May 13, 2013
Bernanke to speak on economy to Congress on May 22.
Federal Reserve Chairman Ben Bernanke will deliver testimony on May 22 on the outlook for the U.S. economy before the Joint Economic Committee of Congress, according to an announcement on the website of committee chairwoman Amy Klobuchar. Bernanke’s appearance will come as markets, weighing recent mixed indications on the strength of the U.S. economy, focus on the likely duration of continued bond purchases by the U.S. central bank to spur growth and hiring.
Spain Home Expropriation Plans Seen Violating EU Bailout.
Spanish politicians trying to cushion the blows of austerity plan to seize foreclosed homes to house the needy, discouraging foreign investment and threatening to violate terms of the European bailout of the country’s banks. The regional governments of Andalusia, with the most vacant properties in the country, and the tourist destination of the Canary Islands, are planning to expropriate foreclosed properties for as long as three years to house displaced families. The European Commission has asked Prime Minister Mariano Rajoy’s government for details on the regions’ actions, to ensure they don’t clash with the country’s commitments. “It’s third world, populist and akin to policies more commonly seen in Bolivia and North Korea,” said Mikel Echavarren, chief executive officer of Irea, a Madrid-based restructuring firm that has advised on 22 billion euros ($28.6 billion) of refinancing. “Investors fear it will set a precedent and other regions will follow suit, making Spanish real estate investment an extremely high-risk activity.” Rajoy’s People Party has pushed ahead with the harshest austerity measures in the country’s democratic history to tame surging borrowing costs that last year pushed Spain to the verge of a bailout. While seizing homes may soften the impact, it threatens to complicate the government’s task of meeting the terms of a 41 billion euro rescue package for the banking sector, including selling 50.8 billion euros of soured property assets transferred to the nation’s bad bank with a return for its investors. ‘Key Element’
“We are talking about a key element, a very important element which concerns the financial assistance that banks have been given by the European Union,” Deputy Prime Minister Soraya Saenz de Santamaria said on Friday at a press conference in Madrid. That agreement “obliges us to fulfill certain obligations, pacts and memorandums. We all have to work together on the issue of foreclosures to adopt balanced decisions.” Simon O’Connor, spokesman for European Union Economic and Monetary Affairs Commissioner Olli Rehn, said today in Brussels that the commission is well aware of the “severe social consequences of the crisis in Spain” and is in contact with the Spanish authorities to request additional information about policies adopted at the regional level. Property investment in Spain already is a risky proposition after a decade-long property bubble burst in 2008, tipping the nation into recession and pushing unemployment to a record 27 percent. Around 400,000 foreclosures have been ordered in Spain since the start of the crisis, sparking a wave of demonstrations that have seen protesters picket politicians’ homes to shame them over evictions. ‘Terrible Idea’
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