European leaders meet after Cyprus seeks bailout
Reuters is reporting that the Finance chiefs of the euro zone’s four biggest economies will hold last minute talks in Paris on Tuesday evening to try to narrow the differences on the euro zone’s future. The meeting was called after Cyprus became the fifth European nation to seek a bailout. Ministers from Germany, France, Italy and Spain will discuss how to manage the crisis in the short term and prepare for the summit meeting on Thursday. The Associated Press reports that a plan has been published on the European Council website that would grant a supranational authority the power to demand changes to national budgets. The goal is to get Germany to accept closer fiscal integration. Central control over the budget may reduce Germany’s fears. Financial markets are on edge and international pressure is mounting for decisive action at the summit. The Dow fell 138 points on Monday to close at 12,502. Asian markets were mixed, mostly down, on Tuesday and European markets are similar.
Cyprus bailout cost represents half of its economy
The Mediterranean island of Cyprus, heavily influenced by Greece, sought emergency funding from the European Union today. CNBC indicates that a 10 billion euro package was being requested for the17.3 billion euro economy. Cyprus is the fifth country to request a bailout after Greece, Ireland, Portugal and Spain. It is the third smallest economy in the region, after Malta and Estonia.
Moody’s Cuts Ratings on Spanish Banks
Moody’s Investors Service lowered its long term ratings on 28 Spanish banks by one to four notches on Monday, according to the Wall Street Journal. This is not surprising since earlier in the day Spain asked the EU for aid to help bail out its banks. The banks were hit by a severe housing slump in Spain. Moody’s downgrade apparently reflects its lack of confidence that Spain will be able to assist its banks. Moody’s downgraded Spain’s overall credit rating earlier this month to Baa3, one notch above junk.
Students in For Profit Colleges may lose Financial Aid
Students in for-profit career training programs may have trouble obtaining financial aid in the future. This is because former students have such a poor record in paying off their student loans. The Associated Press indicates that the Education Department reports that 193 programs at 93 schools were unable to meet any of the requirements of the agency’s new “gainful employment rule”. The rule requires that students from a program have estimated loan payments that do not exceed 30 percent of their discretionary income after graduation or 12 percent of total earnings. Or, of the students graduating from a program, 35 percent must be paying their loans. About 12 percent of all students in higher education attend a for profit college. They represent 45 percent of the student loans that are in default.
US homebuilder making deal with Chinese
Lennar Corp, one of the largest US home builders is in talks with the China Development Bank for $1.7 billion of capital to jump start two long delayed San Francisco projects, according to the Wall Street Journal. The projects would transform two former naval bases into large scale housing developments. China has been active in funding projects in developing nations but this is the first project in the US in which public funding was cut and then the Chinese stepped in. The deal would require Lennar to include China Railway Construction Corp to assist in the project.
Iraq’s economy shows signs of growth
Buoyed by an increase in oil production and declining violence, Iraq’s economy is expected to grow by 11 percent this year. According to USA Today, Iraq will produce 3 million barrels of oil each day, above the 2.5 million it was producing prior to the US led invasion. It anticipates that it will be able to expand to 10 million barrels daily in six years. Consumerism is also increasing with the sales of cars, microwaves and other items increasing. Real estate is expanding with a need for 800,000 homes or apartments. Political risk, however, still makes investors hesitant.
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.