KeNo's Housing and Economic Portal: Tuesday August 16 Housing and Economic stories

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Tepco Reports Second Deadly Radiation Reading at Fukushima Plant - (www.bloomberg.com) Tokyo Electric Power Co. reported a second deadly radiation reading at its wrecked Fukushima nuclear plant north of Tokyo, following a radioactivity level discovered yesterday that would cause death within weeks. The utility known as Tepco said today it detected 5 sieverts of radiation per hour in the No. 1 reactor building. Yesterday in another area it recorded radiation of 10 sieverts per hour, enough to kill a person “within a few weeks” after a single exposure, according to the World Nuclear Association. Radiation has impeded attempts to replace cooling systems to bring three melted reactors and four damaged spent fuel ponds under control after a tsunami on March 11 crippled the plant. The latest reading was taken on the second floor of the No. 1 reactor building and will stop workers entering the area.

Central Falls Bankruptcy Driven by Pensions Casts Shadow Over Rhode Island - (www.bloomberg.com) Central Falls, Rhode Island, whose motto is “a city with a bright future,” has cast a shadow across the rest of the state by entering bankruptcy. Rhode Island’s poorest city sought court protection yesterday after retirees failed to accept cuts in pensions and benefits. That pushed the municipality into insolvency, according to Robert Flanders, a former state Supreme Court justice named to oversee Central Falls finances earlier this year. The city asked the court to let it impose “a prudent plan” to adjust what it pays retired workers. The city’s plight echoes imbalances found in other municipalities across the U.S., including Vallejo, California, and Harrisburg,Pennsylvania, where local governments failed to curb spending to fit shrinking economies. In Rhode Island, the move into court is sounding an alarm because many local pension plans are “considerably underfunded,” the state’s auditor- general said in a report last year. “Unless there’s pension reform, Central Falls may not be the last municipality in Rhode Island that faces bankruptcy,” said Gary Sasse, former Governor Donald Carcieri’s chief of administration. “No question Central Falls was unique and was an economic basket case but there are other communities in the state with locally administered pension plans that are in serious trouble.”

Banks in BRICs Signaling Credit Crisis With Loans Showing Increasing Risks - (www.bloomberg.com) Banks in the biggest emerging markets are losing the confidence of investors as loans turn sour after a two-year credit binge. Brazil’s financial shares have lost more this year than counterparts in crisis-stricken Europe as consumer defaults hit a 12-month high in June and borrowing costs climbed to 46 percent. Bank stocks in China are trading at lower valuations than global emerging-market indexes for the first time since 2006. The country faces a financial crisis with bad debt that may jump to 30 percent of total loans, Fitch Ratings said. In India, the cost of insuring banks against default has climbed to the highest level in a year. Loan-loss provisions at State Bank of India (SBIN), the nation’s largest lender, rose 77 percent in the first three months of 2011, while net income fell 99 percent.

Fed Policy Makers May Consider Additional Stimulus as U.S. Economy Slows - (www.bloomberg.com) Federal Reserve policy makers may start weighing additional steps to prop up the recovery after growth fell below 1 percent in the first half of this year and economists began cutting second-half growth forecasts. “At a minimum, the FOMC will have a serious debate about the policy options -- what they should do, and what they expect to get from it,” said Roberto Perli, a former associate director in the Fed’s Division of Monetary Affairs, referring to the Federal Open Market Committee. “Growth in the first half was dangerously close to zero,” said Perli, director of policy research at International Strategy & Investment Group.

Italy, Spain 10-Year Bond Spreads Reach Euro-Era Record on Growth Concern - (www.bloomberg.com) “Suddenly, Italy joined the other peripherals,” said Justin Knight, a European rate strategist at UBS AG in London. “Investors are, in general, overweight Italy versus other peripheral markets, and it’s going to be a difficult position to unwind.” Italy’s Financial Stability Committee is scheduled to meet later today to discuss the increase in bond yields, Ansa reported, without saying where it got the information. Finance Minister Giulio Tremonti will meet officials from the Bank of Italy and market regulators, the news agency said. Spanish 10-year yields rose eight basis points to 6.28 percent and reached 6.46 percent, the most since 1997. That pushed the spread over similar-maturity German debt as high as 404 basis points. The crisis risks worsening should the Spanish yield touch 6.5 percent, RBS’s Sian said. “Anything materially above that risks an acceleration like we saw for Greece, Ireland and Portugal,” he said. “The political willingness to backstop the European Union is now what the market needs.”