KeNo's Housing and Economic Portal: Wednesday July 7 Housing and Economic stories

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TOP STORIES:

Illinois Debt Default Insurance Climbs to Record, CMA Data Show - (www.bloomberg.com) The cost of insuring Illinois bonds against default rose to a record high as state lawmakers confront a $13 billion budget gap for the year starting July 1. The price of a five-year credit-default swap to insure Illinois obligations rose 7 basis points to 309.1 basis points today, or $309,100 to protect $10 million of debt, from 302.2 basis points yesterday in New York, according to CMA DataVision, a data provider owned by CME Group Inc. The gain makes insuring bonds from the fifth-most populous state more expensive than covering debt from any other municipal issuer. “If the spread is the widest, it says the problem is bigger than it’s ever been before,” said Peter Hayes, who oversees $106 billion of municipal bonds for New York-based BlackRock Inc. “It’s a reaction to the inability to pass a budget. We’ve seen a greater unwillingness from Illinois and the market is reacting to that.” Legislators in Illinois passed a provisional $25.9 billion fiscal 2011 spending plan that’s about $13 billion short, and are resisting Governor Pat Quinn’s proposed $3.7 billion debt sale to make a pension payment and help close the gap. Lawmakers recessed last month without providing a way to cover the pension obligation and pay $4.5 billion in other bills.

Current account deficit rises to $109 billion - (finance.yahoo.com) Higher oil prices and stronger demand for imported goods have widened the broadest measure of the U.S trade deficit in the first three months of the year. The result is viewed as a positive step for the recovery. Even though America is sending more money overseas than it is taking in, the stepped-up spending on foreign goods and services was a sign of growing confidence among consumers. But economists worry that the European debt crisis could dampen demand for U.S. exports. And a stronger dollar would make U.S. goods more expensive overseas. "The U.S. recovery will continue to pull in more imports while the stronger dollar and the ongoing European sovereign debt crisis will act as a drag on exports," said Gregory Daco, an economist at IHS Global Insight.

Spain May Force Europe’s Hand on Bank Stress Tests - (www.bloomberg.com) The Bank of Spain’s decision to publish the results of stress tests on the nation’s lenders may prompt European neighbors to follow suit as investors demand more disclosure of the risks on banks’ books. “Pressure is increasing and now European countries need to consider whether to follow Spain,” said Daniel Hupfer, who helps manage about $40 billion at M.M. Warburg in Hamburg, including shares of Deutsche Bank AG, BNP Paribas SA and Banco Santander SA. “Whether they will is hard to predict. Europe isn’t really seeing eye-to-eye right now.” The Bank of Spain will make the findings public to give investors more information on the state of the banks, said Miguel Angel Fernandez Ordonez, the central bank governor, in a speech yesterday.

BP Using Mercenaries To Prevent Journalists From Talking To Workers - (www.businessinsider.com) A reporter for local New Orleans news station WDSU tried to interview some BP employees on a beach in Louisiana and was met by a BP-hired security guard and was told he shouldn't disturb the workers reports The Consumerist. According to the video (shown below), the media needs to stay at least 100 feet from BP workers. Here's one killer quote from the BP-hired security guard when the reporter asks why he's preventing people from accessing a public beach:

GUARD: "I can tell you where to go because I'm employed to keep this beach safe. I have to keep the workers safe."
REPORTER: "Can I go interview that worker?"
GUARD: "NO."

Powerful stuff. Watch the video below for the full confrontation

CalPERS health premiums to leap again; expect private industry to follow - (www.sacbee.com) It's known as the Patient Protection and Affordable Care Act – and its title begs the question: Why are insurance rates continuing to climb? On Wednesday, the California Public Employees' Retirement System approved an average increase of more than 9 percent in health premiums next year for its state and local government members. Private industry is expected to face similar increases next year following years of rate hikes. For some people, including those buying insurance on their own, increases could jump well into the double digits. Wasn't the health care overhaul supposed to do something about this? Not anytime soon, experts say. Any perception that the federal legislation would quickly tamp down price increases was unrealistic, they say. Some question whether the bill will ever do much to halt the escalation of health care costs.