol complex and dumped sign-waving protesters clad in purple, green, red and blue shirts that represented a show of strength from a variety of public employee unions and dozens of groups that formed what they named the “Responsible Budget Coalition.” "Raise my taxes! Raise my taxes! Raise my taxes!" they chanted, lined up shoulder to shoulder for a few hundred yards stretching a street in front of the Capitol.

Senate Readies Goldman Assault - (online.wsj.com) Goldman Sachs Group Inc. had a clear strategy of shorting the collapsing mortgage market and made $3.7 billion through the tactic, Senate investigators said, setting up a showdown with Goldman executives testifying before a Senate subcommittee Tuesday. The testimony was poised to highlight the fundamental split between Washington lawmakers-who see Goldman as an archetype of the problems that drove the financial system into crisis—and the Wall Street firm, which says it was merely managing risk and didn't make big profits from housing's decline. Goldman Chief Executive Lloyd Blankfein was set to tell the Permanent Subcommittee on Investigations that Goldman acted "as our shareholders and our regulators would expect." In prepared testimony, Mr. Blankfein said: "We didn't have a massive short against the housing market and we certainly did not bet against our clients."