Finance Blog number 1

The financial world initial rejoiced Friday when word came of a deal by most European countries _ including all 17 that use the euro _ to allow the European Commission to oversee national budgets and impose penalties if a country’s debt grows too much.

Since then questions have emerged about the willingness of each individual country to ratify the agreement, the lack of a short-term solution to high debt in Greece, Italy and Spain, and what the future monetary policy of the European Central Bank will be.

The Associated Press spoke with four experts Sunday about the deal and what implications it will have for the markets. Here are their thoughts, edited for clarity.

Peter Tchir, founder of TF Market Advisors: It has to go and be ratified. They’re talking about doing balanced budget amendments in each of the countries. It seems like this was done very last minute. I’m highly suspicious that there’s really a full buy in. I think some of these balanced budget acts are going to take a while to implement. There was also more document space talking about being able to waive penalties than what the penalties would be.

How serious are those punishments going to be and will they ever be enforced? If you look at monetary punishments, where there’s a fine, the country already believes it’s necessary to run a deficit in the current year because their economy is stagnating, are they going to get afraid because of the fine or just lump that into part of the cost? Will they get kicked out of the euro? Clearly at this point the EU has shown anything but a willingness to kick somebody out. They became so scared of that, that they cobbled out bailout after bailout.

On Monday and Tuesday the stock market is going to be looking for the ECB to come in and say, “We can buy as much sovereign debt as we want now.” I don’t think we are going to get that statement and that’s going to put downward pressure on the stock market. It’s going to finally hit home in the U.S. that the ECB does not believe in quantitative easing in the same way that the U.S. does and they’re not going to view this pact as a reason to change their view. That is going to disappoint the market.

Brian Gendreau, market strategist at Cetera Financial Group: There’s a long-term solution in place but there’s no solution to the current crisis. There’s still the prospect of default on Greek bonds and there’s still problems faced by Italy meeting the financing obligations moving forward. It is a welcome first step. I think there’s widespread recognition that it’s going to be a long process one way or another. There were compromises in the agreement.

There are a lot of questions that still remain. One of them is the role of the European Central Bank as a lender of last resort. The ECB has made it clear that they are willing to undertake the role of lender of last resort to banks but there’s a question of to what extent will the ECB be lender of last resort to countries.

This is going to set a better tone for the market going forward. There is a lot of repressed demand for stocks. There are a lot of people who have moved into CDs and Treasurys. People are going to be looking for the green light to move out of those funds. When they do, they’re going to move into stocks. Ultimately, the big beneficiary might be stock markets, including the U.S. stock market.

Paul Zemsky, chief investment officer for multi-asset strategies for ING Investment Management: Overall, it was a very positive step in the right direction but it wasn’t this grand bargain that I was hoping for and others were hoping for earlier last week. But some very good things did happen. The member states did agree to some legislation that would be more binding in terms of the deficits and debt. It would be overseen by the European courts.

I see two problems. One is that overall growth is slowing throughout the region. Germany is the bright spot. Most economists, including ourselves, have (forecast) a mild recession for next year. With slowing growth, it’s hard to get good budget numbers. Second, the agreement has been made but the laws haven’t been passed and signed.

There’s going to need to be pressure kept on these peripheral countries to go through with this. That means you are going to have to keep walking close to the edge in terms of the markets and the threat of the euro region breaking up if these guys don’t come through. We’re still not done with this dance with death. Until these laws are passed, there are going to be scares. There’s going to continue to be volatility coming from this region.

Marc Chandler, global head of currency strategy at Brown Brothers Harriman: On the eve of the European summit, the ECB provided an incredible amount of liquidity to the market. I don’t know if the market fully appreciates that yet. They were willing to loan money to banks for three years. We’re not talking about a short-term, one-week loan. This is a three-year loan essentially. As much as they want, provided they have the collateral, which they also liberalized the definition of.

The take-away point is that the euro and eurozone survives without the ECB being a backstop for the sovereigns and without European bonds being issued. They live to fight another day. But it doesn’t change things. They’re still heading toward a recession. The ECB is still going to have to ease policy. They still have something on the magnitude of 1.8 trillion euros ($2.41 trillion) of bonds maturing, concentrated in the first half of next year.

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Scott Mayerowitz can be reached at http://twitter.com/GlobeTrotScott.

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House Republicans intend to propose a gradual increase in Medicare premiums for wealthy seniors to help cover the cost of renewing Social Security payroll tax cuts and benefits for the long-term unemployed, officials said Wednesday.

The precise details remain to be worked out as the leadership consults with rank-and-file Republicans about the legislation, which has grown significantly in recent days and is expected on the House floor next week.

GOP officials described the plan on condition of anonymity because no final decision has been made.

In addition to the extension of payroll tax cuts and jobless benefits that are at the heart of President Barack Obama’s jobs program, House Republicans plan to include a provision to avert a 27 percent cut in payments to doctors who treat Medicare patients. All three face a Dec. 31 deadline for action.

In addition, GOP leaders eager to attract votes for the measure are likely to include conservative-backed provisions to speed the construction of a controversial oil pipeline from Canada to Texas and block a proposed Environmental Protection Agency rule restricting toxic emissions from industrial boilers.

Across the Capitol, Democrats set the stage for a second politically charged vote in the Senate later in the week on their proposed surtax on million-dollar earners to help pay for the renewal of the tax cuts and unemployment benefits.

Senate Republicans blocked an earlier bill along the same lines, and the Democrats’ decision to call for a second showdown comes as they seek to brand GOP lawmakers as protectors of the rich at the expense of the middle class.

The move is “nothing more than another bill that’s been designed to fail, so Democrats can have another week of fun and games on the Senate floor while tens of millions of working Americans go another week wondering whether they’re going to see a smaller paycheck at the end of the year,” said Senate Republican leader Mitch McConnell of Kentucky.

Republicans oppose higher taxes, and GOP aides in the House pointed out that the proposed higher Medicare premiums for the wealthy would fall on some of the same individuals whom Democrats want to tax.

Senate Republicans included higher premiums in their own alternative measure last week. It would have required seniors earning more than $750,000 to pay more for Medicare Part B, which covers doctor visits and other costs apart from the expense of hospitalization.

According to Medicare’s website, monthly Part B premiums will be $99.90 in 2012 for beneficiaries with individual income of $85,000 or less. The cost rises gradually, reaching $319.70 for anyone whose income exceeds $214,000.

The dispute over taxes is one of several that must be settled before legislation can reach Obama’s desk, and Democrats sought to put the onus on Republicans.

Republicans have said in recent days that to cover the cost of doctor fees under Medicare, they intend to cut funds from the year-old health care bill that is the president’s signature domestic achievement.

Sen. Max Baucus, D-Mont., who is chairman of the Senate Finance Committee, dismissed that approach during the day as “not a good idea. That’s going to cause more problems than it solves,” he said, and urged Republicans to concentrate on drafting legislation that can clear both houses.

Speaker John Boehner, R-Ohio, and other GOP leaders must contend not only with Senate Democrats, but also with disgruntled lawmakers inside their own party who are reluctant to extend a payroll tax cut that they claim has failed to produce any jobs. The proposal to take a piece out of the president’s health care bill is likely to be an attractive addition to these Republicans, as is the renewal of current reimbursement rates for doctors who treat Medicare patients.

Officials said the emerging House bill is also likely to extend several features of Medicare that would otherwise revert to lower payments for some hospitals as well as for ambulances in rural areas, some mental health services and therapy services from non-hospital providers.

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British police are investigating whether computers belonging to former government minister Peter Hain were hacked by the tabloid News of the World while he was the official responsible for Northern Ireland, Hain’s office said Wednesday.

It said in a statement that Hain had met with police officers “regarding an investigation into the alleged hacking of his official and personal computers during his time as Secretary of State for Northern Ireland.”

Hain was Northern Ireland secretary between 2005 and 2007 and would have had access to classified intelligence information.

Police are investigating phone hacking by the Rupert Murdoch-owned newspaper have set up a parallel probe into whether computers also were targeted.

Murdoch’s News International said it was “co-operating fully with the police” on all investigations.

Earlier Wednesday, Alastair Campbell, Tony Blair’s former spin doctor, told a media ethics inquiry set up in the wake of the hacking scandal that a minority of journalists had turned the country’s press “putrid” and tarnished the whole industry. Campbell said journalists such as those who hacked phones for the News of the World tabloid had “besmirched the name” of almost every other reporter in the country.

“A very, very small number of people have completely changed the newspaper industry,” said Campbell, who is credited with running a sophisticated _ and manipulative _ media operation when he worked for the then-prime minister at 10 Downing Street between 1997 and 2003.

“We have a press that has just become frankly putrid in many of its elements,” Campbell said, criticizing the “inhumane treatment” meted out to celebrities and ordinary people alike by newspapers in relentless pursuit of exclusives.

Campbell was giving evidence to Judge Brian Leveson’s inquiry, which was established to examine media ethics and practices and recommend changes to Britain’s system of media self-regulation.

Prime Minister David Cameron set up the inquiry in response to the scandal that began with the exposure of illegal eavesdropping by the News of the World.

Murdoch shut down the tabloid in July after evidence emerged that it had accessed the mobile phone voice mails of celebrities, politicians and even crime victims in its search for scoops.

Campbell said police had told him details about his working life were included in the notes of private investigator Glenn Mulcaire, who worked for the News of the World and was jailed in 2007 for phone hacking.

In a written witness statement, Campbell said he suspected the phone of Blair’s wife, Cherie, had been hacked _ although he acknowledged he had no proof.

He said stories about her “often involved details of where Cherie was going, the kind of thing routinely discussed on phones when planning visits, private as well as public.”

He said phone hacking could explain how the Daily Mirror learned that Cherie Blair was pregnant in 1999.

“As I recall it, at the time only a tiny number of people in Downing Street knew that she was pregnant,” Campbell said. “I have heard all sorts of stories as to how the information got out, but none of them strike me as credible.”

Campbell told the inquiry he had accused Cherie Blair’s adviser Carole Caplin of tipping off the press about Cherie Blair’s whereabouts. Caplin has since been told by police her phone may have been hacked.

Campbell said he had apologized to Caplin for blaming her.

More than a dozen current and former News of the World journalists and editors have been arrested, and two top London police officers and several senior Murdoch executives have resigned over the still-unfolding hacking scandal.

Police said they had made a new arrest, a 31-year-old woman detained in northern England on Wednesday. Her name was not disclosed, although media including Sky News _ which is 39 percent owned by Murdoch’s News Corp. _ identified her as a former News of the World reporter.

The only people charged with crimes so far are Mulcaire and former News of the World reporter Clive Goodman, who were jailed in 2007 for hacking into the voicemails of royal aides.

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Italy had to pay sharply higher borrowing rates to entice investors to part with their cash during a couple of auctions Friday, in an acute sign that Europe’s crippling debt crisis is laying siege to the eurozone’s third-largest economy.

The auction results are another sign that the country’s new technocratic government, faces a big battle to convince that it has a strategy to get a grip on the country’s massive debts.

The country had to pay an average yield of 7.814 percent to raise euro2 billion in two-year bills. That rate was sharply higher on the 4.628 percent it had to pay in the previous auction and represented a new high since the creation of the euro in 1999.

And even raising euro8 billion for six months proved exorbitantly expensive. The yield for this auction spiked to 6.504 percent, nearly double the 3.535 percent rate in the last equivalent auction no faxing payday loans.

Following the grim news on the auction front, the country’s borrowing rates in the markets sky-rocketed, with the ten-year yield spiking 0.34 percentage point to 7.30 percent _ above the 7 percent threshold that is widely-considered unsustainable in the long-run and eventually proved the point at which Greece, Ireland and Portugal had to seek financial bailouts.

The renewed rise is likely to renew tensions over Italy’s debts, which stand at euro1.9 trillion ($2.6 trillion), or a huge 120 percent of economic output. Europe’s current anti-crisis measures are too not big enough to deal with Italy’s debt mountain.

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Synergetics USA Inc. expects to report growth in sales and net income for the first quarter of fiscal 2012, company officials told the Securities and Exchange Commission in a filing today.

The O’Fallon, Mo.-based maker of equipment for eye and brain surgeries, expects revenue of $13.3 million to $13.6 million in the first fiscal quarter, which ended Oct. 31. That represents a 10 percent to 13 percent increase in revenue compared to a year ago. 

Based on increased sales, the company expects to report earnings from continuing operations of 4 cents to 5 cents a share for the first fiscal quarter, and to report a 1 cent to 2 cent per share loss from discontinued operations.

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Italian easily raised euro3 billion ($4.1 billion) from markets, though at a higher cost, as premier-designate Mario Monti began talks on forming a new government of experts to guide the country through financial crisis.

While the treasury raised the maximum sought, market sentiment remained cautious. Investors demanded an interest rate of 6.29 percent on Monday, the highest level since 1997, compared with 5.32 percent at a similar auction a month ago.

Italian president Giorgio Napolitano tapped Monti to create a government of technocrats to bring down stubbornly high public debt.

Napolitano emphasized that euro200 billion ($273 billion) in Italian debt comes due through the end of April _ requiring decisive action.

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The chief of the International Monetary Fund said Saturday that Italy’s financial reform is key to reducing the impact of the eurozone crisis, and that no country is immune to the consequences if the efforts fall short.

After meeting in Tokyo with top Japanese financial officials, including Finance Minister Jun Azumi, IMF chief Christine Lagarde said Italy must restore political stability and implement financial reforms to provide “clarity and credibility” and restore confidence.

Italy needs “steady, solid and sustained implementation of measures,” she said at a news conference.

The eurozone financial crisis, set off two years ago by Greece’s overwhelming debt, has now engulfed Italy, which has the third-largest economy among the 17 nations that share the euro currency. The crisis has toppled Prime Minister Silvio Berlusconi, who says he will step down once reforms are passed to help Italy control its own staggering debt payday advance.

Lagarde expressed concerns about the possible consequences outside the eurozone, particularly in Asia. She urged Japan to use caution against the impact of the eurozone crisis.

“I insisted with Minister Azumi that no country can be immune under the present circumstances, no matter how developed or how emerging or how far away it is,” Lagarde said. “Japan is no more immune than other countries.”

A major exporter, Japan “would be exposed if some of its large clients are in serious difficulty,” she said.

Europe has bailed out Greece, Portugal and Ireland.

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The National Corn-to-Ethanol Research Center has added $3.5 million in advanced corn fractionation technology, provided by Cereal Process Technologies LLC of Overland Park, Kan., with support from the Illinois Department of Commerce and Economic Opportunity.

Located on the campus of Southern Illinois University Edwardsville, the nonprofit research center focuses on improving efficiencies in the production of ethanol for fuel. The new equipment will enhance advanced ethanol research and career training programs at the center payday loans direct lenders.

Kenneth “Pete” Moss, vice president of marketing for Cereal Process Technologies, said the company’s fractionation technology is “the foundation for a revitalized ethanol industry.” He said it enables ethanol plants to reduce energy consumption while producing more ethanol and edible corn oil.

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Japan has made big strides toward stabilizing its tsunami-crippled nuclear plant but is now facing another crisis _ what to do with all the radioactive waste the disaster created.

Goshi Hosono, the country’s nuclear crisis minister, said Friday that Japan has yet to come up with a comprehensive plan for how to dispose of the irradiated waste that has been accumulating since the March 11 earthquake and tsunami.

Hosono gave the assessment after the government announced an $11.5 billion (900 billion yen) allocation to help the cash-strapped plant operator cover the massive cost of recovery without collapsing. Officials have rejected criticism that the allocation is a bail-out _ stressing that the money comes from a joint fund of plant operators, with a government contribution in zero-interest bonds that must be paid back.

The disaster, which killed nearly 20,000 people along Japan’s northeastern coastline, touched off the world’s worst nuclear accident since Chernobyl, generating meltdowns, fires and radiation leaks at the Fukushima Dai-ichi nuclear power station northeast of Tokyo.

Officials say that _ almost eight months later _ the plant has been restored to a relatively stable condition and is leaking far less radiation than it did in the early days of crisis. They hope to achieve a “cold shutdown” _ with each reactor’s temperature below 212 Fahrenheit (100 C) _ by the end of the year.

But Hosono, in a response to a question from The AP, acknowledged Friday that the crisis has spawned a huge amount of irradiated waste that will require new technology and creative methods to dispose of safely.

“We still don’t have a full picture of how to deal with the waste,” he said. “It would require research and development that may take years. For instance, we still need to develop technology to compress the volume of the huge amounts of waste that we cannot move around.”

Japan could be stuck with up to 45 million cubic meters of radioactive waste in Fukushima and several nearby prefectures (states), according to the environment ministry.

Hosono said Japan is not considering shipping out the waste for overseas processing.

The total amount of radiation released from the plant is still unknown, and the impact of chronic low-dose radiation exposures in and around Fukushima is a matter of scientific debate. More than 80,000 people evacuated from their homes, and a 12-mile (20-kilometer) no-go zone is still enforced around the plant.

Cleaning up the area and compensating residents is expected to cost trillions of yen (tens of billions of dollars). Hot spots of highly localized radiation have been reported hundreds of kilometers away, and Hosono said a task force has been set up to investigate them.

The fund payout of $11.5 billion (900 billion yen) announced Friday for Tokyo Electric Power Co. came after the plant operator agreed to a restructuring plan to cut more than 2.5 trillion yen ($32 billion) in costs over the next 10 years and reduce more than 7,000 employees.

TEPCO has been bitterly criticized for its lack of transparency and slow response to the crisis. The application process for residents and business owners to seek compensation has also been called extremely cumbersome.

The controversial fund is designed to help the operator meet its responsibilities without going bankrupt.

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The number of Americans who signed contracts to buy homes fell for the third straight month in September after the spring-and-summer peak buying season failed to entice new buyers.

The National Association of Realtors says its index of sales agreements fell 4.6 percent last month to a reading of 84.5.

A reading of 100 is considered healthy. The last time the index reached that high was in April 2010, the final month that buyers could qualify for a federal tax credit that has since expired cash advance no fax.

Contract signings are usually a reliable indicator of where the housing market is headed. There’s typically a one- to two-month lag between a contract and a completed deal.

But the Realtors group said a growing number of buyers have canceled contracts.

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