KeNo's Housing and Economic Portal: Sunday July 31 Housing and Economic stories

Saturday, July 30, 2011

Sunday July 31 Housing and Economic stories

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TOP STORIES:

On debt, credit rating firms flex muscle with downgrade warnings despite U.S. pleas - (www.washingtonpost.com) The Obama administration has mounted an intense behind-the-scenes campaign to keep the nation’s major credit rating companies from issuing threats that they might downgrade the United States over the swelling size of the federal debt. Senior administration officials have been trying for months to convince analysts at the credit rating companies — all part of publicly traded firms — that political leaders in Washington can come to an agreement to tame the debt. At one key moment, worried that news of a potential downgrade could wreak havoc on the markets, officials summoned four Standard & Poor’s analysts to a meeting with nearly every senior member of President Obama’s economic team at which Treasury Secretary Timothy F. Geithnermade an impassioned plea against any action raising doubts about U.S. credit. But S&P didn’t buy the argument — and one of the two other credit rating firms, Moody’s Investor Services, has expressed concern, too.

Germany wants major private contribution to Greece - (www.reuters.com) German Chancellor Angela Merkel said on Sunday she was not aiming for a forced restructuring of Greek sovereign debt, but wanted private sector investors to make a major contribution to a voluntary scheme to rescue Greece. "What we want is as few measures as possible, and a restructuring, as is constantly being mentioned now, also has the negative effect that countries possibly will not make as much of an effort anymore," German Chancellor Angela Merkel told ARD public broadcaster. "I am not working toward it. We are trying everything we can to avoid something that is even tougher. "But I'm saying clearly that the involvement of private creditors shows that we have a special problem in Greece due to the very, very high debts." Germany wants private creditors of Greece -- banks, insurance funds and other investors -- to shoulder some of the burden, preferably as much as 30 billion euros, in bailing out the country for a second time.

Banks, Regulators Stopped Tougher Stress Tests, Telegraph Says - (www.bloomberg.com) National regulators and lenders stopped the European Banking Authority from setting tougher stress tests by making it difficult to obtain accurate data, the EBA told analysts, according to the Sunday Telegraph. EBA Chairman Andrea Enria outlined the difficulties and the regulator said it would have liked to make the tests on 91 of the region’s banks more strenuous, the newspaper reported.

Gloomy consumers cast dark cloud over economy - (www.reuters.com) U.S. consumer confidence hit a near 2-1/2 year low in early July and manufacturing output stalled in June, further frustrating expectations of a quick economic growth rebound in the second half of the year. Worries about stubbornly high unemployment pushed the Thomson Reuters/University of Michigan's index of consumer sentiment to 63.8, the lowest since March 2009, a report showed on Friday. Economists had expected the index to climb to 72.5 from 71.5 in June. Separate data from the Federal Reserve showed manufacturing output stagnated last month partly due to supply disruptions in the auto sector related to the earthquake in Japan.

Italian, Spanish, Irish, Portuguese Bonds Decline as Debt Crisis Spreads - (www.bloomberg.com) Italian two-year note yields surged the most in over a year, as the nation’s borrowing costs rose at a debt sale and contagion from Greece’s debt crisis spread across the 17-nation euro region. Yields on notes from Ireland, Portugal and Greece soared to euro-era records, while German bunds advanced for the fifth time in six weeks as Europe’s politicians clashed over how to craft a new rescue plan for Greece involving private bondholders. Spanish and Italian 10-year bonds slumped, sending yields to the most since the euro’s inception in 1999, as borrowing costs rose to a three-year high at a sale of five-year Italian securities. France, Spain and Germany plan to sell debt next week. “The market isn’t looking at fundamentals, it is just worried about contagion,” said Huw Worthington, a fixed-income strategist at Barclays Capital in London. “There’s been growing infection across most of the euro-region issuers and it’s hard to see what the catalyst is going to be to get confidence back into the markets with all the issuance next week.”