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INTERNATIONAL AND NATIONAL EFFECTS ON OUR ECONOMY -Jim Cleffi

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Mortgage and Lending with Presidential Mortgage

TROUBLE is still brewing in Greece.  Greek PM George Papandreou raised the possibility of taking legal action against US banks, which he said bear "great responsibility" for Greece's debt crisis.  The Greek parliament is currently looking into deals Greek authorities carried out in 2000 with help from Goldman Sachs that allowed them to mask the extent of Greece's debts through the use of complex financial instruments. It sounds like a complete collaboration of deceit to me but I am just a simple Loan Originator. In my opinion, the risk that Greece will default on a portion of their debts is still high. 

Pennsylvania is heading for trouble with the current year's budget and the shortfall which may result in a credit rating downgrade.  Now, the WSJ has reported that this budget deficit forecast is a foregone conclusion.  The budget deficit widened significantly, from $720 million at the end of March to more than $1 billion on May 3, when the Pennsylvania Revenue Department disclosed that April income-tax collections were well below forecasts. Gov. Ed Rendell has proposed increasing taxes, cutting spending and shifting state funds to balance the budget.  However, many reserves have already been consumed. There is not much to fall back on.  A credit downgrade is becoming more likely.  Investors should avoid many Pennsylvania municipal bonds especially those with a maturity of more than 4 years. Pennsylvania is only one example of the growing budget problem at the state level.  Examples are California, Illinois, Florida, Nevada, Arkansas, Kansas, and Idaho - additional states are suspected of having problems but have not yet released tax revenue data.  Municipal bond investors can no longer sit back and simply collect their municipal bond interest.  Municipal bond investors must now keep a very close eye on the fiscal distress signals of each of their issuers or sell their municipal bond holdings and wait on the sidelines until the uncertainty is reduced.

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