kayleenngrinnel-blog

[kayleenngrinnel-blog]

WRAPUP 1-French credit review threatens euro zone rescues

The U.S. ratings agency said late on Monday it may slap a negative outlook on France's Aaa rating in the next three months if the costs for helping bail out banks and other euro zone members stretch its budget too much.The warning, which sent the risk premium on French government bonds shooting up to a euro lifetime high, came as European Union leaders are preparing measures to protect the region's financial system from a potential Greek debt default.That plan includes a new rescue plan reducing Greece's debt, strengthening the capital of banks with exposure to troubled euro zone sovereigns and leveraging the euro zone's rescue fund to prevent market contagion to bigger economies.German leaders on Monday doused market hopes of a miracle cure at Sunday's Brussels summit, saying no one should expect a "definitive solution".Finance Minister Francois Baroin insisted that France's AAA status was not at risk but acknowledged that the 1.75 percent growth forecast on which the government has based its 2012 budget was over-optimistic and would have to be revised down."It (France's AAA credit rating) is not in danger because... we will even be ahead of schedule on passing deficit reduction measures," Baroin said on France 2 television.Asked if next year's growth forecast would have to be reduced in light of weak economic prospects, he added: "It is probably too high compared to the development of the economic situation. We will not adapt it today."We will adapt it, that much is clear."France and Germany, the two strongest economies among the 17 euro zone members, form the backbone of the 440-billion-euro EFSF rescue fund and are drafting a crisis-fighting strategy for Sunday's summit.Without France's triple-A rating, the whole edifice of rescue measures for troubled peripheral euro zone states would begin to crumble, putting more weight on Germany, where there is a strong public backlash against bailouts.Moody's said Paris' progress on crucial fiscal and economic reforms as well as potential adverse developments in financial markets and the economy would be taken into account in the review.Monday's review was only a preliminary step, but a negative outlook would be a sign that Moody's could downgrade its rating on France in the next couple of years. Moody's placed the United States's Aaa rating on negative outlook in August.The two other major ratings agencies, Standard & Poor's and Fitch, reaffirmed Paris' triple-A rating in August when French banks came under fierce market pressure over their exposure to the weakest euro zone sovereigns.FRENCH SPREAD HITS RECORDIn early market reaction on Tuesday, the spread on French 10-year bonds over benchmark German bunds jumped to a 16-year high of 101 basis points, more than 1 percentage point.Safe-haven German Bund futures rose on ebbing hopes of a quick solution to the euro zone debt crisis after Moody's warning on France's triple-A rating.European shares fell, partly due to news that China's growth slowed slightly more than expected in the third quarter.The ratings review was a potential embarassment for conservative President Nicolas Sarkozy, who is expected to run for re-election next April and faces a strong challenge from Socialist candidate Francois Hollande, who won a primary election run-off on Sunday.French Prime Minister Francois Fillon made clear in a television interview on Monday that if growth fell short of official forecasts next year, the government would take further austerity measures.Ahead of a 48-hour general strike expected to bring Greece to a standstill just as parliament votes on a new set of controversial austerity measures, Prime Minister George Papandreou appealed for unity on Monday."This is maybe the most crucial week for Greece and Europe," he said during a meeting with the Greek president.Hours later, a deputy from Papandreou's party quit his seat in protest against what he called "unjust" steps. The lawmaker will be replaced by another socialist, so Papandreou's four-seat majority in the 300-strong assembly is unchanged.Greece's overall debt is forecast to climb to 357 billion euros ($491.4 billion) this year, or 162 percent of annual economic output -- a level economists agree is unsustainable.To reduce this mountain, euro zone leaders are racing to convince banks to accept "voluntary" writedowns of up to 50 percent on their sovereign holdings. At the same time, they are trying to agree on a blueprint for recapitalising financial institutions at risk from the deepening crisis.Negotiations with the Institute of International Finance, representing the banks, were to continue in Brussels on Tuesday with Deutsche Bank chief Josef Ackermann, who is also chairman of the IIF, resisting pressure on both fronts.Ackermann has objected to efforts to force banks to raise more capital and IIF lead negotiator Charles Dallara told Reuters on Monday that bigger writedowns on Greek bonds could only happen if policymakers addressed broader sovereign debt issues in Europe.

[kayleenngrinnel-blog]

UPDATE 2-US should help more homeowners -Treasury official

While she stopped short of offering any new proposals, Mary Miller, assistant Treasury secretary, said low interest rates created room for greater action in housing, which has been at the epicenter of the struggling U.S. economy."The housing crisis has been long and painful, and there's still more work to be done," Miller said in a speech at a CFA Institute conference in Boston.The Obama administration "is interested in reviewing all of the barriers to refinancing" loans backed by Fannie Mae and Freddie Mac , the government-owned mortgage finance providers, in order to assist more homeowners realize savings, she said.Fannie Mae and Freddie Mac, which were seized by the government in September 2008, will not escape from government conservatorship anytime soon, Miller also said."I don't see any easy way to unwind conservatorship," she said in answer to a question following her speech.. "I don't see an easy option to do something different."Any changes to the existing Home Affordable Refinance Program should not cause investors in mortgage bonds to get cold feet, Miller said in her speech. Many investors have worried they could take a hit."The terms of the HARP program have been known to the market since program inception, and should not introduce new issues," Miller said.Investors in these securities have already enjoyed a much longer holding period than historical prepayment levels might have allowed, she added.Miller also addressed an initiative that housing regulators have floated to rent, sell or dispose of foreclosed homes controlled by Fannie Mae and Freddie Mac."We think there is an opportunity to address the backlog of unsold homes by creating a process for moving real estate owned by the government to new private owners, with a particular interest in creating rental options," she said.The effort "is very likely to become a reality in the next couple of quarters," Miller said, adding that one possibility is organizing bulk sales on a geographic basis.The Federal Housing Finance Agency put out a request for information to solicit the best ideas on how to accomplish sales of foreclosed homes to perhaps turn them into rental properties back in August. About 4,000 comment letters were received, Miller said."Clearly there is interest here, and we look forward to supporting the FHFA as they move ahead," she said.

[kayleenngrinnel-blog]

Officials make arrest of celebrity phone hacker

No further details were available. Officials will hold a news conference at 2 p.m. EDT to announce the arrest.It was not immediately known if the case involves actress Johansson, 26, who in September saw private, naked photos of herself posted on the Web.The "Iron Man 2" star joined a growing list of Hollywood celebrities, including "High School Musical" actress Vanessa Hudgens and "Friends With Benefits" star Mila Kunis, who have had private photos leaked online at the hands of hackers.Indeed, the FBI's investigation of celebrity phone hacking in Hollywood dates back at least one year.Wednesday's arrest also follows the scandal media giant News Corp has suffered in recent months with revelations that one of the company's London newspapers had hacked into cellphones of celebrities. It was not immediately known if the two cases were linked.

[kayleenngrinnel-blog]

Speeding universe work wins Nobel

Honouring two global teams of stargazers whose findings shook cosmology to its foundations in 1998, the Nobel Committee said Americans Saul Perlmutter, Brian Schmidt and Adam Riess showed how the universe that emerged from the Big Bang may fly apart so far, cooling as it goes, that it "will end in ice."Their work gave birth to the theory of dark energy, a kind of inverse gravity, that causes the expansion to accelerate. Up to three quarters of the universe seems to comprise dark energy -- but just what it is is a matter of speculation, notably at facilities like the Large Hadron Collider at Geneva. Many hope an answer could reconcile apparent anomalies in physics.The teams studied dozens of exploding stars, or supernovae, expecting to confirm theories dating back to the 1920s that the universe has expanded for 14 billion years since Big Bang, but ever more slowly. Astonished, they found the opposite was true."We ended up telling the world we have this crazy result -- the universe is speeding up," the Montana-born Schmidt, based in Australia, said by telephone to the Royal Swedish Academy of Sciences, where the 2011 prizewinners were announced."It seemed too crazy to be right, and I think we were a little scared," added Schmidt, 44, who led the High-z Supernova Search Team that included the Baltimore-based Riess, 41. Schmidt is at the Australian National University in Canberra.Perlmutter, 52, from the University of California at Berkeley, said: "The chain of analysis was so long that at first we were reluctant to believe our result."But the more we analyzed it, the more it wouldn't go away ... It was the longest 'Aha!' moment ever."If data continues to improve, he believed theorists may be able to understand dark energy within 10 to 15 years."ALL BETS OFF"Riess told Reuters he was "stunned and incredibly honored" by the award. But he was cautious about predictions energy would propel the universe ever outward until it was spent and froze. "It is what we see," he said. "But the truth is all bets are off. The universe could still recollapse."Before, it was thought gravity would eventually reverse its expansion, until a fiery collapse brought the end of the world.Recalling how it felt to have assumptions confounded, Riess said he spent weeks thinking "I did something stupid" and looking for what he thought must be a mistake in his work: "If you tossed a ball into the air and it kept right on going up instead of falling to the ground, you'd be pretty surprised," he said. "Well, that's about how surprised we were."With the expectation that gravity would slow the expansion of the universe debunked, the fact that the opposite was true revived an idea Albert Einstein once rejected as his "biggest blunder" -- that vacuum of space might create "anti-gravity.""Suddenly that idea made sense," Riess said.He and Schmidt will share half of the 10 million Swedish crowns ($1.5 million) prize money. Perlmutter won the rest.Having turned theory on its head, Perlmutter viewed the world's distant future with equanimity: "It is a tough choice between ending up in the cold or ending up in a fiery blast," he told Reuters. "I tend not to dwell too much on ultimates.""CURIOSITY DRIVEN"Swedish Academy member Lars Brink told Reuters practical developments from the findings were not obvious: "This is very curiosity driven research," he said. "It tells us something about the basic laws of nature. We are putting together pieces of what are the basic laws of nature. This is one brick."It is not that we are going to use it for new gadgets."Mark Sullivan, a physicist at the University of Oxford, said: "Their ... discovery ... has rewritten textbooks, and was one of the landmark breakthroughs of 20th-century physics."Among exciting possible developments from the study of dark energy would be a way to reconcile anomalies between laws of physics observed at the subatomic level -- quantum mechanics -- with those Einstein described for the world we see.Martin Rees, Britain's Astronomer Royal, praised the prizewinners but criticized the Nobel Committee's rules that a maximum of three people could share in an award: "It would have been fairer, and would send a less distorted message about how this kind of science is actually done, if the award had been made collectively to all members of the two groups," he said.There was no repeat of the drama in Stockholm on Monday, when the Nobel Committee, whose rules forbid posthumous awards, discovered it had just given a share of the prize for medicine to a man who had died three days earlier. In the end, the award was confirmed to Ralph Steinman, who used his own discoveries to treat his cancer but succumbed to the disease on Friday.In keeping with many recent prizes, the Committee noted, the winners of the physics category were all relatively young.At Johns Hopkins University in Baltimore, Riess, who was still in his 20s when the research was published, joked to a colleague that he had been quick to react to a pre-dawn call from Stockholm: "When I picked up the phone early this morning and I heard Swedish voices," he said, "I knew it wasn't IKEA."