Biden 'optimistic' on debt talks with Republicans as default looms

WASHINGTON —President Joe Biden said Sunday he remains "optimistic" about finding an agreement with his Republican opponents to raise the US debt limit and avoid a default, which his administration warned would cause "catastrophic" consequences.

Congressional Republicans are demanding budget cuts in exchange for lifting the US borrowing limit, while the White House has insisted for months that the nation's credit should not be up for negotiation.

Alarm bells are meanwhile ringing over the possibility of a first-ever US default, with uncertainty over the actual date the government would stop being able to pay its bills.

The two sides have remained at an impasse despite weeks of warnings from government officials and bankers that a default could unleash drastic consequences, including a possible recession and likely global financial contagion.

Nonetheless, Biden said Sunday he thinks he will eventually be able to reach a deal.

"I remain optimistic because I'm a congenital optimist, but I really think there's a desire on their part as well as ours to reach agreement. I think we'll be able to do it," Biden told reporters while out on a bike ride near his beach home in Delaware.

A much-anticipated new round of debt-ceiling talks between Biden and Republican leaders, including House Speaker Kevin McCarthy, was postponed from Friday until the coming week.

Asked if the Tuesday meeting was still on, Biden said: "I think so."

Treasury Secretary Janet Yellen has warned a default could occur by June 1, while the nonpartisan Congressional Budget Office forecast on Friday the date of June 15.

"We shouldn't be here," Deputy Treasury Secretary Wally Adeyemo said Sunday on CNN's "State of the Union."

"If Congress failed to raise the debt limit by the time of default, we would go into a recession and it'd be catastrophic," he warned.

"The United States of America has never defaulted on its debt -- and we can't."

'MASSIVE CUTS' 

Biden has stated he wants a "clean" hike of the debt ceiling, but Republicans are insisting any extension of the country's borrowing authority, currently capped at $31.4 trillion, come with substantial curbs on spending.

"It's time to bring spending levels back to pre-Covid, and then we can talk about raising the debt ceiling," Byron Donalds, a Republican representative from Florida, told FOX News on Sunday.

"If Joe Biden brings nothing to the table, if all he does is sit there with his hands in his pockets... then he's the one leading our nation into default."

Former president Donald Trump has encouraged Republican lawmakers to hold out for a default if Biden doesn't agree to "massive cuts."

The looming possibility of a default has also threatened Biden's upcoming trip to Asia for a G7 leaders meeting, among other events in the region.

Asked by reporters Sunday if he still planned to leave this week, Biden said: "That's my plan as it stands now."

'CONSTRUCTIVE' NEGOTIATIONS 

Adeyemo acknowledged "constructive" negotiations were ongoing at the staff level, while pushing back on assertions that Biden does not want to address ballooning US debt.

"The president's laid out a plan that includes $3 trillion in debt relief over 10 years," Adeyemo said, referring to Biden's budget request unveiled in March, which featured tax increases on the wealthy and businesses.

Congressional leaders should address ways to hammer out a deal on fiscal policy, "but as we have that conversation, there is no reason we shouldn't raise the debt limit and prevent default in this country, a default that could lead to a massive recession that would cost us millions of jobs," he said.

Lael Brainard, director of the White House's National Economic Council, maintained that a deal would be reached.

"Our expectation is that Congress will do what is necessary" to avoid a default, Brainard, a former Federal Reserve vice chair, told CBS Sunday show "Face the Nation."

Biden addressed the issue on Saturday in Delaware, where he talked briefly to reporters.

"They're moving along," he said of the talks. But while there was "real discussion," he added the two sides were "not there yet."

Agence France-Presse 

Japan's debt mountain: How is it sustainable?

Already the global leader in accumulating debt, Japan is adding nearly $2 trillion to its mountain this fiscal year with record stimulus packages to cushion the impact of coronavirus.

With debt levels around two and a half times the size of its economy, Japan manages to keep government bond yields ultra low and investor confidence high that it can avoid default.

- How did we get here? -

Whichever way you look at it, Japan's debt is unfathomably large. According to the Bank of Japan (BoJ), at the end of 2019, it stood at 1,328,000,000,000,000 yen.

This is equivalent to around $12.2 trillion, just over half the total amount of US debt in absolute terms but by far the biggest pile when measured against the size of even Japan's mighty economy (around 240 percent of gross domestic product).

Japan's debt began to swell in the 1990s when its finance and real estate bubble burst to disastrous effect.

With stimulus packages and a rapidly ageing population that pushes up healthcare and social security costs, Japan's debt first breached the 100-percent-of-GDP mark at the end of the 1990s.

It hit 200 percent in 2010 and is now around 240 percent of GDP, according to the International Monetary Fund.

On Wednesday, Japan's parliament agreed anti-coronavirus measures worth 117 trillion yen -- which is likely to push the GDP ratio well above 250 percent.

- Isn't this a problem? -

To finance this debt, the Japanese government issues bonds known as JGBs.

These are snapped up in enormous volumes by the BoJ, the country's central bank that is officially independent but in practice closely co-ordinates economic policy with the government.

As part of anti-virus measures, the bank has removed its self-imposed ceiling on buying JGBs, giving itself unlimited purchasing firepower. It holds more than half of all JGBs.

These purchases support the price of the JGBs in the debt market and keep the yield on the bonds low (prices and yields move in opposite directions).

This means that in effect, the government is being financed by the central bank at an ultra-low (or even negative) interest rate, making it more sustainable.

"The ultra-low rate conditions created by very much accommodative monetary policy by BoJ can be one of the reasons" that Japan's mountain is less problematic than for other high-debt countries around the world, said Takashi Miwa, an economist at Nomura bank.

- Who else buys Japan's debt? -

Risk-averse private and institutional investors also have a healthy appetite for JGBs because they see them as a safe place to put their money, burned by a history of stock market bubbles.

"A large portion of wealth is held by seniors who lack financial literacy and prioritise stability rather than return," said Shigeto Nagai, from Oxford Economics.

"With limited investment and lending opportunities domestically, banks, insurance companies and pension funds still need the JGB to place their vast amount of excess savings," Nagai told AFP.

The bonds are denominated in yen, still seen as a safe haven in troubled economic times and the proportion held by foreign institutions is very low -- making Japan less vulnerable to external pressure.

In fact, 90 percent of the debt is held by Japanese investors.

Another thing that keeps market confidence high: Japan is the world's biggest creditor, holding more than $3 trillion in net assets in foreign currency reserves and direct investment abroad.

- How high can you go? -

The growing mountain of debt means that, even with ultra-low interest rates, the amount Japan's government pays for repayments is its second-largest budget line.

The only way to avoid adding to the pile is to reduce budget deficits by boosting taxes or cutting public spending -- but this threatens to throttle growth in Japan's already recession-hit economy.

One drastic step could be to write off the debt held by the BoJ -- a step that would be an "accounting trick" with "no consequence" on the real economy, said Frederic Burguiere, an economist specialising in Asia.

"But this does not take into account the moral dimension of economic mechanisms... if we allow states not to repay their debts, what becomes the rules for private investors and the state itself?" asked Burguiere.

Agence France-Presse 

Student Debt a ‘Life Sentence’ for Millions of Americans

Haley Walters is five years away from earning her law degree. If everything goes according to plan, she will be under a mountain of $100,000 in student debt by the time she enters the workforce. Like millions of Americans, Walters is paying a steep price for an education that will likely weigh her down financially for much of her adult life.

“I think the student debt crisis is truly a life sentence,” the 19-year-old Californian told AFP.

With 45 million borrowers owing some $1.6 trillion, the debt burden of American college graduates has exploded in recent years.

It has emerged as a key issue in the 2020 presidential campaign, with candidate Bernie Sanders unveiling an ambitious plan Monday to erase all student loan debt.

“Somebody who graduates from a public university this year is expected to have over $35,000 in student loan debt on average,” said Cody Hounanian, program director of Student Debt Crisis, a California non-profit that assists students and fights for reforms.

According to official statistics, 71 percent of US students are burdened by such debt, with minorities the hardest hit.

“Black women particularly are the most impacted group with the highest student debt total per graduate,” Hovnanian said.

Despite scholarships and financial aid available to many, the cost of higher education is such that the majority of students are unable to repay their loans on schedule.

“When borrowers leave school, they’re in a program that’s supposed to take 10 years… but more and more are enrolling in federal programs that are actually 20 or 25 years in length,” Hovnanian said.

In the long term, the loan balance for such people increases, interest accrues, and the debt burden just keeps going upwards, he added.

Hovnanian spoke of his own experience as an example.

“I had $30,000 in student loan debt, I pay over $150 a month, and that’s in one of these affordable repayment programs,” he said. “By doing that, my loan balance is actually increasing. I’m not covering even the entire interest that’s accrued.”

“I’m paying every month,” he added, “just to be more in debt.”

– ‘System isn’t working’ –
Several experts interviewed said it’s not unusual to have two generations in one family burdened with student debt.
That’s the case for Walters, who just graduated with a two-year degree in political science from Pasadena City College, near Los Angeles.

While she managed to go through that school without accumulating debt, come autumn she will be entering the prestigious — and much more expensive — University of California Berkeley, with a law degree the ultimate goal.
Despite being awarded scholarships, Walters said she will still have to take out loans to pay for nearly $20,000 in annual fees.

“That is basically going to turn into a loan after loan after loan… each with individual interest rates and individual payments,” Walters sighed.

She said she grew up listening to her mother, 58, bemoan the student debt that still haunts her.
“I would hear my mom talk about… how it was basically crippling our finances,” she recalled.
“You know, we couldn’t go on vacation, sometimes I didn’t get school supplies for the new school year, sometimes we got fewer birthday presents.”

Walters said she hopes student debt will be a key issue in the 2020 White House race.
For some candidates, it is already front and center.
– ‘The system isn’t working’ –

Sanders’s “revolutionary” bill aims to erase all student loan debt and make public colleges tuition-free — and he wants the financial industry to help pay for it.
“The American people bailed out Wall Street,” Sanders said, referring to lenders deemed “too big to fail” during the late 2000s recession.

“Now it is time for Wall Street to come to the aid of the middle class.”
Democratic candidate Elizabeth Warren also has a debt cancellation and free public college plan.

“My dad grew up in an extremely poor family in southern California,” said Walters. “The only reason he went to university was that it was free.”

Tuition, however, is not the only financial burden of students.

In California, for example, housing and living expenses represent more than half of the $35,000 needed annually on average for public universities.

Hovnanian said it was crucial to address those issues to ensure students don’t end up saddled with heavy debt before starting their professional lives.

“The system isn’t working for students,” he said. “It’s working for profiteers, for big companies and for those who are making money off of students and borrowers.”

source: usa.inquirer.net

5 Ways to Get out of Debt: Which Method Is Right for You?

Getting out of debt can improve an individual’s quality of life and open new doors. There are many unexpected events that can negatively affect a person’s personal finances and cause serious financial stress. Debt management is possible, however, and is available in many different forms. Some of the most common methods to get out of debt include credit counseling, debt consolidation, cash-out refinance, debt settlement, and bankruptcy.


Credit Counseling

Credit counseling is one of the best ways to help a person better understand the depth of their financial situation, and the options they have to improve it. A professional counselor acts as a liaison between the individual and their creditors to try to negotiate lower interest rates. They can also create a plan for the individual to organize and better manage their debt related expenses. This debt management plan allows the individual to make lower payments though their counselor, who then pays the creditors.

While credit counselors can be very beneficial, they do not have the ability to directly reduce the amount of debt an individual owes. Lowering interest rates is of course helpful, but the principal amount cannot be negotiated or changed. Speaking with a credit counselor can also give you a negative reputation among lenders. They may see you as a credit risk if you are having a counselor negotiate your account details. Also, credit counselors are not free, so the individual should be careful to know how much they are paying their credit counselor to avoid accumulating even more debt from this expense. Monthly payment amounts are often increased in debt management plans, which could leave the individual right back where they started.

Debt Consolidation

Debt consolidation is a very popular method that combines all outstanding debt across multiple creditors into one, single debt amount. A person can apply for a personal or debt consolidation loan so that they are only making payments to one creditor instead of multiple, often at a lower interest rate. All monthly payments are combined into one monthly payment of a determined amount.

Something to consider when using debt consolidation is that loans can at times require collateral. Collateral secures the loan through an asset owned by the applicant, such as their car or house. If the individual fails to pay the loan, these assets could be repossessed by the lender. Those who do not have collateral could expect to see higher interest rates when applying for a personal loan. Also, being approved for a loan will not reduce the principal amount of debt owed.

Being approved for a personal or debt consolidation loan requires good credit, which can be difficult for those who are already under financial stress. Fortunately, taking out one of these loans does not impact the credit of the applicant unless they are unable to pay the loan back. Terms of the loan are often customized to a certain degree to help the individual choose the best plan for their situation.

Cash-Out Refinance

Cash-out refinance lets homeowners work with a mortgage lender to help pay off their debt. Those who own a home can refinance their mortgage, add up the amount of debt they owe, then apply that amount to their current mortgage balance. They can then take that excess amount out in cash and use it to pay off the creditors, thus only having to repay the remaining balance to their mortgage company. This lowers the interest rate and creates one payment that is made each month.

Cash-out refinancing is only appropriate for homeowners with good standing credit, a steady income, and equity in their home. This is crucial to consider because many will need to choose this option before their debt gets unmanageable and hurts their credit, decreasing the chances of being able to use a cash-out refinance in the future. There are also other costs to consider when refinancing a home, including closing costs and the impact of increased mortgage debt.

Debt Settlement

Debt settlement, also known as debt resolution, is when a company that offers debt settlement tries to convince creditors to allow the debtor to pay a lower total amount than what is owed. The individual would then pay the settlement company that lower amount. Much like a credit counselor negotiates to lower interest rates, debt settlement negotiates to reduce the principal amount owed. If done correctly, this can be extremely beneficial to the individual. They can save a significant amount of money if approved.

Debt settlement, unfortunately, can put a damper on a person’s credit. However, credit can be rebuilt by consistently paying the new smaller monthly payments. This may be a good option for those who have already become financially overwhelmed and are facing repercussions for not being able to make their current monthly payments.

Bankruptcy

Bankruptcy is typically seen as a last resort for those who are entirely unable to pay back their debt. This is a legal process that is often extremely damaging to an individual’s credit and financial status. There are two different kinds of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 is the most commonly used method that removes all debt from the individual, allowing them to start over. This can have devastating affects on the person’s credit, and they may even lose assets to cover the debt owed. Chapter 13 does not always completely clear a person of debt, but can lower the principal amount, so the individual owes much less. The individual then owes payments to the court who passes the money to the creditors. This can also severely hurt a person’s credit.

Can I Pay My Debt Myself?

There are ways a person can take control of their personal finances on their own. By organizing finances and using free tools online, those who are struggling to manage their debt can create a plan to help get back on track.

source: usa.inquirer.net

5 Ways Poor Credit Can Cost You

Your credit is one of the most important aspects of your finances. Your credit situation can mean savings — or costs. In fact, poor credit can cost you significantly. And the costs aren’t always in terms of money. While the most obvious costs of poor credit are financial, you also have to watch out for some of the other costs of bad credit.

Here are 5 ways that poor credit can cost you, financially and in other ways:

1. Pay More In Interest

Anytime you borrow money, you are required to pay interest. When someone lends you money, the goal is to earn, and that means that they charge you an interest rate. However, the interest you are charged is usually based on your credit rating.

Poor credit means that you present a bigger risk of not repaying the loan. The lender could lose some of the money it has put up. In order to mitigate some of that risk, you are charged a higher interest rate if you have poor credit. On a short-term loan of two or three years, the extra you pay might amount to a few hundred dollars. For long-term loans, though, like home loans, you could pay tens of thousands of dollars extra because of your poor credit.

2. Higher Insurance Premiums

In some cases, you might pay higher insurance premiums because of your low credit. Some studies link poor credit to other risky behaviors, such as car accidents. Your low credit could, in some instances, result in a higher insurance premium. This means that you could very well pay an extra $20 to $75 each month because of your poor credit. Over time, that can add up to quite a lot.

3. Inability to Access Some Products and Services

Your poor credit might actually cost you in terms of opportunities to get products and services. If your credit is poor enough, you might not qualify for a cell phone service. You might want a specific credit card to help you get back on track or ease your cash flow, but you might not qualify because of your poor credit.

In some cases, a bank will check your credit before allowing you to open an account. If you have poor credit, you might be denied a checking account or a savings account. You might have to use costlier services, such as check-cashing services, or prepaid debit cards. These can lead to fees that can cost you more than $100 a year. Over time, that adds up and your poor credit can mean that you are stuck in a financial services rut that is hard to get out of.

4. You Might Not Get Certain Jobs

Your credit history might be used as part of a background check for certain jobs. If you are applying for a job that involves access to sensitive information, or requires financial knowledge, your bad credit can be a hindrance. An employer might worry that you can be bribed to share sensitive information or participate in corporate sabotage. In some cases, there might be a concern about embezzlement. In any case, your financial situation could raise red flags with some employers and cost you a higher-paying job or a promotion.

While employers aren’t supposed to check your credit score, the story that your report tells might be enough to cost you a good job. This can be frustrating, especially if you are otherwise qualified.

5. Your Relationships Can Suffer

 More on Bad Credit

• What Your Credit Score Says About You
• Build Your Credit Score Faster
• Relationships: Is Bad Credit a Deal Breaker for You?

In many cases, the things that come with poor credit — or that cause poor credit — add stress to your life. When you have a lot of debt and poor credit, and when you are worried about your financial situation and all the extra costs you are paying, it’s hard to maintain healthy relationships. Your stress and anxiety can make you irritable, and you might be reluctant to share the full extent of the situation with a significant other.

In these cases, relationships suffer. Whether you yell at your kids more, or keep secrets from your spouse, it’s not healthy for your relationship. Your mental and emotional health can also deteriorate as a result of the stress related to poor credit. If you aren’t careful, you could end up with costs that are even greater than the financial.

source: financialhighway.com

Recovering Dubai faces billions of maturing debt

DUBAI — As debt-laden Dubai’s economic recovery continues, with grandiose projects making a comeback, the emirate faces some near-term maturity of debt racked up during pre-crisis years but the prospects are not gloomy, analysts say.

Dubai is likely to manage the forthcoming obligations, part of total debt amounting to 100 percent of its gross domestic product, according to Masood Ahmed, the Middle East director at the International Monetary Fund.

“Yes, it can manage,” he told AFP, highlighting the need to be open about the process.

“There is a substantial amount of debt that is coming due in the next few years, and it will be important to manage proactively that process. Information and communication with potential market participants will be a key part of this,” he said.

In recent years, Dubai has restructured billions of dollars of debt, mainly that of its Dubai World group, which rocked global markets in 2009 when it signalled that it could not repay some $26 billion of debt.

“There is likely to be another round of restructuring from 2014 to 2016, when much of Dubai’s borrowing to restructure the first round of debt from 2009 will mature,” said Monica Malik, chief economist at EFG-Hermes Emirates investment bank.

That “includes loans from Abu Dhabi and the UAE central bank, which should be rolled over easily,” she said.

Deep-pocketed Abu Dhabi is a fellow member of the seven-state United Arab Emirates and stepped in when Dubai was battling to solve Dubai World’s debt problems.

But Dubai World later proved to be only the tip of the iceberg.

Dubai and its government-related entities (GREs) had accumulated some $113 billion of debt, with $36.5 billion coming due next year only, according to EFG-Hermes.

But $20 billion of that is owed to the UAE central bank and the government of Abu Dhabi.

“We expect this to be rolled over, making overall 2014 repayments manageable,” said Malik.

Dubai has $9.4 billion of debt maturing in 2013, compared with $14.6 billion in 2012.

Among the positive signs have been announcements by the government and GREs of deals to restructure some due debt, or repayment of maturing bonds.

Earlier this month, Dubai’s government said it repaid 3.34 billion dirhams ($910 million) of bonds that came due in April. The redeemed bonds were part of a 15-billion-dirham bonds programme issued in 2008.

“This repayment reaffirms Dubai government’s commitment to deal with its repayment obligations in a proactive manner,” said Abdulrahman al-Saleh, director general of Dubai’s department of finance.

“It also strengthens the government’s resolve to honour all its financial obligations on time,” he said.

Dubai Group, a unit of ruler Sheikh Mohammed bin Rashid al-Maktoum’s Dubai Holding investment arm, also said this month it was nearing a deal with its creditors to restructure $10 billion of debt after three years of talks.

“For instance, where a full repayment cannot be made, we expect a continuation of the trend established over the past one-two years of a partial capital repayment coupled with a rollover of the remaining debt,” Malik said.

She said the fixed-income market is expected to be the main source of financing, because local banks are constrained by central bank-imposed exposure limits and many European banks continue a “retrenchment” from the Middle East.

Dubai’s economy grew by just under four percent in 2012, and is expected to grow by little over four percent this year, Ahmed said.

“We see a process of recovery that is quite broad based,” he said, citing growth from “logistics, trade, and also from real estate.”

“In that sense, the Dubai economy is doing better,” he added.

Dubai’s non-oil trade surged by 13 percent in 2012 to $336 billion. Its airport is now the world’s second busiest for international travel, handling 57.68 million passengers in 2012.

A number of grandiose property and theme parks projects have been announced recently, reminiscent of the five-year heyday of rapid real estate growth in the glitzy emirate that preceded the 2009 crash.

Real estate and rental prices have also been surging after being chopped by a half during the crisis. Real estate agents are back on their phones calling owners and promising wealthy cash buyers.

But such euphoria triggers warnings of being carried away.

“As we embark now on these mega projects, this ambitious expansion plan needs to be executed in a measured way that is gradual and limits additional risk taking for the still highly-indebted GREs sector,” Ahmed said.

George Abed, director of the Institute of International Finance, warned of repeating the mistakes of the past.

“We think the lessons of the debt crisis have been largely absorbed but in some quarters we hear sometimes a note of euphoria, perhaps, and excitement, exuberance that should be cautioned against,” he was quoted by The National daily as saying.

source: business.inquirer.net

Bad Credit Effects Go Beyond Your Finances

When we think of bad credit, many of us think about the ways that bad credit can harm our chances at getting a loan. Bad credit can lead to higher interest rates, which can cost more money in the long run. Part of borrowing smart is making sure that you have good credit so that you pay the lowest possible interest charges.

However, paying more money for your loan is not the only way that bad credit can hurt you. Poor credit can harm you in other ways — including causing you problems in your personal life.



Emotional Stress

 

In many cases part of the reason consumers have bad credit is due to their high levels of debt. Your credit score suffers when you have high credit utilization. If your credit cards are maxed out, it can weigh on your credit score.


The poor credit score isn’t your only problem. When you have that much debt, it places emotional stress on you. This emotional stress can affect your mental and physical health at home. Emotional stress can cause anxiety and depression, and lead to difficulty in your personal life.

When you are stressed about money, as evidenced by your bad credit, it becomes difficult to effectively manage your emotional state — much less enjoy financial security.

Relationship Problems

 

Your bad credit can also prompt relationship problems. Money problems can lead to fights about money, and place strain on relationships. Disagreements about how to tackle the bad credit situation, and the bad debt situation, can lead to difficulty in your romantic relationship.

However, bad credit can also affect other relationships as well. Your stress and anxiety regarding money can lead to you having less patience with your children, and with other people in your life. You might be embarrassed to participate in activities with others, or afraid that they will learn about your credit problems. If this is the case, it can cause strain in your other relationships, and lead to problems relating.

Trouble Finding Housing

 

Another difficulty that can come from poor credit is difficulty finding housing. If you rent, some landlords will check your credit before approving you. This can mean that you don’t qualify to live in the apartment or house that you are interested in.

In some cases, you might be required to pay a larger security deposit, or pay first and last month’s rent — even if someone else who doesn’t have bad credit wouldn’t have to pay such a large amount of money up front.

Having bad credit can limit your opotions and result in you not being able to live where you want. If you can’t afford the larger security deposit, or if you are denied altogether, you might be forced to live somewhere you don’t want to. This can be a disappointing state of affairs — especially if the results mean that you are farther from amenities you are looking for or if your children won’t be in your preferred school district.

Passed Over for a Job

 

No, an employer isn’t supposed to look at your credit score when making a decision about whether or not to hire you. However, an employer can look at your credit report; at least a version of your credit report is available for employer perusal.

If you have poor credit, and you are applying for a job where you might have access to proprietary information or if you are going to be working in security, an employer might worry that you are vulnerable to bribery or other issues. While you will have to give your permission for a potential employer to check your credit, withholding that permission might indicate that you do have something to hide.

With more and more employers using credit checks as part of the overall background check, having poor credit could hurt your long-term career prospects.

Bottom Line

 

Your credit doesn’t just affect your loan situation. Your personal life can be affected by poor credit, and it can also have far-reaching effects on your finances and life beyond just what happens with your debt. As a result, it’s vital that you work to improve your credit score.

 source: financialhighway.com

The Emotional Effects of Debt and How to Deal

Debt can send out finances into a downward spiral fast. But besides being detrimental to our finances, there is also a strong emotional aspect to debt.

Denial

Often with overwhelming debt, people choose not to even deal with it. They let bills pile up and may not even realize how much they owe and try to ignore it. But denial is only going to make things worse with late and delinquent payments resulting in bad credit reports, higher interest rates, and late fees which lead to even more debt.


How to deal: Instead of hiding from it, deal with it head on. As difficult as it may be, the sooner you face the debt, the sooner you’ll be able to take steps to get rid of it. Write down every bill you have and the interest rate to make a plan on how you will start working towards getting out of debt. Call your debtors to see what type of payment plan you can work out with them.


Stress

Watching bills pile up and getting calls from people you owe can easily lead to stresss. Wondering how you’ll get out of debt and not seeing a clear solution is a stressful situation as well. Often people in debt will stress about mistakes in the past and stress about what the future brings instead of concentrating on what they can be doing this moment.

How to deal: The first step is to start working towards getting out of debt. Make a plan to cut spending to put more money towards debt and to make extra income. Having a plan will reduce the stress. Try the National Foundation for Credit Counseling’s budget calculator to create a plan that’s best for you.  Also, don’t let the debt consume you. Take time for free or cheap stress reducing activities like exercising, getting together with family and friends and reading and writing.

Embarrassed

 

It’s not a surprise if you’re embarrassed by the debt you have. You may feel ashamed and regretful of the mistakes you might have had or feel that you are alone with having debt. Unfortunately, having debt is common. According to Creditcards.com, the average American household has $15,950 of credit card debt.
How to deal: Understand that you are not alone in dealing with debt. Everyone makes mistakes or has events happen outside of their control that may lead to debt. Instead of being embarrassed, be proud that you are doing everything you can to get out of the debt.

Anger

 

Sometimes it’s easy to be angry at and blame a spouse or family member for digging you into debt. You may be angry that your spouse lost a job or took a pay cut and as a result, caused you to accrue debt. It’s estimated that one of the main reasons why couples fight or get divorced is because of arguing about money.
How to deal: With patience and communication, this is a time you can pull together with your spouse instead of breaking apart. It’s okay to calmly talk about your anger and disappointments together, but do so in a way that is productive instead of hurtful. Work together to come up with a plan for how you will rectify the debt.



Fear


It’s scary to not know how you will get out of overwhelming debt. You might also fear creditors calling or losing your home or car. When you’re trying to figure out your next step, it’s scary if you’re not sure what to do.

How to deal: Visit the U.S. governments website on dealing with debt to ease your fears and learn what to do. Once you’ve accepted any mistakes and start making steps towards getting out of debt, you’ll be able to lose some of  these fears. Don’t fear the people you owe, instead talk with them about your options for repayment.

Keep in mind that getting out of debt will take plenty of patience, planning, communication amongst both family members and people you owe, and a lot of hard work.

source: financialhighway.com

5 Tips to Help Rebuild Credit Score

If you have ended up with bad credit score in the past few years then you are not alone. It can feel like a helpless situation but with time and a little effort you can reverse the situation and the best time to start is right now. Rebuilding your credit score won’t happen over night, it is a long process and requires patience and discipline. If you are looking to rebuild credit score these five simple ways on how to improve your credit score can help you stay on track.

1: Streamline Your Debts

If you have bad credit and are struggling to stay on top of things it can be easy for a bad situation to get worse. For example, if you have multiple credit cards and loan repayments each month it is easy to forget one and receive another dent in your credit rating, making it harder to rebuild credit score. Think about consolidating your credit cards and personal loans to reduce the number of repayments due each month and to reduce the interest rate. Set up an automatic payment to cover at least the minimum repayments each month to avoid damaging your credit score further and then make extra repayments from every pay check. If you do consolidate your debts then make sure you cancel any cards you consolidated rather than using them to extend your debt.

2: Create a Budget

Chances are you got into this situation by spending beyond your means. If you are spending more than you are bringing in then things will get worse and rebuilding credit will be impossible. Start by noting down your household income from wages as well as other sources such as share dividends or government benefits. Then think through all your outgoings such as rent or mortgage, utilities, cable, cell phone, groceries, automobile costs, travel, entertainment, clothes and so on. It can be hard to know exactly where you spend all your money when looking back at bank statements, especially if you spend a lot with cash. Try creating a spending diary for a couple of weeks or use a spending tracker app on your phone such as Toshl to get an understanding of where your money is going.

3: Change Your Habits

Now you know what you are spending money on, it is time to make some changes. You need to review your budget and find things you can cut out and reduce. For example, perhaps you can use free online services such as Hulu for on demand TV and cancel your cable subscription. Shop around for better deals on things you need to keep such as cell phone plans, car and home insurance, utilities as so on. Try looking for discount coupons for products you would use or switching to cheaper brands. If entertainment is an area you are spending up on then look for cheaper ways to do things such as eating in more, enjoying the great outdoors and so on.

One habit you will have to change is racking up debt. Take your credit cards out of your wallet and try shifting most of your spending to a debit card linked to your everyday bank account. This will force you to live within your means and avoid clocking up more credit.

4: Clean up Your Credit File

You’re now getting things in order and avoiding the risk of your credit getting worse. The next step to rebuild credit is to clean up your credit file. Request a copy of your credit file and look for any errors such as default or late payment notes which are not correct or unauthorized credit file enquiries. You may be able to request for mistakes to be removed which can speed up the path to financial recovery.

5: Rebuild Credit

The steps taken so far should be putting you in a good position to rebuild credit. Set up automatic payments for all your bills and loan repayments to ensure they always get paid on time. Creating a good repayment record will result in your credit score going up over time. While it may seem tempting to avoid all forms of credit this may not be the best option to restore your credit as the banks want to see repayment history. Safe options to help rebuild credit are secured credit cards or certain prepaid credit cards that rebuild credit. Secured credit cards work by securing the debt against money you deposit with the card issuer. You make repayments each month and the card issuer reports these on time payments on your credit report causing your score to rise over time.

Start your recovery

Getting into debt resulting in bad credit can be very stressful but it’s not a problem that will go away by ignoring it. Grab the issue by the horns and take control of it today. You should control your finances and not the other way around.

Article by Richard from credit card comparison website Secured Credit Cards 4U which compares credit cards to rebuild credit including secured credit cards and prepaid cards from leading US issuers.

source: financialhighway.com

Japan ready to help in euro crisis at G8 talks

WASHINGTON — Japan said that it stood ready to extend help in stemming the eurozone’s debt crisis as the Group of Eight major industrialized nations opened crisis talks.

Japan, the world’s third largest economy and only Asian power in the elite G8 club, has already been a major contributor to an IMF firewall aimed at holding back Europe’s woes with a $60 billion commitment unveiled last month.

Japan’s Prime Minister Yoshihiko Noda will argue in the talks that Europeans hold foremost responsibility in addressing the crisis, foreign ministry spokeswoman Naoko Saiki told reporters on Friday.

“At the same time, in order to help the Europeans solve the European debt crisis, Japan is ready to extend its assistance,” Saiki said.

“The European sovereign debt crisis may endanger the health of the world economy, so we would like to encourage the Europeans to cope with the matter appropriately as soon as possible,” she said.

Further assistance by Japan could include support for the International Monetary Fund or efforts to increase the safety net in Asia, she said.

The G8 talks at the US presidential retreat of Camp David look set to pit President Barack Obama and newly elected President Francois Hollande, both advocates of pro-growth policies, against German Chancellor Angela Merkel who has championed austerity measures.

Japan straddles both positions in the G8. It has sought to stimulate its economy after last year’s tsunami tragedy but Noda is championing a politically risky plan to double sales tax to rein in a giant public debt.

Noda will hold his first meeting with Hollande on Saturday aimed at part at discussing a proposal to launch talks on an ambitious free trade agreement between Japan and the European Union, Japanese officials said.

source: japantoday.com

Global markets: Euro, shares firm ahead of Italian debt sale

LONDON - The euro neared a one-week high against the dollar and European bond markets steadied on Thursday as investors awaited an Italian debt sale that will show whether concerns over Spain are spreading to other debt-laden euro zone nations.

A recent sell-off in Spanish debt has largely calmed down following comments from European Central Bank executive board member Benoit Coeure, who hinted that the central bank might be willing to restart buying of debt in the market.

"Should the Italian auction disappoint, we could see the euro reverse some of its gains," said Ankita Dudani, G-10 currency strategist at RBS Global Banking, who expects the bond sale to go through without much of a hitch.

The euro was up 0.2 percent at $1.3130, while the dollar measured against a basket of major currencies was down 0.2 percent at 79.62.

European equity markets started slightly higher ahead of the Italian bond auction, adding to the previous session's tentative recovery following a week-long slide.

The MSCI world equity index was up 0.2 percent 322.71 after a good start to the US corporate reporting season lifted Wall Street stocks and an Australian employment indicator encouraged the rebound in Asia.

The FTSE Eurofirst index of top European shares rose 0.1 percent to 1034.83 at the start, with Germany's DAX index leading the way, up 0.5 percent.

Safe-haven German bond futures were 6 ticks lower at 139.76, with 10-year cash bond yields up 1 basis point at 1.70 percent.

Italy's borrowing costs are expected to rise by about a full percentage point from a month ago at its 5 billion euro auction of new three-year bonds later, after the rate it pays for one-year money more than doubled at an auction on Wednesday. –Reuters

source: gmanetwork.com

Asian markets slip after weak Spain debt auction

HONG KONG - Asian markets were hit by renewed eurozone fears on Thursday after a weak Spanish auction raised the prospect that it could be the next country to be hammered by a debt crisis.

The news out of Madrid, as well as another batch of poor data from the eurozone, compounded downbeat sentiment after the US Federal Reserve indicated it would not provide any new stimulus to the economy in the near term.

Tokyo fell 0.53 percent, or 52.38 points, to 9,767.61 and Sydney shed 0.33 percent, or 14.3 points, to 4,319.6 while Hong Kong slipped 0.95 percent, or 197.98 points, to 20,593.00.

Taipei fell 1.56 percent, or 121.03 points, to 7,639.82.

But Seoul gained 0.50 percent, adding 10.16 points to close at 2,028.77.

Shanghai, returning after a three-day break, jumped 1.74 percent, or 39.45 points, to 2,302.24 after Beijing on Wednesday hiked the amount of cash foreigners can invest on the nation's markets from $30 billion to $80 billion.

Spain's borrowing soared Wednesday in its first debt auction since an austerity budget last week, fuelling concern among traders of a rerun of Greece's strife last year when it narrowly avoided a messy default.

Madrid is racing to slash its public deficit to reassure markets that it will not follow Greece -- as well as Ireland and Portugal in needing a bail-out -- after it missed its 6.0 percent public-deficit target last year.

Adding to the country's problems is the fact it is heading back into recession, while the unemployment rate is tipped to hit 24.3 percent, according to government estimates.

And on Tuesday Budget Minister Cristobal Montoro warned that national debt will jump sharply to 79.8 percent of GDP this year from 68.5 percent last year.

"The rising cost of Spanish debt reignited fears in Europe as investors sold off equity investments," Miguel Audencial, sales trader at CMC Markets, said in a note.

"Lower-than-expected European retail sales figures and German factory orders both confirmed that a full recovery is still far from reach," Audencial said, according to Dow Jones Newswires.

The Spanish concerns come less than a week after eurozone finance chiefs agreed to boost a firewall aimed at avoiding another crisis on the scale of Greece.

Also Wednesday a study showed eurozone private sector activity retreated last month, adding to evidence that the region is in recession.

The composite Purchasing Managers Index (PMI) compiled by the Markit research firm hit a three-month low 49.1 points from 49.3 in February. A score below the neutral 50-point mark indicates contraction.

The news added to market gloom after minutes from the Fed's most recent policy-setting meeting showed it will play a wait-and-see game before further easing monetary policy, meaning there will be less liquidity.

"Apprehensions on the future state of the US economy in a world without quantitative easing overshadowed the slightly higher-than-expected ADP employment data," Audencial added.

Payrolls firm ADP said that while fewer jobs than expected were created in the private sector in March, figures for prior months were revised upwards.

Employment increased by a seasonally adjusted 209,000 last month, down from a revised 230,000 in February, and lower than forecasts of 217,000 net new positions. However, estimated gains for February rose 14,000, and for January by 9,000.

The figures come ahead of Friday's key government numbers, which include the public sector jobs and the unemployment rate.

Europe's woes overshadowed the jobs figures on Wall Street. The Dow sank 0.95 percent, the Nasdaq was down 1.46 percent and the S&P 500 shed 1.02 percent.

On currency markets the euro bought $1.3140 and 108.04 yen in late Asian trade, compared with $1.3141 and 108.35 yen in New York late Wednesday. The dollar was also at 82.22 yen, compared with 82.46 yen.

Oil prices bounced back from heavy losses late Wednesday in New York, where dealers staged a sell-off after the government reported a big jump in stockpiles.

New York's main contract, West Texas Intermediate crude for delivery in May, gained 87 cents to $102.34 per barrel in the afternoon, after losing 2.5 percent on Wednesday.

Brent North Sea crude for May rose $1.01 to $123.35 after it shed two percent in New York.

Gold was at $1,628.15 an ounce at 0820 GMT, compared with $1,633.75 late Wednesday.

Wellington slipped 0.36 percent, or 12.44 points, to 3,467.98.

Fletcher Building ended down 0.6 percent at NZ$6.20 and Telecom shed 1.4 percent to NZ$2.435 while Chorus was 0.3 percent lower at NZ$3.46.

Manila and Mumbai were closed for public holidays. - Agence France Presse

source: gmanetwork.com

UK will cut top income tax rate

Britain's finance minister has cut the rate of income tax for the country's wealthiest citizens but insisted the rich will pay more through a raft of measures to prevent tax avoidance and a hefty new charge on expensive property sales.

In his annual budget statement on Wednesday, George Osborne said he was cutting the top rate from 50 per cent to 45 per cent by April next year on incomes over STG150,000 ($A228,000)a year. He argued that the original higher rate did not yield as much as expected, partly because the rich were able to avoid the tax.

Osborne sought to deflect criticism that any largesse was confined to the wealthy by announcing a big hike in the level Britons start paying tax to STG9,205. There are doubts, however, as to whether the poorest in British society will reap the full reward, given they may lose some benefits.

'Together, the British people will share in the effort and share the rewards,' Osborne said at the conclusion of his hour-long statement. 'This country borrowed its way into trouble, now we're going to earn our way out.'

The 50 per cent tax rate was introduced by the previous Labour government in response to the sharp deterioration in public finances in the wake of a banking crisis that led to the country's deepest recession since World War II.

The leader of the Labour opposition Ed Miliband pounced on Osborne's decision to cut the top rate of tax, mocking him for his oft-repeated mantra that 'we're all in this together.'

'After today's budget, millions will be paying more while millionaires pay less,' Miliband said.

Osborne insisted that the rich should pay a bigger proportion of their income than the poor and said he was offsetting the cut in the top rate by other taxes on wealth, including a new seven per cent charge on the sale of houses valued over STG2 million, up from five per cent.

Most of those residences are located in London, which has become a second home of choice for many of the world's super-rich - Russian oligarchs and hedge fund managers have all converged on the capital, driving up the cost of homes to levels that are unaffordable to the vast majority of Londoners.

Tony Ryland, a senior tax partner at London Chartered Accountants Blick Rothenberg, said the changes will have 'a major effect on the London housing market, potentially driving away overseas buyers.'

Overall, the budget measures were broadly neutral. Osborne has little room for manoeuvre, given the government's primary plan to dramatically reduce borrowing and recent warnings from credit ratings agencies that they could cut the country's cherished triple-A rating if public finances don't improve.

The government's debt-reduction program has been rewarded in the money markets to an extent, even though the economy has flatlined and unemployment stands at a near 17-year high. Unlike other big borrowers in Europe, such as Greece and even Italy, Britain - the biggest European economy that does not use the euro - has enjoyed super-low borrowing rates, making the deficit easy to finance.

Osborne said he was asking the Treasury to examine whether it would be wise for Britain to start issuing bonds of duration longer than 50 years to lock in the current historic low interest rates. The yield on Britain's ten-year bond is around 2.3 per cent, in line with the equivalent US rate.

Economic growth this year will be 0.8 per cent, up from a previous forecast for 0.7 per cent, according to the Office for Budget Responsibility, an independent agency tasked by the government to compile projections.

Osborne said Britain was likely to avoid a technical recession, officially defined as two consecutive quarters of negative growth. In the last three months of 2011, Britain contracted by a quarterly rate of 0.2 per cent.

In 2013, Osborne said Britain's economy would likely grow two per cent, slightly lower than the previous forecast of 2.1 per cent. The projected growth rates remain below the long-run average of 2.5 per cent.

Meanwhile, the budget deficit in the current fiscal year, which ends March 31, will be STG126 billion, STG1 billion less than expected. As a percentage of GDP, debt will peak at 76.3 per cent in 2014-15, lower than previously thought.

source: http://www.skynews.com.au/world/article.aspx?id=731491&vId=3139065&cId=World

Raise credit scores with good financial management

Credit scores make a huge impact in our personal and financial future.

Any debt left ignored or bills that you didn’t settle all get reflected annually in a document that is easily accessible by various financial institutions and is used to base your financial credibility. This credit report is where your credit scores are reflected. The higher your credit score, the higher your eligibility to qualify for significant loans should the need arise in the future. Inversely, the lower your credit score, the lower your chances of being approved for milestone purchases such as mortgages, car loans or even something as simple as a credit card application.

With lenders, bankers and other financial institutions using it as a reference before granting important loans, it’s a piece of reference that strongly reflects your credit history and financial responsibility. Poor credit grades, therefore, cast a bad impression against your overall reputation; and as a result, prevents us being able to take out important loans.

What makes credit scores to fluctuate?

It’s easy to look towards credit to keep up with the rising cost of living these days; but it’s also the easiest way to ruin credit ratings. Everyone should remember that credit cards are not a source of free or unlimited money—it’s borrowed money and every time you use it, it means it is a debt that you have settle. Given this, try not to spend beyond your means and use it responsibly.

Credit scores varies according to credit agencies

Three major credit bureaus - Equifax, Experian, and TransUnion offer free annual credit reports, upon request. Each agency has their own algorithm to calculate the scores, which bring difference in scores. There are different calculation models used each agency and it is important to regularly review it for discrepancies and inconsistencies. Feel free to raise dispute if you come across any errors.

Correct credit report to stay in peace

While the temptation to live a luxurious lifestyle on credit is great, it is not the healthiest way to go about managing your finances. Living outside of your capability to settle your credit debts reflects negatively on your credit scores and may lead to your inability to get approved for important loans. Interest rates on credit card can go up, and this is something that we all want to avoid.

Get free credit check regularly and maintain a good credit score for a happy financial life. Keep a track on your credit report & score with credit monitoring and a regular check.

Article Source:
http://www.articlebiz.com/article/1051538458-1-raise-credit-scores-with-good-financial-management/

Greece Secures History's Biggest Debt Writedown; 83.5% Of Lenders Approve

ATHENS, Greece (AP) – Greece's private creditors agreed Friday to take cents on the euro in the biggest debt writedown in history, paving the way for an enormous second bailout for the country to keep Europe's economy from being dragged further into chaos.

Greece would have risked defaulting on its debt in two weeks without the agreement, sparking turmoil in the markets and sending shock waves through the other 16 countries that use the euro.

Prime Minister Lucas Papademos called the deal – which shaves some (euro) 105 billion ($138 billion) off Greece's (euro) 368 billion ($487 billion) debt load – an important "historic success '' in a televised address to the nation Friday night. "For the first time, Greece is not adding but taking debt off the backs of its citizens.''

The country said 83.5 percent of private investors holding its government debt had agreed to a bond swap, taking a cut of more than half the face value of their investments as well as accepting softer repayment terms for Greece.

The swap aiming to turn around the country's debt-ridden economy was a key condition to secure a (euro) 130 billion ($172 billion) rescue package from other eurozone countries and the International Monetary Fund.

The managing director of the Institute of International Finance, which negotiated the deal with Greece for large investors, called the bond swap "the largest ever'' debt restructuring.

"This has been painful and the pain is not over yet. But I now can see light at the end of the tunnel for the Greek economy,'' Charles Dallara told Greece's Mega television. He estimated Greece could return to the markets "within a few years.'' If recovery continues, "I think the risk for Greece and the risk on the eurozone will be very manageable,'' he said.

Of the investors holding the (euro) 177 billion ($234 billion) in bonds governed by Greek law, 85.8 percent joined. The deadline for those owning foreign-law bonds was extended to March 23.

Creditors holding Greek-law bonds who refused to sign up will be forced into the deal.

The decision to force losses on some bondholders means that the debt relief will trigger payouts of so-called credit default swaps, a type of insurance on bonds. The International Swaps and Derivatives Association, the private organization that rules on such cases, said its committee ruled that a "restructuring credit event'' occurred.

When the debt relief plan was first announced last year, eurozone leaders and the European Central Bank worked hard to avoid a credit event because they feared the payout of credit default swaps could destabilize big financial institutions that sold them. But since then, that prospect has started to look less threatening. The ISDA said that if triggered, overall payouts will be significantly below the $3.2 billion in net outstanding credit default swap contracts linked to Greece. The exact level of payouts will be determined on March 19.

The Fitch ratings agency downgraded Greece to "restricted default'' over the bond swap – a move that had been expected. Fitch was the third agency to downgrade Greece into default, after Moody's and Standard & Poor's. The agencies are expected to raise the country's credit rating after the completion of the swap.

The finance ministers from the 17-nation eurozone said Greece had fulfilled the conditions to get approval for the bailout next week. IMF chief Christine Lagarde, meanwhile, recommended the fund chip in (euro) 28 billion ($36.7 billion) to the rescue package, which includes (euro) 10 billion left over from Greece's first bailout. The IMF's board is set to decide on the final contribution next week.

The eurozone ministers on Friday already released up to (euro) 35.5 billion ($47 billion) in bailout money to fund the debt swap. Investors exchanging bonds will receive up to (euro) 30 billion – or 15 percent of the remaining money they are owed – as a sweetener for the deal and (euro) 5.5 billion for outstanding interest payments.

source: mb.com.ph

US stocks rise on hopes of Greece debt deal

NEW YORK - US stocks finished higher Thursday, led by a 1.2 percent gain in the Nasdaq buoyed by reports that Greece had achieved the minimum support needed to push its huge private-debt writeoff through.

At the closing bell the Dow Jones Industrial Average was up 69.78 points (0.54 percent) to 12,907.11.

The broad-based S&P 500 added 13.27 (0.98 percent) to 1,365.90, while the tech-rich Nasdaq Composite rose 34.73 points (1.18 percent) to 2,970.42.

While an official statement was still awaited, a Greek government source said that enough private creditors had agreed to the debt swap program ahead of the 2000 GMT Thursday deadline to allow it to go ahead, opening the door to a broader new rescue of the teetering Greek economy.

ATHENS - Greece seemed close to clinching a high-stakes debt swap Thursday as a deadline for bondholders to accept huge losses on their Greek holdings came and went opening the way for an urgent bailout.

Hours before the cut-off, a government source said that participation had already passed 75 percent, the minimum level sought by Athens for the deal to go through.

With the threshold met, Greece was now expected to press on towards unlocking a 130-billion-euro bailout from the European Union and IMF, a process that might include resorting to so-called collective action clauses Athens introduced to force holdouts to accept the deal.

By using the clauses, Greece would get even closer to the 95 percent participation rate the EU and IMF said is necessary to reduce Greek debt to a sustainable level of 120 percent of gross domestic product in 2020.

But the clauses could also trigger anti-default insurance contracts, known as credit default swaps, whose net value was estimated at 3.2 billion euros in February.

The Greek government will make an announcement on the swap at 0600 GMT on Friday, a finance ministry source said earlier.

And eurozone finance ministers were set to review the swap in a conference call later Friday, and weigh in particular the necessity to trigger the clauses or not.

Talk that the 75 percent participation level was close to being reached trickled out throughout the day helping send stock markets sharply higher across the globe and giving leaders some confidence that a page was about to be turned.

Italian Prime Minister Mario Monti said over 60 percent of private creditors had accepted the debt swap and the global bank association that led the initiative said a deal was close at hand.

"I'm optimistic that there's going to be an agreement in the next few hours," said Charles Dallara, managing director of the International Institute of Finance (IIF) and chief negotiator for the banks involved in the debt writedown.

The writedown is the biggest attempted so far, overshadowing Argentina's $82-billion default in 2002, the equivalent of 73 billion euros at the time.

It is designed to erase more than 100 billion euros ($132 billion) from Greece's near and midterm debt and replace it with new maturities.

The exercise is meant to make repayment of the debt, currently at over 350 billion euros, more sustainable in the immediate future, thereby giving the struggling Greek economy much needed breathing room.

"Tonight at midnight, a procedure of historic character reaches completion. An operation of unprecedented size and complexity to drastically cut Greek state debt," Finance Minister Evangelos Venizelos told parliament.

Officials would need two hours after the deadline to determine the level of participation, Greek news reports said.

Greek Prime Minister Lucas Papademos said he expected maximum participation as a take-up too low would ultimately mean an even greater danger of a disorderly default that the IIF warned could cost eurozone nations one trillion euros.

European stock markets posted strong gains on Thursday following rises across Asia, and Wall Street also rose on optimism that Greece's debt swap would be successful.

Directors from the International Monetary Fund have tentatively planned to meet to weigh a new loan for Greece on March 15, spokesman Gerry Rice said Thursday.

Greece and the IIF have warned that a disorderly default could occur as quickly as March 20, when Athens is due to reimburse 14.4 billion euros in debt.

The IIF report warned that if the debt swap deal failed, it could do serious damage to the eurozone and even the global economy.

Greece's own stock exchange picked up 2.78 percent in late afternoon trade.

"Global equity markets are rallying in front of the deadline for the private-sector involvement in the Greek debt swap plan, reflecting an expectation that the deal will get done and that a disorderly default will be avoided," said Briefing Research. — Agence France Presse

source: gmanetwork.com

Wall Street inches toward three-year highs

NEW YORK - US stock markets climbed steadily, if unspectacularly, this week, nearing three year highs despite worry over rising oil prices and Europe's slow boil debt crisis.

"Stocks were in a bear market from October 2007 until March 2009," said Beth Ann Bovino of Standard & Poor's "they have now recovered much of those losses."

The holiday-shortened week saw the Dow Jones Industrial Average hover above the symbolic threshold of 13,000 points, helping add to confidence about the growing economy and falling unemployment.

At the end of the week the Dow was up 0.3 percent to reach 12,982.95 points. The Nasdaq rose 0.4 percent and the S&P 500 rose 0.3 percent.

"A stronger job market is helping the US weather headwinds from both home and abroad," said economists at Nomura, a Japanese bank.

One of those headwinds is higher oil prices, which have been rising on tensions in Iran.

While prices have been on the up for some time, there was renewed focus this week as US politicians talked extensively about what can be done to stem the rise in this election year.

"Oil prices are on the rise again and concerns are growing about their impact on the recovery," said IHS Global Insight economists Paul Edelstein.

"The situation is reminiscent of early-2011, when Brent oil prices reached $126 a barrel, creating a growth pocket in the middle of the year."

"If oil prices stay persistently high or continue to rise, growth forecasts will likely be revised downward. But it would take a much bigger spike in prices to sink the US economy back into recession."

Higher oil prices spelled a boon for the oil majors.

ExxonMobil shares were up two percent for the week and Chevron was up 2.3 percent

Airlines got the raw end of that trade.

US Airways plunged 21 percent, United Continental 13 percent and Delta 12 percent for the week.

In other sectors Wal-Mart saw steep declines, down 5.9 percent following disappointing quarterly earnings.

Wal-Mart missed earnings forecasts for its fourth quarter in part due to heavy price-cutting in the industry during the busy Christmas season.

Hewlett-Packard suffered a nearly 10 percent drop after reporting a 44 percent profit fall in its fiscal first quarter.

After four days that saw little in the way of market-moving data, next week promises to be data-rich including reports on consumer confidence, GDP, manufacturing, and the Federal Reserve's Beige Book. — Agence France Presse

source: gmanetwork.com

An overview of bankruptcy law

Put in simple words, bankruptcy law is what allows you, as a creditor to be able to solve your financial problems. It creates a forum where you can develop a repayment plan and stick to it. In some cases your assets will need to be divided and given to creditors. This is often done under a court-appointed trustee who will oversee the entire process. There are several categories under which you can file for bankruptcy. Some of them allow you to continue in your line of work to generate the funds to repay your debts.

Bankruptcy laws also provide for the ability to get discharges where are creditor can free himself of accumulated debt. Once provided by the court a creditor will not be required to pay all of his debts in full.

Bankruptcy law comes under the purview of Federal Law and comes under Title 11 of the United States Code. While the overall law has to be adhered to, each state can be laws that further guide the creditor-debtor in the process of claims. All proceedings in relation to bankruptcy claims are dealt with in the United States Bankruptcy Courts. Bankruptcy proceedings are of two kinds. The most commonly opted for is under Chapter 7 which calls for liquidation. A trustee is appointed to supervise the division of assets to creditors. Bankruptcy can also be filed for under Chapters 11, 12, and 13. These proceedings can be voluntary or can be initiated by the creditors. What these Chapters provide for is a means to allow the debtor to work off his debt.

Once bankruptcy is filed for, creditors will have to wait to claim their dues within the boundaries of the ongoing proceedings. The debtor cannot move any asset that is a part of the proceeding. Any such transfers that had been initiated before the proceedings will be cancelled or invalidated. The Bankruptcy code has several provisions that allow creditors to build priorities. Recent rulings however have held that Individual Retirement accounts cannot be used for withdrawal in bankruptcy cases. This gives some measure of protection to debtors who are already in serious financial trouble.

There have been several revisions of guidelines with regards to dismissals and conversions in relation to proceedings in each of the chapters. The role of the trustees too has been expanded to include more supervisory responsibilities.

Brian Joneta also writes about Bankruptcy and Credit issues including Declaring Personal Bankruptcy and Cost of Declaring Bankruptcy

Article Source:
http://www.articlebiz.com/article/626273-1-an-overview-of-bankruptcy-law/

Greek leaders ready to back austerity deal

(Financial Times) -- A dispute over pension cuts stalled talks last night between leaders of Greece's fractious national unity government on tough new austerity measures, one of the last hurdles to be cleared before eurozone officials can sign off on a €130B ($172B) bailout and save Athens from a messy default. However, officials said they were still confident of reaching a deal by the morning.

A statement by Lucas Papademos, the technocrat prime minister, said there was "broad agreement on all the issue except for one which demands further elaboration".

The talks between Papademos and the heads of the three Greek political parties in his cabinet included €3B ($4B) in new spending cuts contained in a 50-page document distributed to political leaders in the morning. The full cabinet is due to rubber-stamp the deal today.

After seven hours, Papademos called in the troika -- mission chiefs from the European Commission, European Central Bank and International Monetary Fund who drafted the new medium-term fiscal programme with the Greek finance ministry -- to help break the deadlock. Greece still needs to find about €300m of savings to close a €3bn program of spending cuts to keep this year's budget on track.

Papademos earlier held separate telephone consultations with Christine Lagarde, IMF managing director; Olli Rehn, the EU monetary commissioner; and Jean-Claude Juncker, chairman of the eurozone finance ministers, who are due to discuss the Greek program this evening.

People familiar with the negotiations said Antonis Samaras, the conservative leader, had raised objections to cuts in supplementary state pensions, while former premier George Papandreou refused to discuss the alternative of cutting primary pensions. The pensions issue is seen as critical as elderly, low-income Greeks have been hit hardest by the deeper than expected recession.

George Karatzaferis, the rightwing leader and junior coalition partner, left the talks. It was not clear whether he would return to join the negotiations.



There has been mounting frustration in other European capitals, including Brussels, where officials had hoped to get a deal agreed last weekend so that they could quickly execute the central pillar of the deal -- a €200bn bond swap that will see private Greek debt holders lose half their holdings, wiping €100bn off Athens' €350bn debt pile.

Once the deal is agreed, the focus of the Greek drama will turn to Paris, where the lead negotiators for private bondholders were to meet with investors to begin preparations for the debt restructuring, and to Brussels, where eurozone finance officials will meet on Thursday to cobble together enough money to keep Greece afloat for the foreseeable future.

Debate over the structure of the new bail-out package continued to intensify behind closed doors as eurozone leaders attempted to construct a programme that would both keep the total in new rescue funds at €130bn and reduce Greek debt levels to 120 per cent of economic output by 2020.

Both those goals were signed off at a summit in October, but Greece's worsening budget outlook has forced finance ministry officials to rework the package to stay within those parameters.

There was growing consensus that sufficiently reducing Greece's debt level, which is now at about 160 per cent of economic output, would require more than the agreed €100bn cut in private debt, with leaders' focus increasingly turning to the €40bn in Greek bonds held by the European Central Bank -- the largest of any single investor.

According to several senior eurozone officials, the ECB has not yet agreed to help a revised bailout plan, but it was studying whether it could forgo profits on the €40B ($53B) portfolio -- which would pay out about €55B ($73B) if taken to maturity -- by transferring the bonds to the eurozone's bailout fund, the European Financial Stability Facility, at the price it originally paid for them.

Another plan being considered would have Greece buying the bonds directly from the ECB at the depressed price, using EFSF funds or bonds to pay for them. Either scheme would require eurozone governments ensuring more EFSF funds to buy the Greek bonds -- which may prove politically impossible.

While senior officials at EU institutions and eurozone member states were hoping the ECB would agree to forgo its profits, which would knock as much as €15B ($20B) off of Greece's debt load, four officials with direct knowledge of the talks said such a deal had not yet been agreed.

Without ECB accession, officials worry it will be impossible to get Greece's debt down to levels approved by the International Monetary Fund, which has estimated that the private debt restructuring alone will only get Athens' debt to just under 130% of economic output by 2020. Without IMF approval, the €130bn in new bail-out funds cannot be approved.

Standard & Poor's, the debt rating agency, weighed in on the side of the IMF on Wednesday, saying the restructuring of privately held debt was not enough to make Greece's debt load sustainable.

"Because only a small subcomponent of investors are actually taking the haircut and the official sector [ECB] is not, or only partially, then the reduction . . . is probably not sufficient debt relief to make debt sustainable," said Frank Gill, an S&P analyst.

article source: http://edition.cnn.com/2012/02/08/business/greece-talks/index.html?hpt=hp_t2

Four Benefits Of Charge Card Consolidation Monetary Loans

Charge card consolidation financial loans have grown to be a well known technique to manage debt. These loan providers run numerous ads that concentrate on remarkable capability to lessen monthly obligations. You will find truly multiple great things about this kind of debt consolidation reduction to think about which include this decrease in payment. If you are looking for a method to take proper care of your financial troubles, this may be the best answer for you personally.

Lower Obligations

Consolidation financial loans pull all your different monetary loans together to decrease your price monthly. These companies assistance to lower the total amount that you have to pay monthly. Consolidated monetary loans allow you to reduce your charge card obligations monthly. This may make consolidation perfect for individuals who're battling to satisfy the total quantity for present charge card bills. The monetary loans allow it to be easier for individuals indebted to budget their, as they'll be getting to spend much less toward their debt per spend period.

A Single Payment

It may be confusing to pay for numerous charge card companies monthly. It may be confusing to help keep an eye on them you have compensated, and also the cards which you merely haven't compensated. Consolidation monetary loans bring your obligations into a single payment. You'll be getting to pay the consolidation business. The corporation is going to be having to pay the charge card bills for you personally. You no much more need to keep an eye on monthly obligations.

Having to spend Promptly

The only payment with the consolidated loan also permits you to spend your credit bills promptly. It may be easier to help keep an eye on your debts whenever you have only 1 charge card debt bill. You're in a position to strategy for your payment simpler than before. You may also visualize the aim date for your payment simpler than before. The consolidated loan can make it easier that you should pay promptly. This benefit may also help you save money. Whenever you neglect to pay promptly, you will incur numerous penalties and costs. You will avoid these extra expenses and monetary obligations having a loan consolidation.

Capability to Launch a Checking Account

You'll have some cash remaining, each month, which was utilized toward your charge card bills. It may be simple to earmark these funds for investing. You ought to become thinking about your finances in cases like this, nevertheless, and really should location the cash toward a checking account. This additional cash will help you to quit you from requiring to make use of a bringing together company later on.

It is essential which you should think about all your different options for managing debt. Charge card consolidation financial loans permit you to construct your debt-having to pay process simple and simple. You need to note, nevertheless, that you'll discover yourself having to spend more, with time, due to this kind of loan. Ought to you nonetheless believe that these 4 benefits will assist you to cope together with your financial troubles, you should look at this loan.

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