Government Debt

FRANKFURT, Germany - The European Central Bank says Italian government bonds account for nearly half of its total holdings under a now discontinued bond-buying program launched in 2010 to ease the eurozone's debt crisis. The bank on Thursday detailed for the first time what countries' bonds it acquired under the so-called Securities Markets Program, which it started when the euro area's debt crisis flared in May 2010. The central bank for the 17 European Union countries that use the euro said it held bonds with a face value of 218 billion euros ($287 billion)

From John Paulson's call for a collapse in Europe to Morgan Stanley's warning that U.S. stocks would decline, Wall Street got little right in its prognosis for the year just ended. Paulson, who manages $19 billion in hedge funds, said the euro would fall apart and bet against the region's debt. Morgan Stanley predicted the Standard & Poor's 500 Index would lose 7 percent, and Credit Suisse Group AG foresaw wider swings in equity prices. All of them proved wrong last year, and investors would have done better listening to Goldman Sachs Group Inc. chief executive officer Lloyd C. Blankfein, who said the real risk was being too pessimistic.

In 1981, the average price of a new home was $68,900, the government debt was under $1 trillion and the minimum wage was $3.35 an hour. Today, the average new home sells for $117,000, the government debt is approaching $3 trillion and the minimum wage is still $3.35 an hour. Now that, too, may change. A bipartisan agreement reached yesterday makes it likely that the House will vote this week to raise the minimum wage to $4.55 an hour by autumn 1991. And the prospect that some type of increase will become law is better than at any time in the last eight years.

Shocking and unprecedented though it may be, the Standard & Poor's downgrade of the U.S. government's credit worthiness is not likely to have huge short-term impact on the economy or the finances of average citizens. That is the view of prominent economists and investment advisers in the Philadelphia region who said Saturday that financial markets had been anticipating the S&P action for weeks. The downward pressure on Treasury yields tended to support that view, they said.

Shocking and unprecedented though it may be, the Standard & Poor's downgrade of the U.S. government's creditworthiness is not likely to have a huge short-term effect on the economy or the finances of typical residents. That is the view of prominent economists and investment advisers in the Philadelphia region, who said financial markets had been anticipating the S&P action for weeks. The downward pressure on Treasury yields tended to support that view, they said. Investors have been eager to snap up U.S. government debt despite ongoing differences between Republicans and Democrats in Washington over how to balance the budget and the anticipated action of S&P. "What matters most is the opinion of investors, not of a rating agency, and the collective wisdom of the market is that the U.S. Treasury bond is still the safest asset on the planet," said Mark Zandi, chief economist at Moody's Analytics Inc., of West Chester.

The stock market reclaimed some losses from its biggest dive this year and returned Wednesday to its pattern of steady gains and stable trading. Reassuring reports on productivity and hiring overshadowed worries about the Greek debt crisis. Stock indexes made solid gains by midmorning after the government said oil refineries were operating at a faster clip than economists had expected. Oil refiners Valero Energy Corp. and Tesoro Inc. were among the biggest gainers in the Standard & Poor's 500. The Dow closed up 78.18 points, or 0.61 percent, at 12,837.33.

NEW YORK — Encouraging signs from two of the most important zones of the world economy, the powerhouse of China and the debt-burdened countries of Europe, drove the Dow Jones industrial average up 181 points Thursday, its second-biggest gain this year. China's central bank reported a surprising jump in loans in March. That eased concerns about a sudden slowdown in the Chinese economy, whose growth has helped pull the globe out of recession. Italy's government easily sold $6.4 billion in bonds to investors.

U.S. stocks and Treasury prices dropped Tuesday after Federal Reserve policymakers said they were worried about a slowdown in hiring and appeared to resist buying more bonds to help the economy. The Dow Jones industrial average was down as much as 133 points after the Fed released minutes of the March meeting of its Open Market Committee, which sets interest rates and monetary policy. It had been down 45 points before the minutes were released. The Dow bounced back by the close to a decline of 64.94 points, or 0.5 percent, at 13,199.55.

THE EUROPEAN economy shrank over the past three months as slowing German growth and moribund conditions in France pushed the struggling region to the doorstep of recession. The 0.2 percent slide from April through June included the 17-nation euro area, a currency union beset by twin government debt and banking crises, and the larger 27-nation European Union, a region at the core of the industrialized world and a key market for U.S. products and services. The United States has skirted the worst of Europe's troubles.

NEW YORK — A big final-hour comeback pulled the Dow Jones industrial average nearly back to where it started Wednesday. The Dow was down as much as 191 points earlier as the threat of a financial crisis spreading from Europe shook markets. The euro dropped to a nearly two-year low against the dollar, and oil prices sank to their lowest this year. A late surge of buying erased nearly all of the Dow's deficit, leaving it down just 6.66 points at 12,496.15 by the end of the day. The Standard & Poor's 500 index rose 2.23 points to 1,318.86.