KeNo's Housing and Economic Portal: Monday June 6 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Greece fails to pay medical bills - (www.ft.com) The Greek government has fallen sharply behind on payments to healthcare companies only months after restructuring its €5.4bn ($7.6bn) debt to suppliers, raising doubts about patient safety while revealing the looming cash-flow crisis faced by the state. The pharmaceutical industry says only 30 per cent of €1.2bn in payments owed by public hospitals since the start of last year have been made. Of debt due from the start of 2011, just 1 per cent has so far been paid. The cash crunch in the health sector adds to the urgency of measures planned by the Greek government to raise revenue through a pledge to sell €50bn of state-controlled assets. Fears are mounting in eurozone capitals, however, that the socialist leadership of George Papandreou, prime minister, is not committed to the painful measures necessary to meet revenue targets. “The situation has become dramatic,” the Hellenic Association of Pharmaceutical Companies said in a letter to the ministry of health, warning that it was “only a matter of time before drug shortages on the market begin to occur”. The concerns are shared by other medical suppliers, many of which have tightened payment terms and some of which are themselves struggling to continue operating.

States shorten duration for unemployment benefits - (finance.yahoo.com) Some of the states that have drained their unemployment insurance funds are cutting the number of weeks that a laid-off worker can count on those benefits. Legislators are trying to limit tax increases for businesses to replenish the pool and are hoping the federal government keeps stepping in when the economy slumps. Michigan, Missouri and Arkansas recently reduced the maximum number of weeks that the jobless can get state unemployment benefits. Florida is on the verge of doing so. Unemployment in those states ranges from 7.8 percent in Arkansas to 11.1 percent in Florida. The benefit cuts come as legislatures deal with the damage that the recession inflicted on state unemployment insurance programs. The sharp increase in the number of people who lost their jobs drained the reservoir of money dedicated to paying out benefits. About 30 states borrowed more than $44 billion from the federal government to continue payments to laid-off workers. Many states hastened the insolvency of their funds by keeping balances at historically low levels going into the downturn. The burden of replenishing the funds and paying off the loans will fall primarily on businesses through higher taxes, but the benefit cuts are an effort to limit the tax increases. States usually provide up to 26 weeks of benefits to laid-off workers. Michigan and Missouri have cut that to a maximum 20 weeks. Arkansas went to 25.

Spain's Socialists trounced amid economic woes - (finance.yahoo.com) Spain's ruling Socialists suffered a crushing defeat to conservatives in local and regional elections Sunday, yielding power even in traditional strongholds against a backdrop of staggering unemployment and unprecedented sit-ins by Spaniards furious with what they see as politicians who don't care about their plight. Prime Minister Jose Luis Rodriguez Zapatero said the result was due punishment of his government for the state of the economy -- the jobless rate is a eurozone high of 21.3 percent. But he said he had no plans to move up general elections, which must be held by March of next year, and pledged to press on with job-creating reforms despite the loud outcry of opposition to his party. The win for the conservative opposition Popular Party puts it in even a stronger position to win the general elections and return to power after eight years of Socialist rule. In what Spanish media said was the worst performance on record by the Socialist Party in local and regional elections, the numbers reflecting the loss were stunning: the conservative Popular Party won at the municipal level by about two million votes, compared to 150,000 in its win in 2007, and in 13 regional governments that were up for grabs, Zapatero's party lost in virtually all of them.

U.S. State Legal Chiefs Sharpen Mortgage Investigation, WSJ Says - (www.bloomberg.com) U.S. state attorneys general are sharpening their inquiries into mortgage-business practices by looking for misdeeds when banks originated home loans and packaged them into securities, the Wall Street Journal reported, citing unidentified people familiar with the matter. New York State Attorney General Eric Schneiderman has issued subpoenas to four bond-insurance companies, Ambac Financial Group Inc. (ABKFQ), Assured Guaranty Ltd. (AGO),MBIA Inc. (MBI) and Syncora Holdings Ltd. (SYCRF), as part of his investigation, the newspaper said. While the four companies have been asked to provide information, they aren’t the subject of the investigation, the Journal said. An MBIA spokesman said the company will comply with the subpoena; a Syncora spokeswoman confirmed that a subpoena has been received, while declining to comment further; an Assured Guaranty spokeswoman declined to comment on whether a subpoena has been received; and a spokesman for Ambac declined to comment, the newspaper said.

S&P’s Italy Warning May Fan Contagion as Greece Cuts - (www.bloomberg.com) Greek Prime Minister George Papandreou’s Cabinet is set to endorse additional deficit cuts and asset sales, fending off speculation that the country is headed to a restructuring. The cost to insure Greek debt against default rose to a record and the yield on its 10-year bonds increased to a euro- era high after Standard & Poor’s said May 20 it may cut Italy’s credit rating. That warning came hours after Fitch Ratings cut Greece three grades. “Greece risks a sovereign default and finance ministers have expressed strong doubts about the sluggish progress,” French Finance Minister Christine Lagarde said in a May 20 interview with Austria’s Der Standard. More than a year after European policy makers approved a 750 billion-euro ($1.1 trillion) bailout blueprint to stem the sovereign crisis, bond yields in debt-laden peripheral countries are at record highs and officials are floating plans to extend Greek repayments.