KeNo's Housing and Economic Portal: Monday January 2 Housing and Economic stories

Sunday, January 1, 2012

Monday January 2 Housing and Economic stories

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The Year Governments Lost Their Credibility - (www.nytimes.com) For most of 2011, it appeared that the year would be decent, if not particularly interesting, for investors. Then Europe announced its second plan to rescue Greece, the first one, reached more than a year earlier, having turned out to be completely inadequate. That’s when 2011 became exciting and the losses began to pile up. The summit meeting of European leaders on July 21 in Brussels called for private investors to take losses of 21 percent on some Greek bonds, but for a rescue package to keep losses from being worse. At first markets reacted with enthusiasm, but that deal did not last long enough to even write out the details.

$6.3tn wiped off markets in 2011 - (www.ft.com) Almost $6.3tn was erased from global stock markets this year as the eurozone financial crisis reverberated across the world in the latter half of 2011, calling into question the future of the world’s largest currency bloc. Global stock market capitalisation dropped 12.1 per cent to $45.7tn according to Bloomberg data, while the euro ended the year as the worst performing major currency after finally starting to succumb to the continent’s financial and economic woes in December. The euro had proved resilient for much of the year – burning hedge funds that bet on a steeper decline – but on Friday touched a 10-year low against the Japanese yen, and is near lows against the dollar last touched a year ago.

State revenue rises, but not enough to offset cuts - (finance.yahoo.com) College students clash with administrators over steeply rising tuition. Public employees shut down statehouses amid cuts to pay and retirement benefits. Teachers and social welfare advocates protest budget cuts. Lawmakers struggle to cope with sharp declines in tax revenue. If government budgets were once an eye-glazing topic, they moved to the top of the public agenda in 2011 as state and local governments faced some of their most difficult decisions since the national recession began in late 2007. A fourth year of declining tax revenue meant deep spending cuts and, in many states, a rethinking of the role of government and the scope of the services it should provide. Budget experts expect last year's tumult to give way to somewhat steadier times in 2012, as tax revenue continues a slow rebound. But few budget planners are celebrating, as cautious optimism about an uneven economic recovery is leading to subdued expectations.

As Spain Acts to Cut Deficit, Regional Debts Add to Woe - (www.nytimes.com) Facing a wider than expected budget deficit, Spain’s new government announced a $19.3 billion package of tax increases and spending cuts on Friday and admitted that the country’s finances were probably even worse because of overspending by the autonomous regions. Spain’s new prime minister, Mariano Rajoy, said the austerity package was needed to maintain the confidence of European bond markets after it became clear that the budget deficit was expected to reach 8 percent of gross domestic product this year — two percentage points above the government’s target. And while Spain’s overall fiscal status is nowhere near as dire as Italy’s, it has another problem all its own, as the new budget minister, Cristóbal Montoro, made clear Friday: serious budget shortfalls in its 17 autonomous regions, which have spent recklessly in the past decade.