KeNo's Housing and Economic Portal: Tuesday October 4 Housing and Economic stories

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TOP STORIES:

Aid Losses Amid ‘Fragile’ Recovery Keeps Muni Outlook Negative at Moody’s - (www.bloomberg.com) State and local governments may have their credit ratings cut by Moody’s Investors Service, which cited revenue risks as federal economic-stimulus funding ends amid a “fragile” recovery from the recession. State economies have been slow to recover jobs lost to the recession and face costly U.S. health-care mandates, so even with “strong budgetary management” their finances remain strained, Moody’s said today in a report. Municipal governments are still grappling with the effects of the real estate slump and may face state aid cuts, the firm said in a separate report. “Despite modest economic growth and a boost in sales tax, a robust recovery has failed to materialize, and revenues for local governments have declined,” Geordie Thompson, a New York- based analyst, said in the report reaffirming a negative outlook for municipal credit ratings first adopted in 2009. States won’t receive $66 billion in fiscal 2012 as federal stimulus spending ends, Moody’s analysts including Nicholas Samuels said, citing data from the National Association of State Budget Officers. A negative outlook for a credit rating means the company may cut it in the next 12 to 18 months.

Fund Withdrawals Top Lehman as $75B Pulled - (www.bloomberg.com) Investors have pulled more money from U.S. equity funds since the end of April than in the five months after the collapse of Lehman Brothers Holdings Inc., adding to the $2.1 trillion rout in American stocks. About $75 billion was withdrawn from funds that focus on shares during the past four months, according to data compiled by Bloomberg from the Investment Company Institute, a Washington-based trade group, and EPFR Global, a research firm in Cambridge, Massachusetts. Outflows totaled $72.8 billion from October 2008 through February 2009, following Lehman’s bankruptcy, the data show. Bears say investors are abandoning stock managers because there’s no end in sight to the decline that pushed the Standard & Poor’s 500 Index within 2.1 percentage points of a bear market in August. Bulls say the retreat by individuals has been a reason to buy since the bull market began in March 2009 and withdrawals mean money is available to buy stocks in the future.

Euribor-OIS Spread Widens as Greece Concerns Boost Lending Costs - (www.bloomberg.com) A gauge of banks’ reluctance to lend to each other in Europe rose for the first time in a week amid renewed concern Greece is headed for a default. The Euribor-OIS spread, the difference between the three- month euro interbank offered rate and overnight index swaps, was at 79.1 basis points as of 4:18 p.m. in London, from 75.3 at the end of last week, according to data compiled by Bloomberg. That’s within six basis points of the highest level since March 2009, reached Sept. 12. The International Monetary Fund and European Union are reviewing whether Greece can meet the conditions of its international bailout after a two-day meeting of finance ministers failed to result in new measures to support the region. Greece’s economy will shrink 5.5 percent this year and then “notably” in 2012, Finance Minister Evangelos Venizelos said in Athens today.

Massive Riot Outside Shanghai Causes China To Shut Down Solar Plant - (www.businessinsider.com) A solar-panel manufacturing plant in the eastern Chinese city of Haining has been forced to close after hundreds of residents attacked the facility in a 4-day protest over accusations the factory contaminated a nearby river, according to the BBC. The riots began on Thursday and lasted until Sunday, at times turning violent. About 500 villagers unleashed their anger by overturning eight vehicles, damaging four police cars, and destroying offices, reports The New York Times. At least 20 people have been arrested on charges of destruction of property, robbery and disturbing public order, according to The Los Angeles Times. The plant, which is owned by New York Stock Exchange-listed company JinkoSolar, is accused by demonstrators of dumping toxic levels of flouride into local waters, killing large numbers of fish and some pigs.

AYN RAND DISCIPLE: Our Entitlement Programs Are 'Morally Bankrupt' And 'Theft' - (www.businessinsider.com) The U.S. entitlement programs, namely Social Security and Medicare, aren't just financially bankrupt, they're "morally bankrupt." They're also funded by money stolen from hard-working, responsible Americans. That's the conclusion of Yaron Brook, the president of the Ayn Rand Institute. The author of Atlas Shrugged, The Fountainhead, and other books, Ayn Rand is famous for espousing free markets and self-reliance. Yaron Brook, a former finance professor, shares these beliefs. Brook believes that our society should eliminate social programs so we encourage citizens to stand up and take responsibility for themselves. He also argues that Social Security and Medicare are "theft" because the money to pay for them is stolen from those who don't believe in or need the programs. The entitlement programs were created by elected representatives, of course—representatives who could presumably eliminate them if citizens decided they no longer wanted them. So I asked Brook whether the money to pay for the military, police, and other government programs is also stolen. Brook said no. There is a role for government in our society, he says—protecting the people from crooks and outside attacks—so the money is being put to proper use. But if the money for Social Security is being stolen from citizens who don't believe in it, why isn't the money to pay for the military also being stolen from pacifists who don't believe in war?