Category: Resources

Greek cabinet supports Papandreou’s referendum plan, markets fall in panic

Vittorio Hernandez – AHN News

Athens, Greece (AHN) – The Greek cabinet supported on Tuesday Prime Minister George Papandreou’s plan to submit the European Union (EU) debt deal to citizens although the rescue package may place the country in a worse financial situation.

Papandreou said the referendum results will represent a clear mandate on how Greeks want the government to approach the country’s debt problem and future use of the euro currency. Papandreou promised to abide by the referendum results.

Prior to the referendum, Papandreou’s Socialist Party will submit itself to a confidence vote before the Parliament on Friday.

European leaders were surprised with Papandreou’s plan to submit the debt deal to a referendum vote. The French and German governments, which are the largest holders of Greek debts, wanted the rescue deal implemented at the soonest possible time.

News of a referendum, which would likely reject the deal because it carries another round of austerity measures, sent markets to panic and the European debt crisis back to square one after a week of intense EU leaders’ meeting in Brussels.

The FTSE closed down 2.2 percent at 5421 after it initially declined 5 percent. Both the German Dax and French Cac indices dipped 5 percent at closing time, and the Dow Jones closed down by almost 2.5 percent.

French President Nicolas Sarkozy and German Chancellor Angela Merkel will meet with EU and International Monetary Fund officials on Wednesday in Cannes. Papandreous will also meet with Merkel and Sarkozy on the sidelines of the G20 Summit in France.

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New fed rules to aid more underwater homeowners

Diane Alter – AHN News Reporter

Washington, DC, United States (AHN) – Monday morning the Federal Housing Finance Agency announced new rules that will allow many more “underwater” homeowners, those who owe more than their properties are worth, to refinance at current historical low mortgage rates.

Up to a million borrowers are expected to take advantage of the new program, the FHFA estimates. Originally rolled out in early 2009, the program has fallen far short of the number of people it was expected to help.

Prior to the new rules, only borrowers who owed more than 25 percent more than their homes are worth could participate in the program. The new rules have no cap on how much a borrower owes.

Only mortgages backed by Fannie Mae and Freddie Mac will be eligible under the new rules.

Officials hope the new rules will help the ailing housing market and the flailing economy. By reducing monthly payments, more homeowners will hopefully avoid foreclosure and have more cash to spend, giving a much-needed boost to the depressed economy.

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Oil, Copper Futures Rise on G20 Talks

Jupiter Kalambakal – AHN News Reporter

London, United Kingdom (AHN) – Oil and copper futures posted gains on Monday amid wrap-up talks among G20 finance chiefs where parts of a plan to contain the eurozone’s debt crisis and prevent a possible Greek default were approved over the weekend.

Copper metal for delivery rose 1 percent to $7,619.50 a metric ton on the London Metal Exchange, the biggest increase since Sept. 27.

Copper for December delivery on the Shanghai Futures Exchange advanced 0.7 per cent to $8,846 a ton.

On one end, oil futures jumped by as much as 1.1 percent, maintaining advances from the biggest close in almost a month. Monday’s figures improved oil’s 4.6 percent growth last week.

Crude for November delivery edged up as much as 91 cents to $87.71 a barrel in electronic trading on the New York Mercantile Exchange. It progressed at $86.80 on Oct. 14, the biggest close since Sept. 20. Prices were down 4.3 per cent this year.

Meanwhile, Brent oil for December grew 45 cents, or 0.4 per cent, to $112.68 a barrel on the London-based ICE Futures Europe exchange.

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Americans favor raising tax rate on wealthy to help nation says survey

Linda Young – AHN News Writer

Washington, D.C., United States (AHN) – A majority of Americans favor raising taxes on wealthy people as a way to reduce the national debt.

Pew Research found that 67 percent of Americans approve of raising the tax rate on those with incomes over $250,000.

That figure is slightly higher than the 66 percent who favored that idea in May.

Only 30 percent say they do not approve of raising the tax rate for wealthy Americans with incomes above $250,000.

Broken down by political affiliation, 82 percent of Democrats support such a tax increase, as do 67 percent of independents while only 47 percent of Republicans support a higher tax on the wealthy.

Pew researchers also polled people on their confidence in Republican Congressional leaders to do the right thing when it comes to dealing with the federal deficit.

Only 35 percent of those surveyed say they have a great deal or fair amount of confidence in Republican leaders, which was down from 47 percent in May. Moreover, 62 percent say they have little or no confidence in the Republican leaders to deal with the federal deficit.

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Friendly’s restaurants prepping for bankruptcy

Diane Alter – AHN News Reporter

Wilbraham, MA, United States (AHN) – The Friendly’s restaurant chain is preparing for a possible bankruptcy filing as early as next week, the Wall Street Journal reported Friday.

The Wilbraham, MA, company best known for its hamburgers and sundaes employs roughly 10,000 people and operates more than 500 restaurants.

Economic conditions have weighed heavily on the chain. Fewer consumers are spending money to dine out and rising commodities prices for staples such as corn, butter and coffee have drained the company of cash. Other restaurant chains have faced similar fates, such as Quiznos and Sbarro.

Friendly’s has more than $250 million in debt on its books. The company is in talks with Wells Fargo for $70 million in debtor-in-possession financing that would keep it above water during bankruptcy proceedings.

Friendly’s had humble beginnings. It began as a small ice cream shop opened by the Blake brothers during the Great Depression in Springfield, MA. It expanded along the East Cost and was sold to Hershey in 1979. Friendly’s changed hands again before eventually being taken private by Sun Capital Partners Inc. of Boca Raton on 2007.

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Moody’s cuts credit ratings of eight Greek banks

Vittorio Hernandez – AHN News

Athens, Greece (AHN) – Moody’s Investors Service downgraded the credit rating of eight Greek banks by two notches on Friday. The rating agency cited anticipated heavy losses because of the banks’ holding of Greek government bonds, the impact of a recession, weak liquidity and funding positions.

Moody’s reduced to Caa2 from B3 the ratings of:

  • the National Bank of Greece,
  • EFG Eurobank Ergasias,
  • Alpha Bank,
  • Piraeus Bank,
  • Agricultural Bank of Greece and
  • Attica Bank.

It cut to B3 from B1 the ratings of:

  • Emponki Bank of Greece and
  • General Bank of Greece.

The reduced ratings were accompanied by a negative ongoing outlook.

The rating agency also warned of substantial losses among private creditors holding Greek government bonds over the terms of the current debt exchange, particularly if unfavorable developments arise in the implementation of the $146.75 billion (€109 billion) second tranche of bailout funds from the European Central Bank and the International Monetary Fund.

Major Greek banks have said they will participate in a Greek government bond swap program that will cause large losses in the banks’ government bonds holdings, which Moody’s warned would place the banks’ capital levels at risk of material deduction.

The Greek government announced on Wednesday another round of austerity measures in response to pressure from European officials and IMF to hasten policy changes as conditions for the release of additional aid and prevent a default.

The initiatives, which includes large cuts in pensions and salaries, sparked massive public strikes, particularly in the transport sector, to protest the cuts.

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Girls Gone Wild founder wins gambling debt case against Vegas casino

Windsor Genova – AHN News News Writer

Las Vegas, NV, United States (AHN) – Nevada’s Clark County District Court on Wednesday threw out the case of Las Vegas billionaire Steve Wynn against Girls Gone Wild founder Joe Francis as it ruled that Francis did not intend not pay $2.5 million in gambling debts to Wynn.

District Court Judge Linda Marie Bell found that prosecutors had insufficient evidence to the theft charges against Francis. Francis had denied owing the amount to Wynn Resort after gambling there in 2007.

“I have maintained my innocence in this matter from the start,” Francis said in a press statement. “I think it was disgusting that Steve Wynn attempted to manipulate banking records to try to make this a criminal case.

Francis vowed to get back at Wynn.

“Believe me; I will do everything legally possible to make sure justice is served in this matter and that I am compensated for the damage that these false charges have caused to my reputation,” he said in the statement.

Francis’ world-renowned attorney, David R. Houston, said the Wynn Group used heavy-handed tactics to collect money from his client, “but failed utterly and completely.”

The case arose when Francis took out a marker or personal check to pay the casino. He check bounced prompting Wynn to file theft charges.

Prosecutors, however, said Francis’s bank account may have been frozen in connection with a federal tax case indicating there was no intent to default on the marker.

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Postal Service Wants a Big Change of Plans as it faces default

Tom Ramstack – AHN News Legal Correspondent

Washington, D.C., United States (AHN) – Mail service nationwide will stop as soon as this winter without emergency funding from Congress, the head of the U.S. Postal Service said Tuesday.

The agency has run up a debt of nearly $10 billion so far this year, Patrick R. Donahoe, U.S. Postmaster General, told the Senate Homeland Security and Governmental Affairs Committee.

“We are at a critical juncture,” Donahoe said.

The Postal Service also has no means of paying a $5.5 billion bill due Sept. 30 to fund retirees’ health care, Donahoe said.

E-mail and faxes are reducing the need for regular mail but also reducing the Postal Service’s revenue. The agency delivers about three billion pieces of mail each week, which is down 22 percent from five years ago.

The Postal Service is dealing with an “unprecedented decline in use of first class mail,” Donahoe said.

Donahoe and other witnesses presented the Senate with tough options, all of which call for a drastic revamping of the Postal Service.

“The Postal Service requires radical changes to its business model if it is to stay viable in the future,” he said.

The options include laying off 120,000 workers, closing 3,700 post offices and ending Saturday mail deliveries.

Labor makes up 80 percent of the Postal Service’s costs. Ending Saturday service would reduce its expenses by 2 percent.

The Postal Service wants to offer more automated services, such as replacing clerks with machines that weigh packages and print out the appropriate stamps.

Postal Service officials are asking Congress for more money at a time Democrats and Republicans agree could not be worse.

They are seeking ways to dramatically reduce the nation’s more than $14 trillion deficit by cutting government spending. They also have been unable to agree on the best way to do it.

Thomas R. Carper, (D-Del.) chairman of the Senate subcommittee that oversees the Postal Service, described the agency’s financial predicament as critical during the hearing Tuesday.

“There’s not a huge bailout that’s needed here,” Carper said. “We need to get out of the way.”

Democrats who want to increase revenue by raising postage rates are running into opposition from Republicans within their own committee.

Senator Susan Collins (R-Maine) says the Postal Service runs the risk of getting caught in a “death spiral” in which it drives away more customers by raising rates, thereby reducing its revenue even further.

She suggests the Postal Service figure out ways to cut its costs while attracting more customers with new services.

Collins opposes a rate increase of as much as 6 percent the Postal Service is requesting from the Postal Regulatory Commission, saying it would violate the 2006 postal reform law that limits rate increases to the cost of living.

The only exception would be for “exigent circumstances,” such as a natural disaster or a terrorist attack.

Postal Service officials say the agency’s dire financial condition should qualify as an “exigent circumstance.”

They also are looking for permission to revamp their business model.

Federal regulations require the Postal Service to provide universal mail delivery nationwide to all registered mail boxes. The Postal Service also is forbidden from expanding its services beyond mail delivery.

Among the options being considered is following examples from other countries that allow post offices to cash checks, sell insurance and cell phones.

Postal officials also want to sell commercial advertisements on the sides of their trucks and post offices, make “last-mile” deliveries for FedEx and UPS, offer hand-delivery for secure mail and deliver wine and beer.

The new services could only be allowed if Congress agrees.

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Survey: Canadians expect to be free from debt when they reach 55

Vittorio Hernandez – AHN News

Toronto, Ontario, Canada (AHN) – The average Canadian pinpoints 55 as they age they would likely be free from debt, according to a Canadian Imperial Bank of Commerce survey released on Monday.

The poll, conducted by Harris/Decima, surveyed Canadians between the ages 18 and 64. It found that only 35 percent of those in the age group 55 to 64 had no debt.

On the average, the respondents see themselves paying off their debts within 10 to 15 years.

Thus, those in the age group 18 to 24 said they would likely be free from debt by 32, while those in the 24-34 group placed it at 44, those in the 45 to 55 group pointed at 60 and those in the 55 to 64 bracket said 65.

However, the study pointed out that most of their expectations of being debt free are unrealistic given their current level of indebtedness.

Christina Kramer, CIBC executive vice president of retail distribution, said that more than a planned timetable to get out of debt, Canadians must also make a realistic strategy that would include extra payments allocated for their debt and to minimize interest cost.

Among the 2,000 respondent, 10 percent said they would never be debt free and 8 percent forecast being in debt until they reach their 70s.

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Wall Street falls again Friday, gold still rising

Diane Alter – AHN News Trivia Writer

New York, NY, United States (AHN) – Same story, different day.

Stocks fell again on Friday losing 172.93 points. The Dow Jones Industrial Average closed a volatile week at 10,817.65.

Investors were met with another selloff as continued worries about the European Debt Crisis, global slowdowns and tepid economic data continued to be a drag on worldwide markets.

Those looking for a safe haven piled into gold pushing the commodity up $25.70 to close at $1,850.60 an ounce. The shiny yellow metal hit an all time high during the day of 1881.40.

Many see the precious metal as being in a bubble territory, while other say it still has much more room to run. Silver also looked stellar closing up $2.04 to end the day at $42.81

Crude oil futures closed at near $82 a barrel and the U.S. dollar lost value against the euro and the yen.

Uncertainty has kept many investors wary, on the sidelines or simply out of the game. And with the weekend approaching many just wanted to go out flat.

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