KeNo's Housing and Economic Portal: Saturday March 19 Housing and Economic stories

Friday, March 18, 2011

Saturday March 19 Housing and Economic stories

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TOP STORIES:

Greece slams rating agencies after Moody's cut - (news.yahoo.com/s/ap) Greece launched a tirade against U.S. credit ratings agencies Monday after Moody's downgraded its debt grade further below junk status, warning the bailed-out euro country might have to default on its massive borrowings. The agency slashed its rating by three notches to B1 from Ba1 and warned it may cut again if the government's commitment to austerity wanes or international creditors become less willing to support it — Greece was saved from bankruptcy last May after accepting a euro110 billion ($154 billion) bailout from the EU and the International Monetary Fund. The Greek government's response was quick and critical. It said Moody's downgrade was "completely unjustified" and "does not reflect an objective and balanced assessment" of Greece's actual economic prospects. "Ultimately, Moody's downgrading of Greece's debt reveals more about the misaligned incentives and the lack of accountability of credit rating agencies than the genuine state or prospects of the Greek economy," the finance ministry said.

Jesse Jackson Jr. Wants to re-write the constitution - (www.youtube.com) Sorry, but this guy is a fucking moron. Let me say it again. This guy is a FUCKING CLUELESS MORON. We let fucking shit like this into our congress????? This country is falling apart….. This is a perfect demonstration of all the money going into our schools and how it is going down the drain.

Global Bond Rout Resembling 1994 Seen as Inflation Exceeds Benchmark Rates - (www.bloomberg.com) Emerging-market central banks risk triggering a “1994-style” sell-off in global bonds as soon as next year if they’re still tightening monetary policy when the Federal Reserve begins raising interest rates. That’s the warning of JPMorgan Chase & Co. Chief Economist Bruce Kasman, who calculates that even with recent increases, benchmark rates in developing countries remain about 200 basis points below their 2008 average and, adjusted for inflation, will end this year near their recession lows. Underlying inflation levels also are moving higher, he finds. A reluctance to act faster means the central banks of these economies ultimately may fail to contain inflation at home while fanning it abroad, leaving themselves and the Fed toughening monetary policy at the same time, Kasman said. His fear is that simultaneous shifts will lead financial markets to echo 1994, when investors first doubted the Fed’s inflation-fighting mettle, only for Treasuries to slide more than 3 percent as policy makers almost doubled the federal funds rate.

Moody's downgrade tips Greece closer to brink - (www.reuters.com) Moody's Investors Service downgraded Greek debt to B1 from Ba1 -- lower than Egypt -- and said it may cut further, drawing an indignant protest from the Greek Finance Ministry. "The likelihood of a default or distressed exchange has risen since its last downgrade of the Greek government debt rating in June 2010," Moody's said in a statement. The downgrade sent a ripple of anxiety around credit markets, raising the price of insuring Greek, Portuguese and Spanish debt against default and the risk premium on holding Greek bonds rather than benchmark German bunds. Portuguese government bond yields hit a euro lifetime high of 7.65 percent, heightening pressure on Lisbon to seek an EU/IMF bailout in the wake of Greece and Ireland.

Fixing Pensions Requires Cutting Existing Benefits – (www.businessinsider.com) You can go around and around, but eventually the math leads you to one place. To save the state of, say, California, from fiscal catastrophe, existing public pension benefits have to be scaled back. You can cut benefits for new workers and workers who will be hired in subsequent years, but it won't be enough to right the ship of state. To keep the ship sailing, you have to cut the benefits that have already been promised and agreed to and ratified and are legally binding. Steve Greenhut, who has been covering the California pension crisis for years now, makes this point concisely in a recent column: The well-respected and non-partisan Little Hoover Commission drew some conclusions that even many pension reformers have been reluctant to make – namely, that pensions must be reduced for current employees. The state's unfunded liabilities, or pension debt, is estimated as high as a half-trillion dollars. That is the amount taxpayers will owe to make good on pensions for current retirees and employees. Most of the debate has centered on reducing formulas for new hires, but as Little Hoover explained, that won't put a dent in the problem.