KeNo's Housing and Economic Portal: Friday June 24 Housing and Economic stories

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TOP STORIES:

Cuomo Announces Plan To Fire Almost 10,000 Workers And Cut Pensions - (www.businessinsider.com) Governor Andrew Cuomo is tackling New York state's spending by limiting public employee pensions and cutting almost 10,000 jobs. According to the New York Times, Cuomo says the state can no longer afford to provide the "generous" benefits given to public workers in the past. The governor also targets the rampant benefit padding where workers step up their overtime the final year of employment to beef up their pensions. The same day he made this announcement, Cuomo also moved ahead on his plan to lay off up to 9,800 state employees. The Albany Times Union obtained a copy of the memo announcing state employees will start getting laid off in waves on July 15. Overall 30,000 employees will be affected by the layoffs as jobs are shifted from agency-to-agency. He joins New Jersey Governor Chris Christie in targeting public pensions to help relieve his state's fiscal woes. Christie reached his deal with the senate this week, cutting pension benefits and health coverage for New Jersey state employees.

Maiden Lane Sales Trigger Stampede to Dump Risk: Credit Markets - (www.bloomberg.com) Federal Reserve auctions of mortgage securities that the central bank assumed in the rescue of American International Group Inc. are fueling a selloff in credit markets as Wall Street rushes to hedge against losses on stockpiled debt. Declines in credit-default swaps indexes used to protect against losses on subprime housing debt and commercial mortgages accelerated this month, reaching almost 20 percent in the past five weeks as the cost of the insurance climbs, according to Markit Group Ltd. The plunge this week started infecting everything from junk bonds to the debt of financial companies. The Fed has been selling the $31 billion Maiden Lane II portfolio piecemeal after rejecting a $15.7 billion bid from AIG for the entire pool in March. Since then, Europe’s sovereign debt crisis has deepened and the U.S. recovery has shown signs of slowing, with unemployment rising to 9.1 percent, the highest level this year, and the economy growing 1.8 percent in the first quarter, less than forecast.

California Proposal Jolts Auto Makers - (online.wsj.com) California regulators are pushing a proposal that could effectively require auto makers to sell hundreds of thousands of electric cars nationwide by 2025, in a move that's become a sticking point in talks to establish new national fuel efficiency standards. Auto makers are fighting the California proposal, and in a role reversal, some of the loudest objections are coming from Asian auto makers such as Japan's Honda Motor Co. Ltd., that specialize in small, fuel-efficient cars. California regulators want zero-emission vehicles—those that don't run on petroleum—to comprise up to 5.5% of new-car sales in the state, or roughly 81,300, in 2018. The target would rise annually to 14%, or more than 227,600, by 2025. The rule would apply to car makers that sell at least 20,000 vehicles a year in the state. Requirements diminish below that figure. The cutoff would mainly benefit low-volume luxury car brands such as Jaguar. Car makers would face stiff penalties, roughly $5,000 for every vehicle below the manufacturer's share, for not meeting the targets.

Greek Debt Crisis Causing Company Bond Sales to Be Pulled as Spreads Widen - (www.bloomberg.com) Political wrangling over the future of Greece is infecting Europe’s corporate bond market, pushing relative yields to a 2 1/2-month high and forcing borrowers to pull deals. The extra yield investors demand to hold non-financial company debt instead of government securities rose 3 basis points this month to 118, the highest since March 24, according to Bank of America Merrill Lynch index data. Denmark’s Nykredit Bank A/S and Finnish lender Pohjola Bank Plc (POH1S) postponed bond sales yesterday citing market conditions. Euro-region governments are pitched against the European Central Bank in a dispute over what a potential restructuring of Greece’s sovereign debt would look like. German Finance Minister Wolfgang Schaeuble is calling for private creditors to take more pain while ECB President Jean-Claude Trichet warns such a course may spread contagion. A plan needs to be in place by June 24 to prevent theInternational Monetary Fund from withholding the next instalment of the nation’s bailout. “Systemic risk with Greece is definitely an issue for the market,” said Christophe Herpet, a Paris-based senior portfolio manager at AXA Investment Managers, which manages about 516 billion euros ($747 billion) of assets.