KeNo's Housing and Economic Portal: Monday June 27 Housing and Economic stories

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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.