KeNo's Housing and Economic Portal: Wednesday August 17 Housing and Economic stories

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Black Shirts On The March In "Lawless" Greece - (www.businessinsider.com) Far-right fascist groups are on the rise in Greece, leading authorities to beef up security measures in fear of an attack similar to the slaughter in Norway two weeks ago, the Associated Press reports. While governments throughout Europe have been increasing their vigilance of right-wing extremists, convening an emergency meeting in Brussels last week to discuss the problem, Greece seems particularly fertile soil for a fascist movement to develop. The combination of ongoing financial collapse and rampant illegal immigration problem have led to social strife and widespread xenophobia, AP reports.

With debt deal, states brace for cuts in federal aid - (www.washingtonpost.com) The domestic spending cuts contemplated in the debt-ceiling deal are sure to compound the dire fiscal situation confronting the states, which already are reducing jobs and slashing once-untouchable programs to balance their budgets. The measure that President Obama signed into law on Tuesday does not lay out specific reductions, but with federal dollars accounting for a third of state revenue, analysts said steep cuts will be unavoidable. “The debt-limit deal inevitably will lead to large federal cuts in programs for state and local governments,” said Nicholas Johnson, vice president for state fiscal policy at the Center on Budget and Policy Priorities. “This is going to begin in the middle of the worst year for state budgets.” Cutbacks at the state and local levels are a primary reason that the nation’s economic growth has slowed to a crawl. The debt-ceiling deal calls for a $900 billion reduction in projected domestic spending over the next decade. The savings will be achieved by imposing spending caps, with the exact allocations to be determined by Congress. Adding to the uncertainty, a special congressional committee created by the debt measure is charged with coming up with an additional $1.2 trillion in cuts by the end of the year. And many analysts are concerned that some of those cuts could come from federal funding for Medicaid, which is among the largest expenses in many states. Medicaid, the joint federal-state health-care program for the poor and disabled, also represents by far the largest source of federal aid to states.

Bank of America Said to Be Seeking Separate Mortgage Foreclosure Deal - (www.bloomberg.com) Bank of America Corp. (BAC) has held settlement negotiations with some states over home foreclosures separately from talks with a larger group of state and federal officials, two people familiar with the matter said. The proposed deal would give the bank liability releases from state and federal claims over its mortgage practices in exchange for reducing loan principals to help struggling homeowners, said the people, who didn’t want to be identified because the discussions aren’t public. State and federal officials are negotiating a settlement with the five largest mortgage servicers, including Bank of America, over their servicing and foreclosure practices. Attorneys general from all 50 states began investigating the practices last year to determine whether banks and loan servicers used faulty documents to justify foreclosures.

SNB Unexpectedly Cuts Rate to Curb Swiss Franc’s Gains - (www.bloomberg.com) The Swiss central bank unexpectedly cut interest rates and said it will increase the supply of francs to money markets to curb the “massively overvalued” currency. The franc dropped from a record. The Swiss National Bank lowered its target for the three- month Libor to “as close to zero as possible” from 0.25 percent. The Zurich-based central bank said it will also expand banks’ sight deposits, or cash which can be withdrawn on demand, to 80 billion Swiss francs ($104 billion) from 30 billion francs and repurchase outstanding SNB Bills, according to an e-mailed statement today. The franc, considered a haven in times of turmoil, has surged 10 percent against the euro over the past two months as Europe’s debt crisis worsened, hurting Swiss exports and economic growth. The SNB joins the U.S. Federal Reserve and the Bank of Japan, which have also cut their benchmark rates to near zero in an effort to boost their economies.

Italy seeks EU political support in market turmoil - (www.reuters.com) The European Union acknowledged on Wednesday that investors now doubt whether theeuro zone can overcome its debt crisis and Italy's Silvio Berlusconi called for more action to ward off market attacks. European Commission President Jose Manuel Barroso said a surge in Italian and Spanish bond yields to 14-year highs was cause for deep concern although they did not reflect the true state of the third and fourth largest economies in the currency area. "In fact, the tensions in bond markets reflect a growing concern among investors about the systemic capacity of the euro area to respond to the evolving crisis," Barroso said in a statement. He urged member states to speed up parliamentary approval of crisis-fighting measures agreed at a July 21 summit meant to stop contagion from Greece, Ireland and Portugal, which have received EU/IMF bailouts, to larger European economies.