March 28, 2024

Berlusconi Vows Not to Resign

“The country is economically and financially solid. In difficult moments, it knows how to stay together and confront difficulties,” Mr. Berlusconi said in his first public remarks in a tense month. “Today more than ever, we need to act all together.”

But neither the center-left opposition nor financial markets shared Mr. Berlusconi’s optimism or his confidence in his government’s ability to carry out long-promised reforms. On Wednesday rates on Italy’s benchmark 10-year bond remained above 6 percent, easing only slightly from Tuesday’s record highs.

Addressing Parliament for the first time since it passed a $70 billion austerity package in mid-July, Mr. Berlusconi called on Wednesday for measures that would balance Italy’s budget “by the end of the year,” not 2014 as originally planned.

While delivering the same speech to the Lower House and the Senate after the markets had closed, he offered no concrete proposals beyond calls for unity and saying he would meet with the opposition, as well as business and labor union leaders, to discuss a plan for growth. Mr. Berlusconi said that his government would serve its mandate until 2013, “when we will serenely face the judgment of the electorate.”

He was expected to address the Senate later on Wednesday evening.

Given the ferocity of the markets’ turn against Italy, analysts said the address fell short of what was needed.

“It was a speech without ideas,” said Stefano Folli, the chief political columnist of the financial daily Il Sole 24 Ore, which is owned by the industrialists’ association, Confindustria. “It was very optimistic. I had hoped for a tone more adequate to the difficulties of the moment.”

“If he says the big theme is economic growth, let’s see if proposals emerge. Those have to translate immediately into laws and government initiatives,” Mr. Folli said. “If they stay vague, then the circle closes in a terrible way,” he added, referring to the end of the Berlusconi era.

A born salesman whose peppy speeches once entranced Italians, Mr. Berlusconi in recent months has often seemed more consumed with his own personal legal problems and the fate of his businesses — which include Italy’s largest private broadcaster — than with the fate of his country.

On Wednesday, Mr. Berlusconi was met with boos in the Lower House when he said, “you’re listening to a businessman who has three businesses listed on the stock market and who is in the financial trenches, aware every day of what’s going on in the markets.”

In the Lower House he was flanked by his finance minister, Giulio Tremonti, who has been weakened by a corruption investigation into a former aide.

Following the speech, Pier Luigi Bersani of the opposition center-left Democratic Party renewed his calls on Mr. Berlusconi to step down and call early elections, as his Spanish counterpart, José Luis Rodríguez Zapatero, did last week.

“Italy is in very big trouble,” Mr. Bersani said. “We have been told we’re better than the others. We haven’t looked this problem in the face,” he added, referring to Mr. Berlusconi’s remarks that Italy’s budget deficit, at 4.6 percent of the gross domestic product in 2010, is below the European average, although its debt, at nearly 120 percent, is Europe’s highest after Greece. However, Italy’s growth rate is hovering around a paltry 1.0 percent.

“The question of how can we pay our debt if we don’t even grow, is a legitimate question that doesn’t come from speculation,” Mr. Bersani said.

Gaia Pianigiani contributed reporting.

Article source: http://www.nytimes.com/2011/08/04/world/europe/04italy.html?partner=rss&emc=rss

Bottom May Be Near for Slide in Housing

For real estate, some economists say, an end to the seemingly endless decline in housing values might be in sight.

Not immediately. At the moment, prices are still dropping. In 20 large cities, prices fell 0.8 percent in March from the previous month, according to the Standard Poor’s Case-Shiller Home Price Index released Tuesday. That pushed the closely watched index below its level of two years ago to a new post-bubble low, and put it 33.1 percent under its July 2006 peak.

Few analysts expect housing prices to rebound anytime soon. But quite a few are predicting that the market is close to the moment when things will stop getting worse, which will be a major improvement all by itself.

“By far the bulk of the downturn of housing prices is beyond us,” said Paul Dales of Capital Economics. He expects the market to slip 5 percent further, slightly more than he was expecting a few months ago.

“There are some amazingly favorable signs. Housing is the most undervalued it’s been in 35 years,” Mr. Dales said. “At some point, it’s going to do very well.”

Peter Muoio, senior principal of Maximus Advisors, says he thinks the market has already bottomed, although he expects it to bounce around in a narrow range for a few years rather than recovering. And James F. Smith, chief economist for the investment firm Parsec Financial and a rare housing bull, is predicting a 25 percent climb from here by mid-decade.

“There’s a lot of pent-up demand for housing and someday it will be unleashed,” Mr. Smith said, adding: “Your guess is as good as mine when it will come.”

The new Case-Shiller data did not offer much room for short-term optimism. The national housing index, which is reported quarterly, fell 4.2 percent in the first quarter after a drop of 3.6 percent in the fourth quarter of 2010. This, too, is a new recession low.

Twelve of the 20 cities in the index hit a post-bubble low in March. Washington, D.C., was the only city where prices rose both in March and over the last year. In a double-digit drop that echoed the worst era of the crash, Minneapolis fell by 10 percent over the year.

“Home prices continue on their downward spiral with no relief in sight,” David M. Blitzer, the S. P. Index Committee chairman, said in a statement.

Housing prices are now back to where they were in mid-2002 even before taking inflation into account. Such a decline was unimaginable to the boosters and many of the analysts in the middle of the boom, who were fond of saying that house prices never fell on a national basis. But as credit dried up and the easy refinances disappeared, the foreclosures began. Prices fell sharply in late 2006, 2007 and 2008.

The market turned around in 2009, prompting hopes that the worst was over. A government tax credit proved wildly popular, but the declines resumed after its expiration a year ago.

Some economists think there are still relatively large drops to come. Dean Baker, co-director of the Center for Economic and Policy Research, expects a 6 to 8 percent fall during the rest of the year. “There are a lot of forces pushing prices downward,” he said.

One of them is the excess number of houses. Builders built too much during the boom, and the mania for second and third homes has sharply diminished. New household formation will soak up the supply, but that will take years.

The financial blog Calculated Risk estimated the excess housing supply this week using 2010 Census data, which it compared to 1990 and 2000. The blog concluded that the excess in April 2010 was about 1.8 million units, but probably several hundred thousand fewer now.

The wild card in all of this is consumer sentiment, otherwise known as confidence. The United States Conference Board reported Tuesday that its consumer confidence index unexpectedly fell to 60.8 in May from a revised 66 in April. Analysts had forecast a one-point rise, but the mood turned hesitant. The May level is the lowest since the fall.

People without confidence in the economy and their own prospects tend to put off major purchases.

“People are still scared,” Douglas C. Yearley Jr., chief executive of the high-end builder Toll Brothers, said in a recent interview. “If they look in the paper and see that Robert Shiller says prices have another 20 percent to go, it has to keep them at home.”

Mr. Shiller, one of the developers of the Case-Shiller index and a housing bear, did not respond to requests for his latest forecast, a development that no doubt made Mr. Yearley’s day.

Article source: http://www.nytimes.com/2011/06/01/business/01housing.html?partner=rss&emc=rss

Prices of Imported Goods Increase as the Dollar Declines

The increase in the import-price index came after a revised 2.6 percent gain in March, according to figures from the Labor Department on Tuesday. Other reports showed distributors raised inventories and small businesses lost confidence.

The median forecast of 51 economists surveyed by Bloomberg News called for a 1.8 percent increase in import prices last month. Projections ranged from increases of 1 percent to 2.5 percent.

Compared with a year earlier, import prices increased 11 percent, exceeding the 10 percent increase projected by economists surveyed and the biggest 12-month gain in a year.

The increase in prices from overseas may put pressure on companies to pass on higher costs. The report on small businesses showed the share of those surveyed who planned to raise prices held in April at the highest level in 30 months.

“While many policy makers have described recent commodity cost increases as ‘transitory,’ the reality is that even at the small-business level, producers are increasingly more confident in their ability to pass on costs to customers,” Joseph LaVorgna, chief United States economist at Deutsche Bank Securities in New York, said in a note to clients.

After a two-day meeting in Washington last month, Fed officials said the effect on inflation from the jump in fuel and other commodities will probably be “transitory,” according to a statement released April 27.

The officials also lowered their forecasts for growth, saying the economy is recovering at a “moderate pace,” and agreed to finish $600 billion of bond purchases on schedule in June.

Confidence among small companies fell to a seven-month low in April, damped by a deteriorating outlook for the economy, a report from the National Federation of Independent Business showed. The group’s optimism index decreased to 91.2, the lowest since September, from 91.9 the prior month. Seven of the measure’s 10 components dropped.

Small businesses planning to increase prices held at a net 24 percent of owners for a second month, according to the report.

Increasing sales are also prompting wholesalers to increase stockpiles, according to figures from the Commerce Department. Inventories climbed 1.1 percent in March as sales jumped 2.9 percent. At the current pace of sales, distributors had enough goods on hand to last 1.13 months, matching the level in June 2008 as the lowest on record.

The report on prices from overseas showed the cost of imported oil increased 7.2 percent from the previous month and was up 37 percent from a year earlier. Excluding all fuels, import prices climbed 4.3 percent from April 2010, matching the prior month’s 12-month increase as the biggest since October 2008.

Imported food was 1.8 percent costlier last month and was up 20 percent from a year earlier, the biggest 12-month increase since records began in 1977.

Article source: http://feeds.nytimes.com/click.phdo?i=f4bbe865f7ef819eed3d210aab50e951

DealBook: Optimism Is Back, Says Top Private Equity Deal-Maker

Scott M. Sperling, co-president of Thomas H. Lee Partners, says the threat of a double-dip recession has lessened, and that crucial credit markets are “as robust as we’ve seen” since the financial crisis.

Article source: http://feeds.nytimes.com/click.phdo?i=089888774250c4375c50eb7d40504875