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Europe Gets Facebooked: Seven And A Half Things To Know

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Protesters in Sol Square in Madrid. Europe's plan to bail out Spain's banks failed to lift market confidence that policy makers are any closer to solving their debt crisis.
Protesters in Sol Square in Madrid. Europe's plan to bail out Spain's banks failed to lift market confidence that policy makers are any closer to solving their debt crisis.

Thing One: Bail Fail: One hundred and twenty-five billion dollars just doesn't go as far as it used to.

Europe's 100-billion-euro ($125 billion) promise to bail out Spain's banks went over like a Facebook IPO yesterday, briefly lifting financial markets before flaming out spectacularly. The euro and U.S. stocks ended the day lower after shooting higher in the morning. Far more troublingly, Spanish bond prices fell, driving Spanish borrowing costs higher. This was one of the risks of how the bailout was structured, lending money to Spain rather than directly to its banks: Many observers feared that adding more debt to Spain's already sky-high pile of it, and then possibly pushing current Spanish bondholders toward the back of the line for future payouts, might not be received well by the bond market. And it was not. Meanwhile, Italian bond yields jumped, too, The New York Times warns on its front page, as investors moved on like piranha to pick the next carcass clean.

The immediate failure of the bailout to lift spirits "suggests Europe is quickly running out of time to find a bolder fix for the growing sovereign-debt crisis," write Charles Forelle and David Enrich in the Wall Street Journal. The outcome couldn't have been much worse for European policy makers, who have shown little capacity for bolder fixes: The bailout had no effect, maybe the opposite effect intended, on financial markets, while also encouraging other nations to think that maybe they could get terms as favorable as Spain's, with no extra austerity requirements. That lesson will not be lost on Greece, whose antiquities are threatened by austerity, the NYT writes, and which holds a parliamentary election on Sunday that could be the next major test of Europe's shaky stability.

Thing Two: Cracking Dimon: It's another bad day for the JPMorgan Chase public-relations department. The The Wall Street Journal leads off its front page with a story about how the bank was warned two years ago about the risks being taken by its chief investment office but failed to act to prevent the CIO's multi-billion-dollar losses in credit derivatives. Bloomberg, meanwhile, puts the blame squarely on CEO Jamie Dimon, saying he exempted the CIO from close scrutiny and personally dismissed concerns about the unit's risk management. Meanwhile, Reuters writes that JPMorgan's failure to tell investors of a change in how it measured risk at the CIO could open it up to an SEC probe.

Thing Three: Shrinking Net: New Federal Reserve data show the median net worth of American families tumbled between 2007 and 2010 to levels not seen since the early 1990s, writes Binyamin Appelbaum of The New York Times: "While the numbers are already 18 months old, the survey illuminates problems that continue to slow the pace of the economic recovery. The Fed found that middle-class families had sustained the largest percentage losses in both wealth and income during the crisis, limiting their ability and willingness to spend."

Thing Four: America For Sale: But cheer up, Americans: Foreign buyers are snatching up U.S. homes at bargain prices, the Wall Street Journal reports. Property bubbles and debt crises around the world have made relatively cheap American real estate look like a safe-haven investment, the WSJ writes: "International buyers accounted for $82.5 billion, or 8.9%, of the $928 billion spent on residential real estate in the 12-month period that ended in March, according a survey released Monday by the National Association of Realtors. That was up 24% from $66.4 billion in the previous-year period."

Thing Five: Thanks, Saudi Arabia: If you're able to buy gasoline super-cheap this summer, thank Saudi Arabia. The ginormous oil producer is fighting a desire by other members of OPEC, which meets this week, to cut oil production and keep prices higher. Saudi Arabia wants to produce more, the Financial Times writes: "Opec, which supplies 40 per cent of the world’s crude, normally responds to a sharp drop in prices by curbing production. However, Saudi Arabia’s current policy objective now is to prevent crude rising much higher than $100 a barrel, in order to mitigate the risks high oil prices pose to the global economy."

Thing Six: Brown Vs. Murdoch: Who are you gonna believe? A former British prime minister, or Rupert Murdoch? Testifying at a judicial inquiry yesterday, Gordon Brown flatly denied that he had called Murdoch in September 2009 to threaten him with "war" for switching the allegiance of a Murdoch tabloid, The Sun. This contradicts testimony by Murdoch, raising the possibility he lied under oath, Reuters writes.

Thing Seven: Apple And Google Hardly Speaking Any More: At a developers' conference yesterday, Apple introduced a bunch of shiny new MacBooks that cost a lot and run really well, but what was maybe more remarkable was the software it loaded onto those gizmos. Apple seems to be putting itself in greater opposition to Google, the Wall Street Journal writes: "Among the software products are a new mapping and navigation service that will replace Google Maps as the default on iPhones and iPads. Apple executives also bragged about the comprehensiveness of their local search service, which is integrated with its voice activated "virtual assistant" Siri. And the company struck a long-negotiated deal with Google rival Facebook to integrate various services."

Thing Seven And One Half: Reporter Josh Gross of the Boise Weekly in Boise, Idaho, is America's greatest hero and an Internet sensation because of this piece he wrote about an upcoming Nickelback concert at the Idaho Center. "You can spend $45 to go see Nickelback this week," he wrote. "Or you could buy 45 hammers from the dollar store, hang them from the ceiling at eye level and spend an evening banging the demons out of your dome." It just gets better from there.

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Calendar Du Jour:

Economic Data:

8:30 a.m. ET: Export and Import Prices for May

2:00 p.m. ET: Treasure Budget for May

Corporate Earnings:

Nothing.

Heard On The Tweets:

@pdacosta: And here I was thinking the whole thing was a credit event: Spain bailout unlikely to trigger "credit event" -- ISDA

@conorsen: After today's announcements it sure feels like $AAPL is going to be the uber-hub of the #dataeconomy.

@SusanCTShore: Wed Dimon testimony should make for a fun trading day.

@ReformedBroker: Europeans have their eyes glued on a f***ing soccer match while the EFSF commits to another hundred billion euros in loans. Perfection.

@mattyglesias: Would be more excited about Facebook integration for iOS 6 were not everything about Facebook horrible.

@TheStalwart: On a price/pixel basis, AAPL is cheaper than it's ever been.

-- Calendar and tweets rounded up by Khadeeja Safdar.

And you can follow us on Twitter, too: @markgongloff and @byKhadeeja

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