Friday, July 22, 2011
Iran: Ahmadinejad threatens to send US, Israel 'to the morgue'
"Resistance will continue until Iran sends its enemies to the morgue," he said on his website, making a reference to the US and Israel who he said are "on the verge of collapse and gasping for their last breathes."
Ahmadinejad may have been reacting to news from Iranian state media that Iran brought down a U.S. "spy drone" flying near its Fordo nuclear enrichment plant in Qom province.
State-run Press TV didn't say when the incident happened. US officials said there were unaware that a US unmanned aircraft was downed, according to news reports.
The Islamic Republic, Ahmadinejad said on his website "is the region's greatest military power."
IGN
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Hope for US housing market dampened
Sales of previously owned U.S. homes hit a seven-month low in June as demand for condominiums fell and contract cancellations surged, dampening hopes the distressed housing market was starting to improve.
The National Association of Realtors said Wednesday sales fell 0.8 percent last month from May to an annual rate of 4.77 million units, the lowest since November and a third straight monthly fall.
Economists had expected sales to rise to a 4.90 million-unit pace.
The drop in sales was surprising given that pending home sales contracts rebounded in May. On Tuesday, a report showed home construction in June jumped to a six-month high.
Pending home sales are drawn from a small sample and become actual sales with a lag of a month or two.
Contract cancellations were the chief driver behind June's drop in sales, the group said, though it could not give a specific reason. However, it noted the sluggish economy, especially the weak labor market and tight lending conditions.
"Buyers and sellers are increasingly running up against conservative appraisals, which often cause deals to fall through or be delayed," said Mark Vitner, senior economist at Wells Fargo Securities in Charlotte, North Carolina.
Canceled contracts rose to a 16 percent rate from 4 percent in May. That was the highest since the Realtors started tracking cancellations last year and was well above the usual rate of 9 percent to 10 percent.
Jay Piro, an agent in Nutley, New Jersey, said he has seen contract cancellations rise to 30 percent of his would-be sales in the last six months, mostly involving homes for sale by banks after their owners failed on their mortgages.
Buyers walk away from those properties because banks are too overwhelmed by foreclosures to process them quickly, Piro said. Other deals flop when lenders get nervous about a buyer's credit-worthiness or when buyers get cold feet about inspection problems -- from termites to oil tank issues.
"Things that used to fly in a normal deal because purchasers were so anxious to own property, today they back out," said Piro, who works for realty firm Remax.
While cancellations have been the trend in the last couple of years, the spike in June took industry analysts by surprise. They had not seen a similar pattern with pending contracts for new home sales, they said.
"Cancellations have been ongoing, it's not a one-month trend," said Jonathan Smoke, head of research at Housing IntelligencePro in Washington. "On the builders side, we have not seen a corresponding change in cancellations. If anything, they have been moderating on the new home contracts side."
June's drop in sales drop could add to concerns about the economy's ability to rebound this quarter after stumbling badly in the first half of the year.
The decline in sales last month was concentrated in condominiums, with single-family home sales flat. Single-family homes account for a large portion of the home resale market.
Weakness in housing, still struggling with an over-supply of for-sale and foreclosed properties, is a drag on growth.
Data next week is expected to confirm the economy lost further momentum in the second quarter after a pedestrian 1.9 percent annual growth pace in the January-March period.
Read more: http://www.vancouversun.com/business/Hope+housing+market+dampened/5138197/story.html#ixzz1Sqc6SzTI
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Fed planning for potential U.S. default
PHILADELPHIA — The U.S. Federal Reserve is actively preparing for the possibility that the United States could default as a deadline for raising the government’s US$14.3-trillion borrowing limit looms, a top Fed policymaker said on Wednesday.
Philadelphia Federal Reserve Bank President Charles Plosser said the Fed has for the past few months been working closely with Treasury, ironing out what to do if the world’s biggest economy runs out of cash on August 2.
“We are in contingency planning mode,” Plosser told Reuters in an interview at the regional central bank’s headquarters in Philadelphia. “We are all engaged … It’s a very active process.”
Plosser said his “gut feeling” was that President Barack Obama and Congress will come to an agreement to increase the Treasury’s borrowing authority in time to avert a default on government obligations.
Obama was due to meet with top Republicans in Congress on Wednesday to discuss the latest attempts to end the dispute over raising the country’s debt ceiling, a row which has raised the prospect of the Treaury Department running out of money to pay its bills next month.
The Treasury has repeatedly said default was unthinkable and that there was no alternative to raising the debt ceiling, and Plosser’s remarks marked the most extensive public comments on the matter from a U.S. official.
One aspect of the Fed’s contingency planning is purely operational: the Fed is developing procedures about how the Treasury will let it know which checks will get cleared and which won’t, Plosser said.
The Fed effectively acts as the Treasury’s bank — it clears the government’s checks to everyone from social security recipients to government workers.
“We are developing processes and procedures by which the Treasury communicates to us what we are going to do,” Plosser said, adding that the task was manageable. “How the Fed is going to go about clearing government checks. Which ones are going to be good? Which ones are not going to be good?”
“There are a lot of people working on what we would do and how we would do it,” he said.
Plosser added that there are difficult questions that the Fed itself had to grapple with.
The Fed lends to banks at the discount window against good collateral. But what happens if U.S. Treasuries no longer fit that bill?
“Do we treat them as if they didn’t default, in which case we would be saying we are pretending it never happened? Or do we treat them as if they defaulted and don’t lend against them?” Plosser said. “Those are more policy questions.”
Plosser, who was a vocal critic of some of the Fed’s extraordinary lending during the financial crisis — which he said veered into fiscal policy and risked the central bank’s independence — warned it would be crucial for the Fed not to do the Treasury’s work for it.
“We have to be very careful that we don’t become, that we don’t conduct fiscal policy in this context,” he said. “That we don’t substitute for the inability of the Treasury to borrow in some circumstances.”
That said, the Fed, which is charged with ensuring financial stability, would clearly feel the responsibility to step in as a lender of last resort if markets seized up after a U.S. default, he added.
Fed Chairman Ben Bernanke last week warned that a default could have “catastrophic” effects on financial markets.
Plosser, a former dean of the Simon School of Business at Rochester University, was more circumspect.
“It could be very bad. At some level we don’t really know what the consequences could be. It could be very serious. It could be less serious. Do we really want to run that experiment?”
Plosser is a voting member of the Fed’s monetary policy-setting committee this year.
© Thomson Reuters 2011
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US report warns of al-Qaida terror threat to utility plants
ABC quoted the new US Department of Homeland Security (DHS) report as warning that violent extremists have obtained such insider positions and are planning physical and cyber attacks at a major facility, including a chemical or oil refinery.
"Based on the reliable reporting of previous incidents, we have high confidence in our judgment that insiders and their actions pose a significant threat to the infrastructure and information systems of US facilities," the report reads. "Past events and reporting also provide high confidence in our judgment that insider information on sites, infrastructure, networks, and personnel is valuable to our adversaries and may increase the impact of any attack on the utilities infrastructure."
Jerusalem Post
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Dollar slips vs. euro on Greek deal report
The euro EURUSD -0.15% climbed to trade at $1.4436, up from $1.4230 in late North American trading on Wednesday. At its lows of the day, it touched $1.4137.
The currency extended gains in afternoon trading, moving above $1.44, after EU leaders said they agreed to a new program for Greece that would also involve the support of 30 international financial institutions
“We agree to support a new program for Greece and, together with the IMF and the voluntary contribution of the private sector, to fully cover the financing gap,” said the European Union heads of state in a joint statement following a summit in Brussels. Read details on the new package for Greece
The deal would entail 109 billion euros, or $156.7 billion, in official assistance and another 50 billion euros in a bond exchange and debt buyback program with the private sector. As part of the agreement, maturity on future loans to Greece from the euro zone’s bailout fund will be extended from 7.5 years to up to 30 years while funds will be loaned at 3.5%. Read more on private support for Greece
“We call for a comprehensive strategy for growth and investment in Greece,” the leaders said, adding that the E.U. will “relaunch the Greek economy.”
Market Watch
More:
http://www.marketwatch.com/story/dollar-slips-vs-euro-on-greek-deal-report-2011-07-20?siteid=rss&rss=1
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