Derivatives Continue to Plague Already Cash Strapped Cities

“Sicily, Italy’s poorest region, faces increasing losses on about 860 million euros ($1.1 billion) of derivatives that are weighing on its debt as the local administration faces a liquidity crisis.

Contracts with six banks led by Bank of America Corp. (BAC), Deutsche Bank AG (DBK) andNomura Holdings Inc. (8604) have lost money for the local government since 2008 and future losses will wipe out earlier gains, Italy’s state auditor warned in a June 29 report. The regulator urged Sicily to “seek protection” against losses on the contracts.”

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“Financial aid sought by Spain from its euro-area partners to shore up banks must be restricted to viable lenders, the German government said.

Spain will face conditions in drawing as much as 100 billion euros ($123 billion) in aid for its banks, “of which the most important is that they will be very carefully scrutinized to see which ones can survive,” German Deputy Finance Minister Thomas Steffen told state representatives in the upper house of parliament in Berlin today. “Banks that aren’t viable must be treated differently to those that are.”

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Continuing claims went sideways after a revision of last week’s numbers.

“Mario Monti’s government is trying to attract as much as $18 billion in investment to Italy by relaxing a ban on offshore oil and gas exploration imposed by Silvio Berlusconi after the 2010 Gulf of Mexico spill.

The premier, who must jump-start the economy to help stem Italy’s debt crisis, last month ruled that companies such as Eni SpA (ENI), Edison SpA (EDN) and Royal Dutch Shell Plc (RDSA)can resume shallow- water projects within 12 kilometers (7 miles) of the coast they were forced to abandon in 2010. The decree needs Parliamentary approval and the lower house is set to debate it July 23.”

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“Spain’s five-year borrowing costs surged as the government braced for protests against spending cuts, while France paid record-low yields of less than 1 percent to sell similar securities.

Spanish five-year notes yielded an average 6.459 percent at auction today, compared with 6.072 percent a month ago. French yields for the same maturity fell to 0.86 percent, almost half of last month’s level. Spain sold debt as lawmakers debated spending cuts in Parliament, where police erected barriers and stood guard.”

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“Canada’s dollar strengthened versus its U.S. counterpart as speculation the Federal Reserveand Chinese government will take steps to boost economic growth spurred demand for higher-risk assets.

The currency was headed for a second straight weekly gain on speculation the Bank of Canada will be the first among Group of Seven counterparts to raise interest rates. Stock-index futures rose and crude oil climbed above $91 a barrel. Statistics Canada will report today that wholesale sales rose 0.2 percent in May, according to the median of 16 forecasts compiled by Bloomberg.”

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“Australian businesses grew less optimistic about near-term prospects, signaling a slowdown in the fastest-growing developed economy that economists predict will force the central bank to cut interest rates again.

The business conditions index for the next three months dropped to 5, the lowest reading since the second quarter of 2009, National Australia Bank Ltd. (NAB) said in a survey released today. The second-quarter confidence index slipped to minus 2, the lowest since the third quarter last year, it showed.”

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“European stocks rose for a second day, to their highest level in three-and-a-half months, as companies reported earnings that exceeded analysts’ estimates. Asian shares and U.S. futures advanced.

Akzo Nobel NV (AKZA) climbed 6.5 percent after posting second- quarter results that beat forecasts. Remy Cointreau SA, France’s second-biggest distiller, gained 5.2 percent on higher revenue. Hermes International SCA (RMS), the French maker of silk scarves and leather goods, gained 2.9 percent as sales beat expectations. Actelion Ltd. (ATLN) climbed 5.7 percent as it raised its profit forecast for 2012.”

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“Asian stocks rose, with the benchmark index headed toward its biggest gain in almost three weeks, amid speculation China will do more to boost growth and after U.S. housing starts jumped to the highest in four years.

The Hang Seng China Enterprises Index (HSCEI) of mainland companies jumped 2.4 percent as the country’s swap market signaled a further reduction in the reserve ratio requirement for banks. BHP Billiton Ltd. (BHP), Australia’s biggest oil producer, increased 3.1 percent as crude prices exceeded $90 a barrel for the first time since May. Man Wah Holdings Ltd. (1999), a sofa maker which gets more than half of its sales from the U.S., climbed 4.9 percent in Hong Kong.”

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World Markets

Currencies

Commodities

USD Libor

Euribor

Yields for Italy, Spain, France,  and Germany …

Here’s a look at Wednesday’s hybrid movers under $10, click here for charts.

Doom and fucking gloom.

The weather service says total rainfall at the airport for the 47-day period from June 1-July 17 was just 0.09 inches. The previous record for 0.09 inches over 45 days occurred Aug. 13-Sept. 26, 1908. No measurable rainfall fell this month through July 17, eclipsing July 1901 by one day.

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Because the law of diminishing returns is apparently not something he understands, here’s Harry Reid to tell you why you’re too stupid to not be controlled by ad money purchasing bad commercials that you’ll probably mute.

Washington (CNN) — When Senate Majority Leader Harry Reid, D-Nevada, pronounced this week that “17 angry old white men will wake up and realize they’ve just bought the country,” after the elections, he echoed the distaste many Americans feel at the secrecy surrounding the flood of money pouring into campaigns.

Political experts estimate $6 billion will be spent during the 2012 presidential elections — a large chunk of it via anonymous donors thanks to a Supreme Court ruling which allows unlimited corporate campaign donations. That’s enough money to give 6/7ths of the world’s population $1 each. Politicos and even comedians have made much ado about the influence of anonymous super rich donors and well heeled super PACs, groups that can raise money from a number of sources and spend unlimited amounts independent of and in support of political campaigns.

Democrats on Capitol Hill bemoaned failed efforts this week at forcing out of the shadows political campaign donors who give more than $10,000 to independent groups. Republicans called Democratic efforts a disingenuous attempt to silence critics by going “after the microphone instead, by trying to scare off the funders,” said Senate Minority Leader Mitch McConnell, R-Kentucky, long an advocate of campaign donations as a form of free speech.

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Los Angeles (CNN) — California is poised to become home to the nation’s first truly high-speed rail system with Gov. Jerry Brown’s signing Wednesday of a law authorizing the first leg of construction for a line that will eventually connect Los Angeles and San Francisco.

California will issue $2.6 billion in bonds, with the federal government providing an additional $3.2 billion, to build the initial segment of the high-speed rail between Merced and the San Fernando Valley on the north side of Los Angeles, officials said.

The high-speed rail project was part of a transportation bill signed by Brown that calls for general improvements to the state’s rail system involving a total of $4.7 billion in state funding matched with $7.9 billion in federal and local funds, officials said.

“This legislation will help put thousands of people in California back to work,” Brown said at Union Station in downtown Los Angeles, according to a news release. “By improving regional transportation systems, we are investing in the future of our state and making California a better place to live and work.”

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U.S. policymakers are bracing for a potential “collapse” of the power structure inside Syria, as the Obama administration closely monitors the intensifying violence in the capital.

Following a bomb attack that left several Syrian regime officials dead, a State Department source forwarded to Fox News an assessment from an independent Middle East analyst who monitors social media in the region and provides occasional guidance to the department.

“Tweet trends on #Damascus indicate something will collapse in #Syria next 36 hours,” the message said. “Looks a lot like Tripoli did a year ago.”

The note was a reference to the atmosphere in Libya’s capital before Muammar Qaddafi’s regime was overthrown, and Qaddafi was captured and killed.

It’s unclear whether Damascus has entered such a period, but the capital saw an unprecedented attack Wednesday on Bashar Assad’s regime, when a bomb ripped through a high-level security meeting and killed at least three officials.

Syrian TV confirmed the deaths of Defense Minister Dawoud Rajha, 65, a former army general and the most senior government official to be killed in the rebels’ battle to oust Assad; Gen. Assef Shawkat, the deputy defense minister who is married to Assad’s elder sister; and Hassan Turkmani, a former defense minister who died of wounds suffered in the attack.

Also wounded were Interior Minister Mohammed Shaar and Maj. Gen. Hisham Ikhtiar, who heads the National Security Department. State TV said both were in stable condition.

U.S. Defense Secretary Leon Panetta, speaking alongside British Defense Minister Philip Hammond on Wednesday, said the escalating violence indicates that the rebels feel emboldened and that the government of Assad is suffering “probably some fragmentation around the edges” as it struggles to keep a grip on power.

The bombing was the harshest blow to the government’s inner circle in the 16-month uprising.

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Relatives of three U.S. citizens killed in drone strikes in Yemen last year, including radical Muslim cleric Anwar al-Awlaki, are suing the U.S. government for targeting the terrorism suspects “without due process.”

The wrongful death lawsuit, filed Wednesday, claims that the killings of U.S. citizens al-Awlaki, his 16-year-old son Abdulrahman al-Awlaki and operative Samir Khan were unconstitutional. Khan was the publisher of the terror magazine Inspire.

The complaint, prepared by the American Civil Liberties Union and Center for Constitutional Rights, was filed against four senior national security officials: Defense Secretary Leon Panetta, CIA Director David Petraeus and senior commanders of the military’s Special Operations forces, Adm. William McRaven of the Navy and Lt. Gen. Joseph Votel of the Army.

The lawsuit says: “The U.S. practice of ‘targeted killing’ has resulted in the deaths of thousands of people, including many hundreds of civilian bystanders. While some targeted killings have been carried out in the context of the wars in Afghanistan and Iraq, many have taken place outside the context of armed conflict, in countries including Yemen, Somalia, Pakistan, Sudan, and the Philippines.”

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MADRID (Reuters) – Spanish banks’ earnings for the first half of the year, which start on Thursday with Bankinter, are likely to be marked by a continued cleanup of toxic real estate assets which will hit profits.

Although Bankinter is not fully representative of the sector, as it is less exposed to the property market than the rest of Spanish lenders, the medium-sized bank will report a halving in net profit on Thursday, a Reuters poll forecasts.

Euro zone finance ministers will discuss on Friday the conditions attached to the release of up to 100 billion euros ($122 billion) in aid for Spain’s banks, loaded with bad loans following a 2008 property crash and ensuing recession.

The government has demanded banks write down losses of more than 80 billion euros on around 184 billion of repossessed property and bad loans to developers, as well as sound real estate assets, through two laws passed before the country sought European aid for its lenders.

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Oh my, yes…

Royal Dutch Shell Plc (RDSA) has started discussions with Anadarko Petroleum Corp. (APC) over a bid for the U.S. producer’s gas assets in Mozambique, where energy companies are looking to tap the largest discoveries in a decade, according to people familiar with the situation.

Europe’s biggest oil company has begun informal talks with Anadarko about a deal for some or all of its 36.5 percent stake in the Rovuma-1 offshore gas fields, though Anadarko is reluctant to sell before further results of exploration in the area are known, the people said, asking not to be identified because the talks are private.

A Royal Dutch Shell Plc deal for Rovuma-1, where an Anadarko-led group has found natural gas equal to as much as six times the U.K.’s existing reserves, would bring the Anglo-Dutch company’s capital and expertise to bear on a complex energy project.

Anadarko hasn’t begun a formal auction process for the stake, which could fetch about $8 billion based on the price Thai energy company PTT Exploration & Production Pcl (PTTEP) offered for the U.K.’s Cove Energy Plc, which holds 8.5 percent of the same fields, they said. Shell this week dropped a plan to buy Cove after its shares more than doubled in a bidding war with PTTEP.

“Big oil certainly see significant resource potential out of East Africa, with Mozambique today offering the largest prize,” said Theepan Jothilingan, an oil analyst at Nomura Holdings Inc. “It will be advantageous if you have one of them coming in on the development of the liquefied natural gas project and from that perspective Shell fits the bill. Anadarko will look to scale down at the right price.”

Anadarko shares rose 81 cents, or 1.1 percent, to close at $72.63 in New York, while Shell’s London shares gained 0.6 percent to 2,216 pence.

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The word is going out quietly to Republican activists across New Jersey: If you’re going to the GOP convention in Tampa next month, be sure to be there by Tuesday night, Aug. 28, because Gov. Chris Christie is going to be giving the keynote speech that night.
“We’ve been told that’s the night to be there, that’s when the governor is going to speak. They’re saying he’s the keynoter,” one top party activist told The Post yesterday.

NYPOST.com