FOREX-Euro steadies vs dlr as focus shifts to EU summit - Reuters India
* Euro rebound slows as profit-taking eases
* Traders still wary of short squeeze potential
* Growth/austerity debate expected at EU summit
By Nia Williams
LONDON, May 22 (Reuters) - The euro steadied against the dollar on Tuesday as its rebound from a recent four-month low stalled, although traders said selling was likely to be limited in the run-up to an informal meeting of European leaders this week.
Many in the market were sceptical policymakers could agree measures to help tackle the euro zone debt crisis and soothe concerns about Greek political turmoil and weakness in the Spanish banking system.
But with speculators' short euro positions at a record high, traders were wary of the potential for a squeeze higher on any signs of progress at Wednesday's meeting.
The euro dipped 0.1 percent against the dollar to $1.2802, but holding above last week's four-month low of $1.2642.
"I doubt any news out of the meeting tomorrow will be able to create a positive environment, but people booked some profit at the end of last week and may be waiting for better levels to sell the euro," said Niels Christensen, FX strategist at Nordea.
"Even if the political leaders were to pull an agreement out of the hat we need something that's going to take immediate effect. I see a bit of consolidation in euro/dollar and then more downward bias."
Market players saw support for the euro around $1.2789, the 23.6 percent retracement of the May fall from $1.3283 to $1.2642, and traders reported offers from Asian central banks above $1.2825-30 that were expected to cap gains.
French President Francois Hollande is expected to push for a joint euro zone bond at the EU meeting in Brussels, a measure backed by Italy, Spain and the European Commission. However Germany, Europe's largest economy, has so far opposed the move and championed austerity measures to tackle the crisis.
"The market has been sort of supporting the German line of tough austerity. But that may be changing as well," said Teppei Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ.
"Investors who have risk assets want their prices to rise and it's becoming clear austerity measures alone are not going to bring about that."
Many market participants were cautious ahead of the summit, which could highlight a deep divide between the German-led drive for austerity and the efforts to put more focus on growth, a pledge of the new French president.
BOJ MEETING EYED
Although the euro struggled versus the dollar it climbed 0.2 percent against the yen to 101.84. The dollar also rose 0.3 percent against the Japanese currency to 79.51, off a three-month low of 79.002 hit on Friday.
The Bank of Japan begins a two-day policy meeting on Tuesday, with most market players expecting the BOJ to keep policy on hold after easing last month.
However, speculation the BOJ could ease further raised the possibility the yen could rise if it kept policy on hold.
That could push the dollar below 79 yen, setting it on course to test the important support level of its 200-day moving average, around 78.53 yen.
The Australian dollar rose 0.2 percent to US$0.9931 , rising clear of a six-month low of US$0.9794 hit last week thanks to broad recovery in riskier assets on Monday.
S.C. lawmakers repurpose money set aside for struggling homeowners - Anderson Independent-Mail
COLUMBIA, S.C. — South Carolina was given $31 million from a lawsuit settlement to help homeowners who can’t pay their mortgages, but the majority of lawmakers want to spend the cash elsewhere.
Among other things, the GOP-controlled Legislature wants to use the infusion to recruit new businesses.
The money in question is the state’s portion of a settlement involving five of the country’s largest loan providers to resolve state and federal investigations into illegal foreclosure practices.
Democrats in the state House and Senate have argued more of the cash should go to help the families who were hit hard in the foreclosure crisis.
“We’ve got their money, and we don’t want to return it back to them,” said Sen. John Scott, D-Columbia. “There’s something wrong with that kind of attitude when the rest of the time you say you want to give money back to the taxpayers.”
Republicans argue bringing new business to the Palmetto State will help those struggling to make house payments.
Anderson GOP Rep. Brian White, the chairman of the House Ways and Means Committee that designed the House budget, said the House didn’t neglect homeowners when it set aside the settlement money for business incentives.
“Our thought process was that the Commerce Department would be able to recruit and get people out working,” he said. “You get people employed, that’s a house payment and a paycheck.”
White said there are also lots of federal programs and agencies already assisting homeowners facing foreclosure.
The diversion of the funds is legal, the product of broad language in the $25 billion settlement that effectively gives states wide discretion to use the funds as they please.
More than a dozen states are diverting the money. But only a handful intend to spend essentially none of the funds for housing, according to a recent report by Enterprise Community Partners, a national group that advocates for affordable housing.
In its version of the budget, the S.C. House sent the bulk of the state’s settlement money to the Commerce Department’s Closing Fund, incentives used to entice companies to come to South Carolina.
The Senate’s budget that sits one vote away from approval moves $10 million from the settlement to the Commerce fund, but sets aside $5 million for the S.C. Housing Authority.
The agency would use the money primarily for legal services for families facing foreclosure and multifamily housing bonds.
The remaining balance of the settlement was put into the general fund in the Senate’s budget.
Sue Berkowitz, the director of the S.C. Appleseed Legal Justice Center, said the group was disappointed the House budget diverted all of the settlement money.
The center is asking senators to provide more of the settlement money to homeowners beyond the $5 million already in the budget.
“If you look at the intent of the mortgage settlement, the whole reason the lawsuit was initiated was because the banks were breaking the law and taking people’s homes,” she said.
While not reaching the highs experienced during the housing crisis four years ago, foreclosures are on the rise in the Lowcountry.
During the first three months of the year, the Charleston metro area’s home foreclosure rate jumped 8.5 percent from a year ago, according to online marketer RealtyTrac.
Language in the settlement gave state attorneys general, including S.C. Attorney General Alan Wilson, sole discretion over the $2.5 billion in direct payments to states included in the agreement.
Wilson wanted the money to be spent primarily on a consumer protection enforcement fund, a consumer education fund and consumer restitution.
Wilson however doesn’t control the state budget, and lawmakers didn’t go along with his plan.
According to Wilson’s office, the state received an additional approximately $16 million from the settlement beyond the $31 million in the form of direct reimbursements to borrowers.
That money will be doled out to people who have already had their homes foreclosed on.
Stanford scholars examine big money's influence on elections - phys.org
This new money funded through super PACs was a main topic of discussion among leading political scientists and economists at a recent Stanford conference.
"In normal campaigns, which is to say where candidates are spending the money, they tend to have a balance between positive and negative ads," said Trevor Potter, a former commissioner at the Federal Elections Commission and lawyer for the Super PAC set up by comedian Stephen Colbert.
Now, Potter said, "You have new money in the system that wasn't there before in large sums running totally negative ads, and the candidate can't do anything about it legally."
The 2010 Supreme Court decision, Citizens United v. the Federal Elections Commission, gave rise to the "super" political action committees.
The case and subsequent court rulings resulted in a flood of unlimited donations to political action committees from wealthy donors, corporations and labor unions. The money from these donations can only be spent independent of the candidate.
Potter said the Citizens United decision reflected a lack of understanding of the political system among the justices, none of whom have held elective office.
"It was decided by a court that's lost touch with, has not had touch with, how politics actually work and how campaigns actually work," he said.
The daylong conference hosted by the Stanford Institute for Economic Policy Research (SIEPR) asked the question, "Is it government by the people, or the best government money can buy?"
Does big money influence outcomes or shape a candidate's message? And what about corruption – can a hefty infusion of cash influence policy? Political scientists, economists, campaign watchdogs and others joined to discuss the role of money in the presidential election.
Those who took to the stage included Stanford Professors Bruce Owen, Adam Bonica and David Brady, as well as colleagues from UCLA and Vanderbilt, and Washington insiders, media experts and campaign advisers.
"I don't think this is a partisan issue," said Joel Hyatt, co-founder and CEO of Current TV and the national finance chairman for Al Gore's 2000 presidential campaign. "I think it is totally corrupting our system of government."
The independent cash-raising organizations, or Super PACs (political action committees), were the target of much ire.
The issue of whether the new allowances for independent spending corrupt the political system was tackled throughout the event, as was whether bad politics can corrupt the economy.
Brady, a senior fellow at the Hoover Institution, SIEPR and the Freeman Spogli Institute, and Lynn Vavreck of UCLA dissected how experts use fiscal data to predict winners and losers in the presidential race.
Looking at economic indicators including gross domestic product and unemployment figures, Vavreck said, experts can reasonably predict election outcomes with a 75 percent accuracy rate.
"You can do 50 percent with the flip of a coin, so that extra little bit, I'll take that. It's pretty good," Vavreck said.
Generally, the incumbent is favored if there is economic growth – so if you believe that model, President Barack Obama wins if the economy continues its upward path. Logically then, an opponent of the incumbent is favored when growth stalls – Mitt Romney is next in the White House if the economy weakens or levels off.
But just because elections can be predicted fairly well based on economic data doesn't mean that the money spent and campaign messages crafted aren't relevant, Vavreck added. There is, after all, the 25 percent of the time that the model fails.
"This is going to be a close election," Brady said. "And this is an election in which the campaign and the candidates and the message are going to matter."
Brady highlighted Obama's approval rating – less than 50 percent. Historically, candidates lose if they go into an election with under 50 percent approval.
He also pointed to poll numbers showing more independents rallying behind Romney when it comes to the economy and job creation. The independents go to Obama, however, when asked about who would be better at protecting the middle class.
"So these poll results are clearly going to drive the messages of the campaigns," he said.
Brady concluded with a prediction that Obama would be re-elected, with the caveat that anything can change over the next several months.
"Whenever you give these talks," he said, "people want to know who is going to win."
Provided by Stanford University 
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