Analyst: Short-term austerity will only make Greek economy worse
U.S. stocks end with slight gains; Caesars jumps-From MarketWatch
U.S. stocks listed mainly upward Wednesday as investors reacted to a news report that Greece had drafted a new financing deal with the European Union and International Monetary Fund.
Greece will commit to permanent spending cuts that include reduced pension payments and a 20% cut in the minimum wage, according to a letter of intent obtained by Bloomberg News.
“The issue we’ve been dealing with for weeks is when do we get something signed, sealed and delivered,” David Kelly, chief market strategist at J.P. Morgan Funds, said of the market’s muted reaction. “We continue to get assured by people in Europe that a deal will get done, so to some extend a deal is already priced into the market.”
Greece will commit to permanent spending cuts that include reduced pension payments and a 20% cut in the minimum wage, according to a letter of intent obtained by Bloomberg News.
Any deal in the works is a “euphemism for default. The tragedy of this is Europe continues to insist on short-term austerity, which only makes the Greek economy worse,” said Kelly, arguing Europe at large would reap far greater economic good by offering aid in the form of an outright grant to jump-start the Greek and other peripheral European economies.
After veering between gains and losses, the Dow Jones Industrial Average /quotes/zigman/627449 DJIA +0.04% finished with a 5.75-point gain at 12,883.95.
The S&P 500 Index /quotes/zigman/3870025 SPX +0.22% added 2.91 points, or 0.2%, to 1,349.96, with financial firms performing best and energy the worst among its 10 industry groups.
The Nasdaq Composite Index /quotes/zigman/123127 COMP +0.41% rose 11.78 points, or 0.4%, to 2,915.86.
For every three stocks falling four gained on the New York Stock Exchange, where volume topped 765 million. Composite volume neared 4.1 billion.
Caesars Entertainment Corp. /quotes/zigman/1626530 CZR +71.00% nearly doubled in its trading debut, with shares of the casino chain up 71% to $15.39 apiece.
There is a huge amount of money sitting on the sidelines, 10-year Treasury yields are low and unattractive, so investors ought to be moving some money into equities, so it’s a slow march upward as investors gradually become less nervous,” said Kelly of the lackluster trading volume.
Oil prices trimmed their rise after the U.S. Energy Department reported supplies rose last week, with the crude-futures contract for March delivery /quotes/zigman/2203135 CL2H +0.60% adding 30 cents to $98.71 a barrel.
The euro erased a gain versus the dollar /quotes/zigman/4867933/sampled EURUSD -0.01% to trade nearly unchanged at $1.3262 on concern that Greek Prime Minister Lucas Papademos and coalition party leaders might not come to terms necessary for another round of rescue funds. Read more on currencies.
The ECB is ready to exchange its holdings of Greek government bonds to help reduce Greek’s debt load, people briefed on the matter told Dow Jones on Tuesday. Read more on ECB concessions.
Treasury prices were near neutral after the government sold $24 billion of 10-year notes, with the yield on the benchmark 10-year note /quotes/zigman/4868283/delayed 10_YEAR +0.46% at 1.977%. Read more on bonds.
Gold lost ground after rising 1.4% the prior session, with futures for April delivery /quotes/zigman/660065 GC2J -0.71% off $17.10, or 1%, to settle at $1,731.30 an ounce on the Comex division of the New York Mercantile Exchange. Read more on gold futures.
“I guess we’re waiting for Greek haircuts. We don’t have any economic news to speak of, and we’re at the last vestiges of earnings,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “Without data, people go on emotions.”
2) Top financial story of the day:
Could have impact akin to housing meltdown, bankruptcy attorneys say
Bankruptcy lawyers: Student debt is looming economic bomb-From USA Today
Student debt is looming as a national problem that could have repercussions reminiscent of the mortgage crisis, says a report by the National Association of Consumer Bankruptcy Attorneys.
The study, released Tuesday and based on a nationwide survey of 860 bankruptcy lawyers, said bankruptcy attorneys nationwide are seeing "what feels too much like what they saw before the foreclosure crisis crashed onto the national scene."
The report calls for a change in bankruptcy laws.
In the survey, 81% of respondents said potential clients with student loan debt have increased "significantly" or "somewhat" in the past four years.
And 95% of respondents reported that few student loan debtors have any chance of discharging what they owe through a bankruptcy proceeding because they have to prove "undue hardship" — a standard that is difficult to meet.
Total debt from student loans is about $1 trillion, about 14 times more than 15 years ago, and well above the estimated total credit card debt of $798 billion.
The bankruptcy attorneys association's report urges a change in bankruptcy laws so those burdened with student debt would be on the same footing as others facing bankruptcy.
"It's not fair and needs to be corrected," said U.S. Rep. Steve Cohen, D-Tenn., sponsor of legislation that would make changes suggested in the report.
Cohen outlined the revisions in a conference call with reporters Tuesday, along with officials from the bankruptcy lawyers association. Douglas Lustig, a trustee for federal bankruptcy court in western New York, agreed that something should be done.
"The problem is that you have former students who filed for bankruptcy and are not able to get a fresh start," said Lustig, who also represents clients in bankruptcy court.
Those with student debt should be able to discharge all or part of the money owed in a bankruptcy proceeding and the law should be changed so the debt can be paid over a longer period of time, Lustig said.
The high cost of college tuition and room-and-board, plus high interest rates charged by some private lenders, are all adding to the problem, experts say.
"The rising cost of education definitely needs to be in the forefront of people's minds," said Cassandra Robinson, 23, who graduated from the University of Rochester in 2010 and owes about $100,000 in student debt.
William Brewer Jr., president of the National Association of Consumer Bankruptcy Attorneys, offered a warning.
"Take it from those of us on the frontline of economic distress in America," he said. "This could very well be the next debt bomb for the U.S. economy."
3) Quote of the Day from Dave Ramsey.com:
We gain strength, and courage, and confidence by each experience in which we really stop to look fear in the face ... we must do that which we think we cannot. — Eleanor Roosevelt
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