KeNo's Housing and Economic Portal: Wednesday May 4 Housing and Economic stories

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TOP STORIES:

Austerity Chills the Ardor for Muni Debt - (online.wsj.com) For many cities and states, the love affair with debt has cooled, as governments cut back on spending and as borrowing comes under political attack. In Marquette, a small city on Michigan's Upper Peninsula, officials last month voted to nearly halve the amount of debt the city plans to issue in fiscal 2012 from the year ending June 30. "You get to a saturation point where too much debt is too much debt," said Marquette City Commissioner David Saint-Onge. The wariness to take on more debt extends to the municipal-bond market's largest borrowers, such as California, which this year plans to issue a little more than half of the approximately $10 billion in long-term bonds it sold in 2010. "It has a lot less to do with the market, and more to do with trying to get back on firm fiscal ground," said Tom Dresslar, spokesman for the California Treasurer's Office.

Temp Workers in Germany Dismay Unions - (www.nytimes.com) Peter Hintermeier, a 60-year-old pipe fitter, is one of the people who have made Germany competitive again, but he is not too happy about it. Originally from the area around Erfurt in eastern Germany, Mr. Hintermeier has spent 15 years as a temporary worker, going wherever the jobs are. “You’re doing the same work for less pay,” said Mr. Hintermeier, who earns about 9 euros, or almost $13, an hour. That is about $2.86 an hour less than the average for eastern Germany, and $7.16 to $8.59 less than in wealthier regions of the country, where Mr. Hintermeier often works. On top of that, “there aren’t many opportunities to develop,” he complained. And he said he often encountered resentment from co-workers who consider him low-cost competition. Mr. Hintermeier is one of nearly a million temporary workers, almost 3 percent of the work force, who in recent years have given German companies much more flexibility than before. Temporary employment played a critical role in helping Germany weather the 2009 downturn, as employers were able to quickly respond to ebbing demand by reducing payrolls.

Public-Worker Retirements Surge as States Cut Benefits to Shrink Deficits - (www.bloomberg.com) Teri Essex retired a year earlier than planned when she was offered $56,000 to leave her elementary-school teaching job in Elk Grove, California.

Instead of accepting a salary cut, larger classes and less money for supplies from spending reductions made last year by California lawmakers closing a $19 billion budget deficit, Essex, 60, took the money over nine years to retire in 2010 after 21 years of teaching. “The financial buyout was a no-brainer,” said Essex, whose school was 15 miles (24 kilometers) outside Sacramento. Even though she’ll give up about $300 monthly by quitting early, she said, “Once you start thinking about retiring, it was like, ‘Oh yeah, I want to do this.’” California, Florida and Texas are seeing more retirements as rising benefit costs, pay cuts and looming furloughs prompt workers to leave. Inducements to quit early also boosted departures in New York as U.S. states tackled budget gaps totaling more than $540 billion since fiscal 2009,according to the Center on Budget and Policy Priorities. In New Jersey, Wisconsin and Ohio, added motivation came from attacks on unions over costs that strained budgets.

VIX Drops to Lowest Since 2007 as Intel, Yahoo! Beat Estimates - (www.bloomberg.com) The benchmark index for U.S. stock options slumped to its lowest intraday level since June 2007 as shares rallied on better-than-estimated quarterly reports from companies including Intel Corp. (INTC) and Yahoo! Inc. The VIX, as the Chicago Board Options Exchange Volatility Index is known, decreased 8.9 percent to 14.55 at 9:40 a.m. in New York. The index measures the cost of using options as insurance against declines in the Standard & Poor’s 500 Index, which added 1.3 percent. May VIX futures fell 3.4 percent to 18.45 while July contracts slumped 2.1 percent to 21.45. The biggest advance among all VIX options was on the May 15 puts, which rose to 10 cents from 5 cents. This year’s lowest VIX close before today was 15.32 on April 15. The gauge has averaged 20.37 in its two- decade history.

Greek Yields Surge to Fresh Records; Spanish Bonds Rise After Debt Auction - (www.bloomberg.com) Greek bonds tumbled, leading declines by securities from Europe’s most indebted countries, as a German government adviser said the Mediterranean nation will probably have to restructure its debt burden. The slide drove yields on Greece’s two- and 10-year bonds to euro-era records. Portuguese and Irish bonds also fell after Lars Feld, a member of German Chancellor Angela Merkel’s council of economic advisers, said Greek restructuring is probable. Spanish bonds rose after demand increased at an auction of 10- year debt. German bunds fell for a second day as equities rose, sapping demand for the safest assets. “Talk of Greek restructuring dominates sentiment and is pushing peripherals lower,” saidCharles Diebel, head of market strategy at Lloyds Bank Corporate Markets in London. “The bond market continues to push spreads wider, suggesting the reality of the restructuring risk.” Greek two-year yields climbed 129 basis points to 22.02 percent at 4:26 p.m. in London. It reached 22.06 percent, the highest since at least 1998, when Bloomberg began collecting the data. The 4.6 percent security due 2013 fell 1.56, or 15.6 euros per 1,000-euro ($1,450) face amount, to 73.335. The Greek 10- year yield rose 27 basis points to 14.75 percent, after reaching a euro-era record of 14.80 percent. The extra yield, or spread, over German debt rose to a record 11.45 percentage points.