KeNo's Housing and Economic Portal: Monday May 2 Housing and Economic stories

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Greek, Portuguese Government Yields Surge to Records on Default Concerns - (www.bloomberg.com) Greek two- and 10-year government bonds slumped, driving yields to the highest since before the introduction of the euro, amid concern the nation won’t be able to avoid defaulting on its debt. The Greek two-year note yield surged to 20 percent, the highest borrowing cost among developed nations. Portuguese two- and 10-year yields also reached euro-era records, even as Greek officials said restructuring isn’t being discussed. Finnish euro-skeptics won support in yesterday’s election as voters protested funding euro-region bailouts. German bunds surged as Standard & Poor’s put a “negative” outlook on the U.S. credit rating, sparking demand for an alternative to Treasuries. “Risk is one of the main drivers, with the restructuring debate moving to the front pages again and the Finnish election results not doing anything to deter those feelings,” said Christopher Rieger, head of fixed-income strategy at Commerzbank AG in Frankfurt. “We are looking for more gains in bunds.”

Did The President's Disastrous Budget Speech Cause The Shock US Downgrade? - (www.businessinsider.com) The merits of the S&P outlook downgrade aside -- we're skeptical -- it's interesting that the official downgrade announcement specifically talks about the political events of the past few weeks: The Ryan Plan and the Obama speech. One charge that's been leveled against the President is that he didn't actually introduce a plan, but rather gave a campaign speech centered around accusing the GOP of throwing grandma and grandpa underneath the bus. As such, the two parties have confirmed that they're extremely far apart, and it's this that the S&P seems to be reacting to. We view President Obama's and Congressman Ryan's proposals as the starting point of a process aimed at broader engagement, which could result in substantial and lasting U.S. government fiscal consolidation. That said, we see the path to agreement as challenging because the gap between the parties remains wide. We believe there is a significant risk that Congressional negotiations could result in no agreement on a medium-term fiscal strategy until after the fall 2012 Congressional and Presidential elections. If so, the first budget proposal that could include related measures would be Budget 2014 (for the fiscal year beginning Oct. 1, 2013), and we believe a delay beyond that time is possible.

Finland's Euro-Skeptics Poised to Form Government Following Election Upset - (www.bloomberg.com) Finland’s euro-skeptic bloc is poised to enter a government with the pro-Europe National Coalition led by Finance Minister Jyrki Katainen after voters used yesterday’s election to protest against funding bailouts. The True Finns, whose leader Timo Soini says taxpayers shouldn’t have helped rescue Greece or Ireland, surged almost 15 points to 19 percent, the Justice Ministry said. Katainen’s group won 20.4 percent to become Finland’s biggest party for the first time. Prime Minister Mari Kiviniemi’s Center Party got 15.8 percent and the Social Democrats, which also opposed bailouts for the two countries, won 19.1 percent. Kiviniemi will lead her party in opposition after its “huge defeat,” she told broadcaster YLE. “They couldn’t leave the True Finns out of government after this landslide,” said Tuomo Martikainen, professor emeritus in political science at the University of Helsinki, by phone. “It would be making a mockery of democracy.”

20 Tax Facts That Will Make Your Head Explode - (www.businessinsider.com) Whatever their political perspective, people find reasons to get upset on tax day. Pundits talk a lot about the growing tax share of the rich, and the 47% of Americans who don't pay income tax. These arguments are somewhat unfair because they ignore the growing wealth disparity. But they're just two of many ridiculous facts that emerge in this giant bureaucratic mess.

1. The IRS has more employees than there are people in Flint, Michigan (106K vs 102K)

2. You could fill Dallas with the number of accountants Americans hire to help with taxes each year (over a million)

A soft patch or something worse? - (www.reuters.com) The U.S. economy appears to be running dangerously close to stall speed, and the rest of the world may not have enough oomph to compensate. At the start of 2011, growth looked solid. The U.S. unemployment rate was finally dropping, consumers were in a spending mood, and economists were busily upgrading first-quarter growth projections to the range of 4 percent. Those forecasts are falling fast. Many economists now think the U.S. economy grew at a sluggish 1.5 percent to 2 percent pace over the first three months of the year, and one forecaster even raised the possibility of a negative reading. Whether this is a short-lived blip or a more worrisome dip depends largely on which way oil prices move, and how consumers and businesses around the world respond. Goldman Sachs economist Andrew Tilton said downside risk was "unfortunately a phrase we have been using a lot lately." A quiet week for economic data probably won't bring much, if any, good news. The highlights include a clutch of U.S. housing reports, which will serve as yet another reminder that the real estate slump persists.