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US Postal Service 'Unsustainable' Situation, Leader Says - (www.cnbc.com) U.S. Postal Service officials understand it needs major cutbacks to survive and are willing to work with Congress to do whatever's necessary, including ending Saturday service, Postmaster General Patrick Donahoe told CNBC Friday. “The situation we have is unsustainable,” Donahoe said in reaction to comments earlier this week from Rep. Darrell Issa, who said more than 200,000 postal jobs need to go. In fact, the USPS itself has put forward a broad plan that includes terminating Saturday mail delivery, closing more than 3,600 facilities across the country, and addressing the $5.5 billion hole in the service's pension plan and the $5.1 billion operating deficit from 2011. Most recently, the service reached an impasse with two unions that have been working without a contract since November. The USPS has sought authority to lay off workers and reduce benefits.
Why Foreclosure Crisis Will Last Longer Than Expected - (www.cnbc.com) The number of new foreclosures in 2011 dropped nearly 40 percent, according to year-end numbers just released by Lender Processing Services; there is, however, little cause for celebration. The fall is largely due to moratoria and process reviews stemming from the so-called “robo-signing” foreclosure paperwork scandal. Mortgage delinquency rates were largely unchanged from last year, which means all that distress will be pushed forward to 2012 and beyond. To give you an idea of just how much the “robo” scandal is toying with the numbers, LPS compared states that require foreclosures to go through the courts versus states that don’t (judicial versus non-judicial) and found the following:
- 50 percent of loans in foreclosure in judicial states have not made a payment in two years, as opposed to 28 percent in non-judicial states.
- Foreclosure sale rates in non-judicial states are about four times those in judicial states.
Greek Debt Wrangle May Pull Default Trigger - (www.bloomberg.com) Opposition to payouts on Greek credit-default swaps from European Union policy makers is softening as disputes over a voluntary debt exchange threaten to push the nation into default. Any agreement between the Greek government and the Washington-based Institute of International Finance on debt write-downs will only bind 50 percent of investors in the 206 billion euros ($270 billion) of notes being negotiated, Barclays Capital estimates. Hedge funds may resist a deal, seeking to get paid in full or compensated from insurance contracts. Greece must repay 14.5 billion euros of bonds in March and an agreement that triggers as much as $3.2 billion of default insurance may be necessary unless all bondholders approve, said Marco Buti, head of the European Commission’s economics division. EU Economic and Monetary Affairs Commissioner Olli Rehn said today in Davos that a deal is “very close.”
Banks Face Bind Over Cash Pile - (online.wsj.com) After receiving nearly half a trillion euros in cheap loans from the European Central Bank last month, the Continent's banks face a dilemma: to invest the money in lucrative but potentially risky government bonds or hoard the cash at a loss. The choice reflects the uncertainty surrounding Europe's financial system at a time when dark clouds continue to hover over the euro-zone economy and its common currency. Regardless of whether banks use the money to buy bonds or simply stash it at the central bank for safekeeping, consumers and businesses are unlikely to see much of the funds pumped back into the economy in the form of loans. The ECB in December extended about €489 billion ($640.88 billion) in three-year loans to hundreds of banks that operate in the euro zone. The loan program was primarily designed to fend off a potential cash crunch. European banks face hundreds of billions of euros of debt coming due this year and, with funding markets shut to all but the strongest institutions, some banks faced the prospect of serious liquidity problems.
FITCH GOES ON RAMPAGE: CUTS SPAIN, ITALY, BELGIUM, CYPRUS, AND SLOVENIA - (www.businessinsider.com) Boom!!! Fitch just cut the long-term issuer ratings of 5 EU sovereigns: Belgium: AA+ to AA.. Spain: AA- to A… Italy: A+ to A-… Cyprus: BBB to BBB-… Slovenia: AA- to A… It affirmed Ireland's BBB+ rating with a negative outlook. While Fitch says that it supports EU leaders actions to address the crisis so far, a lot more has to happen before these countries are out of trouble:
Greece's Outlook Still Grim - (www.cnbc.com)
EU, IMF press Greece on reforms before aid flows - (www.reuters.com)
Central Banks Diversify Their Arsenals - (online.wsj.com)
Spanish Unemployment Rises to 22.9% - (www.bloomberg.com)
Monti Takes on Italy Bureaucracy in Policy Push - (www.bloomberg.com)
Japan prices fall, mild deflation to persist - (www.reuters.com)
China Home Prices Must Fall 30% to Reach ‘Reasonable’ Level, Lawmaker Says - (www.bloomberg.com)
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