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News Analysis for the Investor - November 1, 2011

The Greeks surprise Europeans by putting debt agreement to a vote

| BY Catherine McBreen

Greeks put Eurozone deal at risk

In a surprise move that threatens to impact today’s markets as well as all of the progress recently made by the Eurozone on its debt crisis, Greek Prime Minister Papandreaou announced he will put Greece’s bailout to a referendum.  Last week the Eurozone leaders had agreed to give Greece a second bailout of $179 billion and a 50 percent write down on its huge debt.  It requires significant spending cuts by the Greek government and resulted in ongoing protests and riots in Greece.  Reuters reports that the latest opinion poll indicates a majority of Greeks do not support the bailout deal.  This makes it very difficult for the remaining European leaders who were in the process of reaching out to China for an additional lifeline.

Dow declines 276 points on Monday but ends month up 9.5 percent

The Dow fell 276 points on Monday but ended the month with a 9.5 percent increase, the best month since October 2002.  The Wall Street Journal indicates that the surge for the month was due to strong earnings reports combined with what was believed to be a resolution of the European debt crisis.  Overall investors seem to be returning to the markets and are willing to take more risk.  Apparently, however, the rough ride is not yet over.  Futures are down for Tuesday, along with European markets, due to the surprising Greek announcement.

Credit Suisse to cut jobs

Credit Suisse will cut an additional 1500 jobs or 3 percent of its work force, according to the Wall Street Journal.  The 1500 is on top of 2,000 jobs cut in July, bringing the total to 3,500. The announcement comes after  Credit Suisse announced its net profit rose 683 million francs for the third quarter but fell short of analysts estimates.  The hardest hit business is the fixed income business which is capital intensive and difficult to make profitable.  Credit Suisse, along with UBS, are subject to Swiss banking laws which require higher capital ratios than other European banks.

More banks cut debit card fees

Since Bank of America announced its $5 dollar monthly debit card fee, it has become the unpopular girl in the room and all of its banking peers are moving away from its side.  Last week JPMorgan Chase and Wells Fargo announced that they will not be instituting a debit card fee.  Today, according to USA Today, the regional banks are climbing onboard the debit card free bus, with SunTrust Bank and Regions Bank both announcing they will not institute a debit card fee.  Activists have named November 5 as “Bank Transfer Day” and are urging consumers with accounts at big banks to switch to small banks on that day.  So far Bank of America is holding firm indicating the $5 debit card fee is needed to offset revenues lost due to the new legislation.

MF Global crashes into bankruptcy while funds are apparently missing

MF Global , a large brokerage firm run by former Governor of New Jersey, Jon Corzine, filed for bankruptcy on Monday.  Last week, the struggling firm had apparently negotiated a deal to sell a portion of the firm to a rival firm, but the deal apparently fell through.  Late on Monday it was discovered that approximately $950 million could not be located.  Regulators are questioning whether MF Global diverted customer funds to support its own trades as the firm was coming close to collapse.  The missing amount has since been lowered to $700 million, according to the New York Times, but questions remain over whether client money was kept separate from company money. The bankruptcy is anticipated to be one of the largest US bankruptcies ever.

US Treasury to borrow $305 billion in current quarter

The Treasury Department will borrow $305 billion in the last quarter of 2011 and an additional $541 billion in the first  quarter of 2012, according to USA Today.  The borrowing projected for the first quarter of 2012 is the second highest amount ever borrowed falling only behind the last quarter of 2008 when the Treasury was forced to increase borrowing to bailout the banks.  The current estimate for the fourth quarter is $19 billion higher than estimated.




About the Author

Catherine McBreen

Catherine S. McBreen is President of Millionaire Corner.  McBreen plans and develops content for Millionaire Corner.  Catherine balances editorial content to meet the informational needs of both new and seasoned investors.  She designs special monthly surveys on topical issues affecting the economic environment.

McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law.  She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.

Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences.  She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth.  Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.

McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)

Catherine is the mother of four and is involved in many school and community events.