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Opening Bell: 07.13.11

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As Talks Stall, New Debt Plan Offered (WSJ)
In one sign that top leaders worry they won't reach a deal in time, Senate Minority Leader Mitch McConnell (R., Ky.) unveiled a proposal that would allow President Barack Obama to raise on his own the federal borrowing limit by $2.4 trillion in three installments before the end of 2012, unless two-thirds of Congress votes to block it. Because Mr. Obama would have to lift the debt ceiling, it could place any political fallout on him for doing so. But Republican conservatives protested that Mr. McConnell's plan would give up the leverage the GOP has to force the White House to approve government spending cuts in return for a debt-ceiling increase.

Defaulted Greece May Have to Rescue Trichet (Bloomberg)
Trichet’s threat to refuse defaulted Greek bonds as bank collateral for ECB liquidity remains in force after European finance ministers failed to agree on measures to stem the region’s debt crisis. In a default, Greek lenders could instead get Emergency Liquidity Assistance, a short-term loan program by national central banks in use in Ireland, said economists at Deutsche Bank AG, Barclays Capital and BNP Paribas SA. That would leave the Greek central bank to firefight a banking crisis that Trichet has staked the ECB’s credibility on keeping clear of. The danger of such an event has gained credence as persistent speculation on the prospect of Greece defaulting transformed into regional contagion that sent bond yields soaring and stocks plunging from Portugal to Italy.

Moody's says Italy debt payment sustainable (Reuters)
The maturity profile of Italian debt acts as a "buffer" against the spike in its cost, Moody's analyst for Italy was quoted as saying on Wednesday, a day after the 10-year Italian yield broke above 6 percent.

Germany Says No Concrete Plans for Euro Crisis Summit (Reuters)
"There are no concrete plans for a special summit," the spokeswoman said in response to a Reuters query. "The priority is for finance ministers to agree a new aid package for Greece."

Authorities could bail out banks again, S&P says (FT)
Dodd-Frank, the legislation signed into law a year ago next week, was supposed to prevent bail-outs by allowing the government to seize and wind down safely an ailing “systemically important financial institution”, or Sifi. But in a research note, S&P said: “We believe the government may try to avoid contagion and a domino effect if a Sifi finds itself in a financially weakened position in a future crisis.”

Pimco’s Gross Raised Total Return’s Treasury Holdings in June, Pared Cash (Bloomberg)
Gross boosted his $243 billion Total Return Fund’s investment in U.S. government securities to 8 percent of assets in June from 5 percent in May, according to Newport Beach, California-based Pimco’s website. Bonds in developed markets outside the U.S. rose to 13 percent of holdings from 10 percent. Cash and equivalents dropped to 29 percent from 35 percent.

Madoff refund checks hitting mailboxes soon (NYP)
Irving Picard, the trustee in charge of cleaning up Bernie Madoff's multibillion-dollar Ponzi scheme, was given the OK yesterday to start doling out some of the $7.6 billion he's collected in the fallout of the $65 billion stock fraud.

Hookers Know Way to San Jose (NBC)
After police budgets were slashed July 1, San Jose PD’s Vice Unit was disbanded, said San Jose Police Department spokesman Jose Garcia. This meant that part of their job responsibility – cracking down on prostitution and brothels – was reassigned to the police department’s Covert Response Unit. The CRU was originally responsible for narcotics busts in the area and despite the newly added responsibilities, the unit’s size increased by one officer. It now totals 14. Sources say the result has been an increase in illegal prostitution.

Investigators listened in on Wall Street (FT)
US prosecutors intercepted phone calls involving nearly 100 investment fund clients of the Primary Global Research expert-network firm in 2009 as part of an insider trading investigation, according to newly filed court documents.

S.E.C. and Pension Systems to Examine Fletcher Fund (DealBook)
The Securities and Exchange Commission has opened an inquiry into Fletcher Asset Management, a New York hedge fund run by Alphonse Fletcher Jr., a prominent Wall Street investor, according to a person with direct knowledge of the situation who requested anonymity because he was not authorized to discuss it…So instead of redeeming the pension systems’ interest with cash, Fletcher issued a promissory note equal to the amount of each pension system’s redemption request. The note, which paid 5 percent annual interest, matures in two years, giving Fletcher that amount of time to return the cash. “The distribution of a promissory note in lieu of immediate cash has raised concerns with the each of the system’s respective boards,” the pension systems said in their statement.

BIS warns more countries to lose risk-free debt status (FT)
High fiscal deficits and rising pension and healthcare costs are likely to increase government debt levels in advanced economies, while emerging markets remain vulnerable to external supply shocks and political instability, the BIS said in a paper published this week. “Overall, risk premia on government debt will likely be higher and more volatile than in the past. In some countries, sovereign debt has already lost its risk-free status; in others, it may do so in the future.” … The BIS warned that while the US, the UK and Japan had so far been less affected by sovereign risk concerns, they were not “immune,” given their sharp increase in public debt ratios in recent years.

How Frequent Fliers Exploit A Government Program To Get Free Trips (NPR)
Once in possession of the coins — shipped to them by the government for free — they can deposit them into their bank accounts and pay off the credit card bills.

China’s Economy Grows 9.5%, Exceeding Estimates (Bloomberg)
Gross domestic product rose 9.5 percent in the second quarter from a year earlier, the statistics bureau said in Beijing today, after a 9.7 percent gain the previous three months. The median estimate was for a 9.3 percent pace in a Bloomberg News survey of 18 economists. Industrial output advanced 15.1 percent in June, the most since May 2010.

Wife arrested in penis-severing case; life sentence possible (LA Times)
A woman who allegedly laced her husband's dinner with drugs and then cut off his penis with a 10-inch kitchen knife could face a life sentence if convicted in the attack. After officers arrived at the couple's Garden Grove home, Catherine Kieu Becker, 48, allegedly made a spontaneous statement to police that her husband "deserved it."