Friday July 1 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

“Capture” of Regulators by Fannie Mae and Freddie MacBecker - (www.becker-posner-blog.com) Political economists describe the process whereby government officials end up being the servants rather than the masters of the firms they are regulating as the “capture” by the industry of their regulators. When regulators are captured, much of what they do is motivated, consciously or not, by a desire to help the companies they are regulating, even when the social goals that the regulators should pursue are very different. A famous illustration of capture is given by the way airlines were regulated under the Civil Aeronautics Board (CAB) from 1940 to 1978. Large airlines of those times, like American and Delta, naturally had a strong incentive to try to keep new airlines from entering the industry. As a compliant ally of the airline industry, the CAB did not approve one new interstate airline during this almost 40-year period. Many airlines entered the industry when President Carter abolished the CAB, and some of the old standbys, such as Pan Am and Eastern, ceased operations because they could not adjust to a competitive environment. An economically disastrous example of the capture theory is provided by the disgraceful regulation of the two mortgages housing behemoths, Fannie Mae and Freddie Mac, before and leading up to the financial crisis. In their fascinating recent book, Reckless Endangerment, Gretchen Morgenson and Joshua Rosner explore in great detail how Fannie Mae used political connections and intimidation of anyone who stood in their way to gain a highly dominant position in the residential mortgage market. The authors’ show that various government officials, including congressmen and presidential cabinet members, closed their eyes to what these two government-supported enterprises (GSE) were doing. They allowed them to take on enormous risks, while publicly defending their behavior as not being highly risky.

Bad Housing News: Why Homebuyers Aren't Buying - (www.northjersey.com) Why aren't homebuyers buying? Maybe they've heard the recent spate of bad housing news. Home prices fell again, and housing experts are predicting an official "double dip" price decline. We've lost nearly a decade of value, as home prices have slipped back to where they were around 2001-02. The number of people applying for purchase mortgages, rather than refinance mortgages, has fallen all the way to levels last seen around 1997-98. Some 61 percent of home sales are distressed, meaning that they are short sales or foreclosures. No wonder housing prices are falling. Mortgage lenders want homebuyers to put down more in cash, and Congress is talking about requiring a far higher down payment for FHA loans for those whose credit score is less than optimal. The number of new homes sold is at a record low, at least since records were kept starting in 1963.

Affluent black county mired in mortgage mess - (msnbc.msn.com) America’s wealthiest black county is in trouble. Prince George’s County, Md., has gained prominence in recent years as the most affluent county in America with a majority African-American population. Average income in the county is almost double the national average for black families, according to the Census Bureau’s 2009 American Community Survey. But the county, adjacent to the District of Columbia, has been laid low by the recession and the mortgage meltdown and now holds a more dubious distinction: a rising foreclosure rate that ranks as the worst in Maryland. More than half of all housing sales in the county so far this year have been properties in foreclosure, a rate that dwarfs other counties in the state, according to MRIS, which provides listing services for real estate agents. This has caused a domino effect of social, economic and financial problems to ripple throughout Prince George’s communities.

Attorney: Realtor group violates law on speech - (irvinehomes.ocregister.com) A lawyer for an Irvine blogger who has taken on the real estate industry and accused agents of being dishonest says the Orange County Association of Realtors' formal grievance against the writer is at odds with a California law protecting freedom of speech. . Scott Sims, attorney for Larry Roberts, who writes the IrvineHousingBlog.com, says in a new letter to OCAR that Roberts' opinions constitute "free speech protected by California's anti-SLAPP statute. "If OCAR does not immediately serve notices of dismissal of all charges, we will take the appropriate actions to protect Roberts' constitutionally protected rights,'' states the letter by Sims, a partner at Manderson, Schafer & McKinlay of Newport Beach. Sims also writes, "OCAR's efforts to harm Roberts' business and reputation, and to haul Roberts before a secret kangaroo court pre-disposed to convict him for unknown acts, have no place in American society.'' The OCAR grievance says Roberts and two other people have violated a code of ethics rule stating that "Realtors must not knowingly lie about competitors'' as well as a general set of regulations governing how MLS information is used on the Internet. The grievance doesn't say specifically what Roberts -- who is not a Realtor --or anyone else did, according to Roberts, who showed a copy of it to The Orange County Register. An OCAR spokeswoman, Rena Budesky, declined to discuss the matter with a reporter, saying grievances are confidential.

Proposal to toughen loan standards - (www.washingtonpost.com) Consumer borrowing is so rampant in the United States that most people who took out a mortgage last year to buy a home ended up spending more than a third of their income to pay that loan and other debts. Now, a federal proposal would target borrowers with heavy debt loads by making it tougher for them to get the cheapest mortgages. The initiative is part of a broader measure that aims to prevent another foreclosure crisis and could confront borrowers who do not meet certain conditions with higher interest rates and fees. The debt restrictions are on top of other conditions, including a requirement that borrowers pony up a 20 percent down payment to qualify for the cheapest mortgages. While the down-payment condition has captured the public spotlight since the government unveiled its plan in March, experts who track the housing industry say the proposed debt limits could be just as onerous for borrowers.

OTHER STORIES:

To buy, or not to buy, a House? - (www.timesunion.com)

The Sickness Beneath the Slump - (www.nytimes.com)

National House Asking Prices and Inventory - (www.deptofnumbers.com)

Housing Hijinks - (www.zerohedge.com)

House clearance sale expected to begin in earnest this summer - (www.irvinehousingblog.com)

SoCal housing market sputters in May - (latimesblogs.latimes.com)

Housing Market News Stalker: Patrick.net - (www.renohomeblog.com)

Existing House Active Listings show Big Declines - (www.calculatedriskblog.com)

Housing Market Forecasting: Dont Even Bother - (www.theatlantic.com)

Hong Kong Home Sales Tumble on New Down Payment Rules - (www.bloomberg.com)

Thursday June 30 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Greece poses $41 billion risk to U.S. banks - (www.marketwatch.com) As fears stirred by Greece’s deepening debt crisis raced through global financial markets Wednesday, a quick check of U.S. banks showed they risk losses of tens of billions of dollars should the Mediterranean nation default on its payments. U.S. banks had total exposure of $41 billion to Greece by the end of 2010, according to the latest figures, issued June 9, from the Bank for International Settlements. Most of the financial commitments appear to be indirect. About 83% is tied to “guarantees” that range from protection for sellers of credit-derivative contracts to other obligations owed to third parties. Still the data are murky, according to economic consultant Kash Mansori. “We don’t know exactly what the form of exposure is,” said Mansori, who authors the Street Light blog. “We can only make educated guesses.” He thinks U.S. banks are mostly exposed to Greek’s financial crisis through credit-default swaps, which essentially are insurance contracts, he said. Mansori said he believes U.S. banks largely sold these deals to European banks, which own bonds issued by Greek banks and the Greek government.

Las Vegas land prices down 83 percent from 2007 peak - (www.vegasinc.com) Land transactions remain scarce in Las Vegas, but when deals get done, the price apparently has yet to find its bottom. Las Vegas-based Applied Analysis reported the price paid for vacant land during the first quarter fell to an average of $156,700 an acre outside the resort corridor. That’s a decline of 6.3 percent since the fourth quarter, when it was $167,276 per acre, and down 14.1 percent from the first quarter of 2010 when it was $182,461 per acre. Since the peak of the market in the fourth quarter of 2007, land prices have fallen by 83.3 outside the resort corridor, the firm reported. Applied Analysis Principal Brian Gordon said the oversupply on the market in all real estate sectors continues to put downward pressure on new construction and ultimately the need for land. High vacancy rates in commercial properties and limited residential construction are expected to limit the demand for land.

Ireland Opens New Front as ECB Battles to Avert Another Meltdown - (www.bloomberg.com) Ireland opened a new front in the drive to restructure debt on the euro area’s periphery, adding to the European Central Bank’s concerns as it tries to head off another wave of financial turmoil. Irish Finance Minister Michael Noonan said yesterday that senior bondholders should share in the losses of Anglo Irish Bank Corp. and Irish Nationwide Building Society, reversing a policy of protecting owners of senior securities. The ECB is against imposing losses on investors. President Jean-Claude Trichet said on Feb. 7 that haircuts aren’t part of a plan to reduce Ireland’s debt load. Ireland’s about-face on bondholder involvement in its banking crisis comes as European lawmakers struggle to settle a dispute over how to avoid a Greek sovereign default. While German Finance Minister Wolfgang Schaeuble said last week that Europe’s biggest economy insists on the participation of the private sector, his French counterpartChristine Lagarde has ruled out any action that constitutes a “credit event,” backing the ECB’s view.

Greek 2-Year Yield Surges Past 30% as Default Concerns Mount; Bunds Rise - (www.bloomberg.com) Greek government bonds slumped, pushing the yield on the two-year note above 30 percent for the first time, as Prime Minister George Papandreou’s failure to win support for more austerity fueled speculation of a default. Portuguese and Irish two-year yields also climbed to the most since the euro’s 1999 debut, while the 10-year Spanish yield jumped to the highest since 2000 as the country’s borrowing costs rose at a debt sale. The cost of insuring against default on Greek, Irish and Portuguese government debt surged to records. Papandreou will reshuffle his Cabinet and seek a confidence vote today. German government bonds gained, pushing the 10-year yield to a five-month low. “The Greek drama is firmly catching everything under its wings and there’s no way around that story,” said David Schnautz, a fixed-income strategist at Commerzbank AG in London. “Implementation risk is highly elevated. It’s completely risk- off mode and for a country like Spain to come to the market in this environment, it’s challenging.”

LA sues banks over upkeep of foreclosed units - (www.sfgate.com) A dead dog lies among the knee-high weeds, a sign to Guillermo Elenes that the burned-out, boarded-up house is being used as a dump. Inside, soiled diapers, fast-food trash and the strewn beer and vodka bottles indicate that squatters have been living there. The dumping ground-crash pad serves as a squalid symbol of how the foreclosure crisis is riddling communities with blight because no one wants to shoulder the responsibility of maintaining foreclosed homes. "There's one on every block," said Elenes, a community organizer with the Alliance of Californians for Community Empowerment in Watts, a low-income South Los Angeles neighborhood pockmarked with foreclosed homes. "All we want is for the banks to step up and be good citizens." Communities across the nation have made little progress in getting banks to maintain foreclosed properties, and as the crisis matures and bank-owned homes fall into advanced stages of disrepair, cities and residents are getting desperate.

OTHER STORIES:

Europe Faces ‘Lehman Moment’ as Greece Unravels - (www.bloomberg.com)

Spanish Bond Sale Misses Treasury’s Maximum Target as Borrowing Costs Rise - (www.bloomberg.com)

U.S. Stock-Fund Investors Pull Most Money in Six Months as Markets Decline - (www.bloomberg.com)

Greek default fears hit global markets as Papandreou pushes austerity measures - (www.washingtonpost.com)

Greek debt worries spread to Spain - (www.ft.com)

Greek PM reshuffles government, lenders dangle lifeline - (www.bloomberg.com)

Papandreou Reshuffle Fuels Allies Dissent - (www.bloomberg.com)

Papandreou Calls Confidence Vote on New Government in Bid for More EU Aid - (www.bloomberg.com)

China Indicator Points to ‘More Moderate’ Growth as Central Bank Tightens - (www.bloomberg.com)

India Raises Rates for 10th Time Since 2010 - (www.bloomberg.com)

Philadelphia-Area Manufacturing Unexpectedly Shrinks to -7.7 in Fed Index - (www.bloomberg.com)

U.S. Homeowners Gain Equity With 15-Year Loans - (www.bloomberg.com)

Basel Weighs 3.5-Point Fee to Curb Bank Growth - (www.bloomberg.com)

Pandora IPO feeds fear of dot-com bubble - (www.washingtonpost.com)

Lenders Dig In on Rules - (online.wsj.com)

Global economy menaced by return of living dead - (www.ft.com)

Wednesday June 29 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Anglo Irish Bank Senior Bondholders to Share Losses, Finance Minister Says - (www.bloomberg.com) Irish Finance Minister Michael Noonan said senior bondholders should share in the losses of Anglo Irish Bank Corp. and Irish Nationwide Building Society, reversing a policy of protecting owners of senior securities. Noonan discussed sharing the cost of rescuing both lenders with senior bondholders at a meeting with the International Monetary Fund, he said in an interview with Dublin-based broadcaster RTE yesterday. The lenders have about 3.8 billion euros ($5.4 billion) of the securities. “We don’t think the Irish taxpayer should redeem what has become speculative investment -- we don’t believe it should be redeemed at par,” Noonan said. He said the IMF “understood our position fully.”

Greek Bank Threat is Main Stability Risk: ECB - (www.bloomberg.com) The European Central Bank said the threat of the Greek debt crisis spilling over into the banking sector is the biggest risk to the region’s financial stability. “Greece could have a contagion effect,” ECB Vice President Vitor Constancio said at a briefing in Frankfurt today, when presenting the bank’s semi-annual Financial Stability Review. “That’s the reason why we are against any sort of default with haircuts and any form of private-sector event that could lead to a credit event or a rating event.” The euro area’s sovereign-debt woes have worsened as investors increased bets that Greece will not be able to pay its debts, sparking the region’s first sovereign default. The risk that euro-area banks holding Greek government bonds will be saddled with losses has jumped, after Standard & Poor’s slapped Greece with the world’s lowest credit rating on June 13. "The euro area faces a very challenging situation that comes mostly from the interconnection of the sovereign debt crisis and the situation of the banking sector,’’ the ECB said in the review. “In light of the potentially very dangerous implications of sovereign-debt restructuring for the debtor country, including its banking system, a determined and unwavering focus on improving fundamentals” is required.

Protesters in Spain clash with police while trying to block regional parliament- (www.washingtonpost.com) About 2,000 demonstrators angry about planned budget cuts in education and health clashed with police outside a regional parliament in Spain on Wednesday. There were reports of 36 injuries. Some politicians could only reach Catalonia’s parliament using police helicopters. Scuffles broke out when police pushed back protesters so other lawmakers arriving on foot could get in. The politicians were heckled and at least two were sprayed with paint, a police spokeswoman said on condition of anonymity in keeping with rules. Spain’s state-run radio reported 36 injuries, including 12 police officers. Police declined to comment on whether there were any injuries. Regional President Artur Mas was among some 25 politicians who arrived by helicopter. About 400 police packed the Ciutadella park in central Barcelona to ensure protesters could not enter by climbing over the railings. Outside, riot police vans stood guard at the main park entrance.

GOP governors push back against Obama on federal Medicaid rules - (www.washingtonpost.com) Faced with severe budget problems, Republican governors are escalating their fight against federal rules requiring states to maintain current levels of health-care coverage for the poor and disabled. The growing resistance to the federal government over the hugely expensive Medicaid program poses a critical test for President Obama, who has the power to relax the rules for states. If he allows states to tighten eligibility requirements, it would outrage many of his core supporters while undermining the central goal of his signature health-care law: expanding health insurance coverage. But if the president turns his back on governors struggling to gain control of their finances by trimming their most costly program, he risks intense criticism just as his administration is locked in a battle with Republicans over the nation’s soaring debt. “There is a growing impatience among governors,” said Mike Schrimpf, communications director for the Republican Governors Association. “As the Medicaid portion of state budgets grows, the issue becomes even more pressing.”

A Slowdown for Small Businesses - (www.nytimes.com) In the latest sign that the economic recovery may have lost whatever modest oomph it had, more small businesses say that they are planning to shrink their payrolls than say they want to expand them. That is according to a new reportreleased Tuesday by the National Federation of Independent Business, a trade group that regularly surveys its membership of small businesses across America. The federation’s report for May showed the worst hiring prospects in eight months. The finding provides a glimpse into the pessimism of the nation’s small firms as they put together their budgets for the coming season, and depicts a more gloomy outlook than other recent (if equally lackluster) economic indicators because this one is forward-looking.

OTHER STORIES:

‘Tidal Wave’ of Gold Demand Coming From China, India as Economies Expand - (www.bloomberg.com)

Yen May Climb to 75 Per Dollar on U.S. Credit-Rating Risk, Sakakibara Says - (www.bloomberg.com)

IPOs Boost Demand for Silicon Valley Mansions - (www.bloomberg.com)

Investors bet on prospect of ‘Greek accident’ - (www.ft.com)

Papandreou Offers to Quit for Unity Cabinet - (www.bloomberg.com)

Greek Socialists in power-sharing talks - (finance.yahoo.com)

State TV: Greek Socialists in power-sharing talks as anti-austerity riots erupt in Athens - (www.washingtonpost.com)

Greece Bailout Prospects Darken as European Bickering Weakens Papandreou - (www.bloomberg.com)

Greek Unions Stage Strike Against Austerity - (www.bloomberg.com)

Soros Says China Missed Window to Stem Inflation, Now Risks ‘Hard Landing’ - (www.bloomberg.com)

Chinese Developers’ Outlook Cut at S&P as Government Curbs Housing Prices - (www.bloomberg.com)

Europe’s Yard Sale May Come Up Short - (www.bloomberg.com)

Greece in turmoil amid coalition talks - (www.ft.com)

Tuesday June 28 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Wave of Unrest Rocks China - (online.wsj.com) A wave of violent unrest in urban areas of China over the past three weeks is testing the Communist Party's efforts to maintain control over an increasingly complex and fractious society, forcing it to repeatedly deploy its massive security forces to contain public anger over economic and political grievances. The simultaneous challenge to social order in several cities from the industrial north to the export-oriented south represents a new threat for China's leaders in the politically sensitive run-up to a once-a-decade leadership change next year, even though for now the violence doesn't appear to be coordinated. In the latest disturbance, armed police were struggling to restore order in a manufacturing town in southern China Monday after deploying tear gas and armored vehicles against hundreds of migrant workers who overturned police cars, smashed windows and torched government buildings there the night before. The protests, which began Friday night in Zengcheng, in the southern province of Guangdong, followed serious rioting in another city in central China last week, plus bomb attacks on government facilities in two other cities in the past three weeks, and ethnic unrest in the northern region of Inner Mongolia last month. Antigovernment protests have become increasingly common in China in recent years, according to the government's own figures, but they have been mainly confined to rural areas, often where farmers have been thrown off their land by property developers and local officials.

BofA ‘Significantly Hindered’ Foreclosure Review of Its Loans, U.S. Says - (www.bloomberg.com) Bank of America Corp. (BAC), the largest U.S. lender, “significantly hindered” a federal review of its foreclosures on loans insured by the Federal Housing Administration, the U.S. said. The bank was slow in providing data and offered incomplete information, according to the U.S. Department of Housing and Urban Development inspector general’s office, which conducted the review. “Our review was significantly hindered by Bank of America’s reluctance to allow us to interview employees or provide data and information in a timely manner,” William Nixon, an assistant regional inspector general for the agency, said in a sworn declaration. The filing, dated June 1 and obtained yesterday by Bloomberg News, was submitted as an exhibit in a lawsuit by the state of Arizona against the Charlotte, North Carolina-based bank. Arizona, which is seeking to interview former Bank of America employees, accused the bank of misleading homeowners who were seeking mortgage modifications.

Fees Punish Savers Seeking Hedge-Fund Cachet in Commodities Futures Funds - (www.bloomberg.com) Altegris Managed Futures Strategy Fund, a mutual fund that allows less affluent clients to invest with some of the best-known hedge-fund commodities traders, has attracted $707 million since its start less than a year ago. Investors in the fund lost 6 percent this year, and plummeting gold, silver and oil prices weren’t the only reason. The losses also reflect fees of as much as 2 percent of assets paid to the underlying traders in addition to the fund’s 2 percent management fee and 5.75 percent in upfront charges. If the fund had made a profit, as much as 35 percent of that would also have gone to the underlying managers. Investors in U.S. mutual funds, by contrast, paid 0.8 percent in average fees last year, according to data from Morningstar. “The fees are far higher than for less specialized strategies,” said Nadia Papagiannis, an analyst with Chicago- based Morningstar Inc. (MORN) “They’re promising the performance of hedge-fund managers, but what we’ve seen with funds of funds is that the performance is mediocre.”

Regulators moves to delay swaps crackdown, bolster banks - (www.reuters.com) U.S. regulators threw a temporary bridge across the increasingly awkward gap between the idea of regulating the $600-trillion swaps market and the reality of actually doing it. In a move that will give the European Union time to catch up with the United States, the U.S. Commodity Futures Trading Commission conceded on Tuesday what market observers have long known -- new swaps rules must be postponed. The CFTC proposed delaying for months the effective dates of new rules overseeing the over-the-counter derivatives market, including credit default swaps like those that helped amplify the 2007-2009 banking crisis. The U.S. agency's move came as French President Nicolas Sarkozy called on Tuesday for tighter controls over speculators he blames for rising food and energy prices.

Systemic U.S. Firms May Be Forced to Restructure, FDIC’s Krimminger Says - (www.bloomberg.com) Systemically important financial institutions in the U.S. may have to simplify their business if they can’t provide viable plans for unwinding themselves in a crisis, a senior Federal Deposit Insurance Corp. official said. “Ultimately, a SIFI could be required to restructure its operations if it cannot demonstrate it is resolvable in an orderly manner under theBankruptcy Code,” Michael Krimminger, the FDIC’s chief counsel, will tell a House Financial Services subcommittee tomorrow at a hearing in Washington. The Dodd-Frank Act requires firms deemed systemically important to file plans with the FDIC and the Federal Reserve, laying out how they could be resolved if they should collapse. Lawmakers gave the FDIC authority to resolve complex firms aiming to prevent a repeat of the market tumult that followed the September 2008 bankruptcy of Lehman Brothers Holdings Inc. Krimminger, in prepared testimony for a Financial Institutions subcommittee hearing on whether Dodd-Frank has ended the idea that some firms are “too big to fail,” said the FDIC anticipates systemic firms will “pursue the resolution planning process in a way to meet statutory requirements.”

Uh-Oh: It Sounds Like They Don't Have A Deal On Greece - (www.businessinsider.com) A deal for another bailout of Greece has not yet been reached, according to Luxembourg's finance minister, Luc Frieden (via Bloomberg). Frieden, commenting at the European finance ministers meeting today, said the deal may not be done until July. He also suggested that the private sector will be involved in this bailout, a fact now well known. The euro is falling on the news, but it has also been sliding in the wake of Bernanke's speech, so recent movements may be a bit misleading.

OTHER STORIES:

Euro Finance Chiefs Race to Avert Default; Greek Bonds Drop - (www.bloomberg.com)

Soros: Time working against euro zone solution - (www.reuters.com)

'Conduit' muni bond defaults draw scrutiny - (www.latimes.com)

Euro zone to mull private sector role in Greek bailout - (www.reuters.com)

Greek Aid May Be Delayed to July: Frieden - (www.bloomberg.com)

China Inflation Heading for 6% Shows Danger for Wen Extending Rate Pause - (www.bloomberg.com)

China Raises Bank Reserve Requirements - (www.bloomberg.com)

China food costs push inflation to 5.5 pct in May - (finance.yahoo.com)

India Wholesale Prices Rise Faster-Than-Estimated 9.06% From Year Earlier - (www.bloomberg.com)

Kan to Resign After Passage of Key Bills - (www.bloomberg.com)

Mario Draghi Holds E.C.B. Line Against Restructuring for Greece - (www.nytimes.com)

Inflation in China hits 34-month high - (www.ft.com)

U.S. Retail Sales Fall on Weak Auto Demand - (www.bloomberg.com)

Debt Limit ‘Wrong Tool’ to Force Cuts: Bernanke - (www.bloomberg.com)

CEOs less confident about economy: Roundtable - (www.reuters.com)

Good for Obama’s jobs council, good for America? - (www.washingtonpost.com)

Monday June 27 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

European Credit-Default Swaps Surge to Records on Greek Contagion Concern - (www.bloomberg.com) Credit-default swaps on Greece, Ireland and Portugal surged to records on concern European governments’ struggles to resolve the deficit crisis will threaten their ability to pay their debts. Swaps on Greece jumped 47 basis points to an all-time high of 1,610 as of 5:30 p.m. in London after Standard & Poor’s downgraded the nation, according to CMA. Contracts on Ireland soared 27 basis points to 740, Portugal climbed 22 to 764 and the Markit iTraxx SovX Western Europe Index of swaps on 15 governments jumped 7 basis points to 218, approaching the record 221.75 set Jan. 10. Disagreement between the European Central Bank and Germany over bailing out Greece is undermining investor confidence in the region’s most troubled governments. ECB President Jean- Claude Trichet and German Finance Minister Wolfgang Schaeuble are at odds over who should bear the cost of the second Greek rescue in 14 months. S&P lowered its long-term sovereign credit rating on the nation to CCC with a negative outlook from B. “How to make out of a bad situation an awful one seems what European politicians are currently aiming for,” Anke Richter, a credit strategist at Mizuho International Plc in London, wrote in a note to investors. “We still believe that there will likely be an aid package coming forward, but we are not so sure if the quarrelling of the last weeks will be easily forgotten by markets.”

The Easy Credit That Fueled Brazil's Boom Now Imperils It - (online.wsj.com) Brazilian policy-makers have fueled their country's economic boom through a state-owned bank that keeps business flush with credit. Now the engine that has helped the nation become a global player in beef, oil and mining is colliding with another policy imperative: battling inflation. The Brazilian National Development Bank, in its latest spur to the economy, last week announced it would lend $1.6 billion at below-market interest rates to help a large company to build a pulp and paper mill. Two days later, Brazil's central bank raised its benchmark rate—for the fourth time this year—to the highest of any major world economy, 12.25%. The opposing moves point up the central, and increasingly controversial, role of Brazil's highly active state development bank, the financier of a vast array of projects, from dams to ports to corporate takeovers. Though the success of Latin America's largest economy is well known, less recognized is how much it owes to massive government lending. For a sense of the scale: The development bank's loans last year, just within Brazil, totaled triple the amount the World Bank lent to more than 100 countries.

Apple Store Employee Seeks to Plant Union Seed - (www.cnbc.com) An Apple store employee has started a drive to unionize retail workers in a rare move at a company known for its near-fanatical following and cutting-edge mystique. Cory Moll, a part-time employee at an Apple store in San Francisco, is working to form a union to fight for better wages and benefits and to address what he says are unfair practices in the company's glass-and-steel retail showrooms. "The core issues definitely involve compensation, pay, benefits," Moll said, adding that he decided to go public with the union to encourage other employees to come forward. While unions are strong in industries like trucking and autos, they are largely unheard of in Silicon Valley companies, which pride themselves on being quick-footed and having the flexibility to hire and fire. Moll's budding campaign is also unusual given Apple's reputation for fierce employee loyalty. Apple has more than 30,000 retail employees in its 325 stores around the world.

Online Sales Tax Battle Looms as Amazon, Ebay Clash - (www.cnbc.com) Amazon and Ebay, two of the biggest names in online retail, have staked out contrary positions in a debate over the taxation of U.S. Internet shopping, which enables many buyers to escape paying sales tax. The two companies are divided in the face of a lobbying challenge from bricks-and-mortar rivals including Walmart and Sears , which complain that a tax loophole gives their online rivals an unfair price advantage. The issue is being pushed up the political agenda by the weak public finances of many U.S. states, that are are struggling with budget deficits and eager to find new sources of tax revenue. The U.S. does not have a federal tax law on Internet commerce, but since 2008 seven states have changed their laws in an effort to make Amazon and others collect sales tax from customers. Amazon has fought such moves aggressively, but says it would support a federal law provided it was simple and applied even-handedly. Ebay, by contrast, remains a staunch opponent of any catch-all legislation.

JEREMY GRANTHAM: We're Headed For A Disaster Of Biblical Proportions - (www.businessinsider.com) Legendary investor Jeremy Grantham of GMO has published a treatise on the root cause of exploding commodity prices. He has also offered a startlingly depressing outlook for the future of humanity. Grantham concludes that the world has undergone a permanent "paradigm shift" in which the number of people on planet Earth has finally and permanently outstripped the planet's ability to support us. Specifically, Grantham says, the phenomenon of ever-more humans using a finite supply of natural resources cannot continue forever--and the prices of metals, hydrocarbons (oil), and food are now beginning to reflect that. In other words, Grantham says, it is different this time. Grantham believes that the trend of the last 100 years, in which the prices of almost all major commodities have steadily declined, is permanently over. And from here on in, humans will be competing more--and paying more--for ever-scarcer resources.

OTHER STORIES:

U.S. banks prepare to lower use of Treasuries: report - (www.reuters.com)

In Greece, Some See a New Lehman - (www.nytimes.com)

Greek debt crisis stirs bank fears - (www.ft.com)

Eurozone periphery bond trading volumes at new lows - (www.ft.com)

Trichet’s ‘Cold War’ With Germany Risks Damage That May Force Compromise - (www.bloomberg.com)

China Lending Tumbles on Slowing Economy - (www.bloomberg.com)

China local govts borrowed around $1.4 trillion -c.banker - (www.reuters.com)

ECB and Germany May Be Forced to Compromise - (www.bloomberg.com)

Eurozone v ECB: bust-up looms - (www.ft.com)