Daily Digest

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Daily Digest 6/27 - Merkel Urged To Back Crisis Measures, Outlook Darkens For Gloomy BofE

Wednesday, June 27, 2012, 9:39 AM


Germany's Liability From Rescue Funds Up To E310 Bln: Press

Germany's maximum liability from the Eurozone's temporary and permanent rescue funds totals E310.3 billion, according to a German Finance Ministry report obtained by German business daily Handelsblatt. The report, sent to the parliament's budget committee, argues that even this total liability is far less than the cost of a complete break-up of the Eurozone, though it does not estimate the cost of such a collapse, Handelsblatt reported.

Farmers' costs to rise by $3.7bn by 2014 under carbon tax, analysts say (Australia)

AUSTRALIA'S farmers will be hit with a massive $3.2 billion jump in annual costs when the carbon tax takes effect next week, slashing industry profitability. A study released yesterday by business analysts IBIS World forecast the new carbon tax imposts would push down revenue for the agricultural sector next year by 6.4 per cent, from $54 billion to $50.5 billion in 2012-13. IBIS analysts said despite farmers being exempt from paying a direct tax on the 15 per cent of Australia's carbon emissions produced on-farm, the cost of running their food and fibre businesses would rise by an even bigger $3.7 million from 2014

Rupee slump deepens India private equity quagmire

The rupee has been under pressure as India's economy weakens and investors worry about a widening current account deficit. Ratings agencies Fitch and Standard & Poor's, citing fiscal policy woes and risks to growth, have cut their outlook on India's credit rating, threatening its investment grade status. The Reserve Bank of India, which has stepped into the market to sell dollars, on Monday announced a rise in foreign investment limits in government bonds and other steps to bolster the rupee, but the currency drew little support as the market had hoped for more aggressive measures.

Heavily exposed to Greece, Italy: France fights to avoid euro zone bank contagion

“I think the French are pushing this for a simple reason: They bloody well know they’re next in line. They’re after Italy,” said Nicholas Spiro, head of consultancy Spiro Sovereign Strategy. Apart from France’s own financial stress — its gross debt is about 90% of gross domestic product and rising — its banks have major exposure to the euro zone’s most fragile economies.

Merkel urged to back euro crisis measures

Sigmar Gabriel, leader of Germany’s opposition Social Democratic party, on Tuesday called for Berlin to back urgent crisis measures to reduce eurozone interest rates, warning that without such action “the currency union will simply explode”.

US fiscal cliff is as bad as eurozone crisis, says Bootle

The looming ‘fiscal cliff’ facing the US following November’s presidential election could ultimately prove as destructive as the eurozone crisis, Roger Bootle has warned. Bootle, founder of Capital Economics, argued that there is a ‘reckoning coming in America’ since the country is ‘peculiarly’ bad at resolving the friction between its historically low tax regime and the penchant for high levels of public spending it has shown in recent memory.

France boosts minimum wage as spending freeze bites

France's new government announced a cosmetic 2 percent increase in the minimum wage on Tuesday as it seeks to soften the blow from tax hikes and spending freezes to the struggling economy. President Francois Hollande is pushing for Europe to refocus away from austerity towards measures to boost growth and is relying at home largely on planned tax increases to shrink the public deficit within a target of 4.5 percent of gross domestic product by the end of 2012.

Detroit resident's answer to busting blight: Do it yourself

The numbers are inescapable: Estimates of just how many blighted buildings still stand in Detroit– most of them houses past rehabilitation, nests of crime and the most visible signs of the city’s distress – range from 30,000 to as many as 70,000. It costs about $10,000, on average, to take down one of them. Which means that Detroit needs anywhere from $300 million to $700 million to get the job done, when its entire city budget for next year is $1.1 billion, with a $200 million deficit.

The states cutting the most to schools and cities

Funding from local governments’ two biggest sources -- state aid and property taxes -- fell for the first time since 1980, according to a report released this month by the Pew American Cities Project. The decrease in funding from these two sources has forced many local areas to cut expenses significantly. Relying on the Pew report, 24/7 Wall St. identified eight states slashing local funding to cities, towns, counties and school districts.

Merkel: no EU total debt liability in my life: sources

Merkel has warned against focusing on proposals for shared debt liability - such as the eurobonds favored by France's new Socialist leader Francois Hollande - and other "easy" solutions to the euro zone crisis at this week's European Union summit.

She said in a speech on Monday that sharing debt liability within the 17-nation single currency area would be "economically wrong and counterproductive".

French Debt Less Attractive as Reality Bites

During his first two weeks in office, President Francois Hollande saw French borrowing costs go in one direction, and that was down. Not anymore.

The yield on the French benchmark 10-year bond advanced to 2.63 percent at 4:00 p.m. in Paris, up from a euro-era low of 2.071 percent on June 1. It was as high as 2.902 percent on May 15, when Hollande took office. The rate is at risk of rising further with French banks vulnerable to the region’s debt-ridden nations as economic growth stalls.

Spain deficit already near 2012 target by May

Spain has probably already exceeded one of its budget deficit ceilings for the full year, government figures showed on Tuesday, underlining the pressures on Spanish finances as it negotiates an international bailout for its banks. Spain's central government deficit was 3.41 percent of gross domestic product from January to May, indicating it may have passed a year-end target of 3.5 percent, Treasury figures showed on Tuesday. Early cash transfers of almost 9 billion euros to Spain's struggling regions had stretched the deficit to 36.4 billion euros ($45.4 billion) by the end of May, the Treasury said.

Spain May Scrap Tax Rebate Rajoy Introduced as Election Pledge

Spain’s government may increase taxes to rein in the budget deficit, including scrapping a rebate for homeowners that Prime Minister Mariano Rajoy introduced six months ago to meet a campaign pledge. The government is considering eliminating the tax rebate for mortgage holders, in line with a proposal from the International Monetary Fund, and may introduce an environmental levy, Deputy Budget Minister Marta Fernandez Curras told reporters today in Madrid. She said she didn’t know when or by how much sales tax may rise, a step the IMF also advocated.

French Jobless Claims Rise to 12-Year High as Growth Stalls

French jobless claims rose to the highest in more than 12 years in May as stalling growth prompted companies to trim payrolls. The number of people actively looking for work rose by 33,300, or 1.2 percent, to 2,922,100, the Labor Ministry said today in an e-mailed statement from Paris

(This next one is a blog at Smartmoney, so you may or may not want to post it)

High Court Can’t Halt Rising Health Costs

Experts on both sides of the political divide point to Massachusetts as a test run for such health care reform. The state introduced its own health care reform in 2006 which required residents to buy health insurance – similar to Obamacare’s “individual” mandate. But in the three years following the reform, premiums jumped 18% for a single plan, compared to 13% for the national average, according to a report by Consumer Watchdog. Family plan premiums rose nearly 20% in the state, versus 14.5% nationally, according to the report.

10 Million Underwater Mortgages And Shadow Inventory Worth $246B Mean Housing Trouble

Even after Fed Chairman Ben Bernanke has forced interest rates to record lows, allowing people to refinance their mortgages at cheaper rates, activity remains depressed. While home prices may be nearing a bottom, by no means is the market about to rebound. Actually, it remains at risk if the global economy continues to slow, which could lead to a string of defaults and another leg down in what has been a lackluster housing market.

Gloomy BoE sees outlook darken

Britain's economic outlook has worsened markedly in the space of just six weeks due to the deepening euro zone crisis and signs that a global slowdown is taking root in the United States and emerging markets, the Bank of England said on Tuesday.

Bank Governor Mervyn King told legislators the world is not yet halfway through the financial crisis that began in 2008, and that Britain risked a downward spiral as businesses continue to put off investment due to the turmoil in the euro zone.

Nomura downgrades top three Greek banks

The brokerage expects the banks to face a potential capital shortfall of 22 billion euro to 24 billion euro for this year and the next.

Greek banks need recapitalization to meet stricter European Union requirements, even as they have to set aside more money to cover potential losses from their borrowers, given the current economic situation and unemployment rates.

"With intensive outflow of deposits, Greek banks continue to derive liquidity from the European Central Bank and the relatively expensive emergency liquidity assistance or ELA funding, which has a negative impact on net interest income," Nomura said in a note to clients.

France 'ready to share budget sovereignty'

France must agree to share sovereignty over its budget with its EU partners, French Budget Minister Jerome Cahuzac said on Tuesday.

He told BFM TV and RMC radio: “This is what we are talking about, budget solidarity in Europe which implies that not only that the French budget, but also the German, Italian and Spanish budgets be subjected to a review by all our partners.” He said: “This does not mean abandoning sovereignty, it is sharing.”

Mayor: Stockton appears headed for bankruptcy, as mediation deadline passes

Stockton could become the largest U.S. city to declare bankruptcy after a Monday deadline to make a deal with its creditors passed and the city’s mayor said she did not believe a settlement had been reached. Mayor Ann Johnston told KCRA-TV (http://bit.ly/LpyGkr) on Tuesday that a formal bankruptcy filing now appears “very likely.”

Egan-Jones cuts Germany to A-plus, outlook negative

Credit ratings agency Egan-Jones on Tuesday cut Germany's rating to A-plus with a negative outlook from AA-minus, noting that the fallout should Greece exit the euro zone needs to be watched. Whether on not Greece or other euro zone members exit the monetary union, Germany will be left with "massive" additional, uncollectible receivables, Egan-Jones said in a statement.

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saxplayer00o1's picture
Status: Diamond Member (Offline)
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Posts: 4263
Spain's PM warns his country cannot afford to finance itself ahe

"Spain's Prime Minister Mariano Rajoy today warned that his country could not carry on funding itself for long.

He said he will ask other European Union leaders at a summit starting tomorrow to use existing options to stabilise financial markets.
Speaking in parliament before a meeting of European heads in Brussels tomorrow and Friday, Mr Rajoy warned Spain would not be able continue financing itself at current yields for a long time."





Italy Sells 9 Billion Euros of Bills as Rates Rise on Contagion

UK borrowing higher than expected in May

Tall's picture
Status: Platinum Member (Offline)
Joined: Feb 18 2010
Posts: 564
Pipline accidents - Alberta's oil sands - difficult to fix

These tarry spills have impacted people, surface waters and farmland and are proving difficult to clean up.



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