Despite the non-farm payroll loss of 131,000, bulls continued to assert themselves in volatile marketplaces.  Overall, corporate earnings are strong and while companies are talking additional trimming rather then new jobs, there is a feel of a very mild recovery underfoot. 

Private employment added 71,000 new jobs after adding just 31,000 in June.  Analysts had predicted 90,000 new jobs would be added in July.  These same analysts predicted overall employment falling by 65,000.

The unemployment rate held firm at 9.5 percent, but there is concern that thousands of potential workers have dropped out of the system as their benefits expired.  Some analysts believe the recent extension of benefits has created the increase in unemployment.

Analysts were surprised by the 202,000 jobs trimmed in July by federal, state and local governments.  In June governments cut 252,000 workers.  The Federal government cut 154,000 jobs, state governments trimmed 10,000 workers and local governments trimmed 38,000 workers.  In the federal government’s cuts 143,000 people were temporary census workers.

Most local governments begin their new fiscal year on July 1^st.  Most local governments are under tremendous pressure to continue providing services but with reduced work forces.  Cuts in state operations can be expected to rise as just about every state in the Union is carrying significant deficits as they approach the close of their fiscal year.

Manufacturing Leading The Private Sector

In the private sector, the manufacturing sector added 36,000 workers and led the way again in July.  Manufacturing added 13,000 jobs in June.  The auto industry reversed its traditional pattern by not laying off workers in July.

The service sector added 38,000 new jobs after gaining 34,000 in June.  The temporary services sector, which has been solid since October 2009, trimmed 5,600 jobs after adding 11,200 in June.  Temporary employment averaged 45,000 new jobs per month from October 2009 to May 2010.

Of the 15 subsectors composing the private sector, three reported job losses, one was unchanged and 11 reported gains. 

• Professional and Business Services – Down 13,000
• Financial Services – Down 17,000
• Construction – Down 11,000
• Non durable good – Unchanged

 On The Positive Side

After falling to 34.1 hours in June, the average workweek increased to 34.2 in July.  Average hourly wages increased by 0.2 percent in the month as the average hourly earning rose four cents to 22.59.

These are positive signals but one of the most important numbers is the growth of the GDP.  Global markets are expecting the U.S. to add significantly to our Gross Domestic Product.  Economic growth fell to a projected 2.4 percent this year after rising to 3.7 percent in the first quarter.

Federal government expenditures now stand at 25 percent of the GDP.  The Obama Administration must either spark GDP growth or decrease the cost of government.

In early afternoon news, Goldman Sachs predicted that unemployment would rise to 11 percent and remain there through 2011.  Unemployment now stands at 9.5 percent.  Most analysts projected a rise in unemployment top 9.6 percent.

President Obama responded to the labor report saying that July marks the seventh consecutive month that the private sector has added jobs.

The ADP report, which is often viewed as a precursor for the government’s employment report due on Friday, showed a nice jump in private sector hiring and seems to support a stabilization of the economy.  Downsizing activity showed continued improvement in July but planned layoffs rose 6 percent to 41,676 according to consultant Challenger, Gray & Christmas.

The ADP report adjusted June’s employment figures to reflect a 19,000 gain in new private sector jobs compared to the 13,000 new jobs reported earlier.  The optimistic private sector gains were offset by the prospect of continued downsizing.  John Challenger reported that “While it is true that job cuts have increased in each of the past three months, the increases are so slight and the monthly totals so low when compared to recent years, that the trend in no way suggests a reversal of the significant slowdown in job-cut activity witnessed over the past year.”

Government led the way in job cuts for the fourth time this year.  7,193 government workers, a 36 percent increase, were laid off last month.  The Challenger Co. says the government and the private sector will pare 105,969 jobs in 2010.  Following the government, pharmaceutical companies are the next biggest sector in terms of layoffs.  Some 37,010 job cuts are projected for the industry.

Demand For Home Loans Up

The Mortgage Bankers Association announced a rise in home mortgage applications for the third consecutive week, spurring optimism that the recovery was proceeding.  Low interest rates were credited with the gains, which also spilled over into the modification and re-financing sectors of the industry. 

30-year fixed rate mortgages average 4.6 percent, down 0.09 percent form the previous week.  In year-to-year analysis, the new interest rates were well below the 5.17 percent at this time one year ago. 

The real estate crisis has been struggling to gain momentum ever since the expiration of the federal government’s tax credit.  Demand for new mortgages is 40 percent lower than in April when the credits were due to expire.

The Mortgage Bankers also reported that refinancing application increased by 1.3 percent.  Refinancing is a key component of the government’s anti-foreclosure plan.

At the core of the housing problem has been consumer’s fears over employment.  Kurt Gleeson of RealEstate.com said, “The housing market is sputtering.  There is a smaller pool of buyers who can afford to purchase  a home.  The economy and more specifically, the sluggish employment market have excluded many potential buyers.  Job growth remains Number 1 in importance for the housing market.” 

The Labor Department, the Obama Administration, the Congress and the media go through the motions, but none of these groups possess the strength of character, the moral integrity or the conviction to do the right thing and address unemployment from top to bottom until it is fixed.   

For one thing, the politicians are too busy making news and shaping a statistically attractive re-election profile to work on anything constructive, like employment reform.  It is easier and safer to point fingers than sit down and work on solving the country’s biggest problem. 

Even the eloquent and hopeful tones of President Barrack Obama have worn thin under the weight of 14.6 million unemployed workers. The President has become another media puppet, playing Main Street at every chance he gets to repeat his fading chorus for change, which is now spelled F-R-U-S-T-R-A-T-I-O-N.

If you did not have a job; if you were not sure your job would be there come Monday; if you had one or more persons counting on that job, you would find the Thursday media feeding, the President and the Congress of the United States obnoxious, insensitive and arrogant.

Realistically, how could the weekly jobs report improve? 

The government cannot afford the employees it has, especially the ones in the high places.  Businesses are afraid to spend money because they understand that next time, there will be no bailouts and because there are so many costly legislative acts on the table that nobody knows what a new employee might really cost.  Besides, many businesses are profiting better than ever by trimming payrolls.  New entrepreneurs have no access to credit and, at this time, investors are not prone to risk.

The people we have elected to solve these problems appear little more than a disjointed three-ring circus.  The Congress cannot agree with the Senate.  Nobody agrees with the President.  All three circus rings lack leadership. 

The audience sees plenty of smokescreens but no solutions. What this country needs is not Republican or Democratic theater.  We do not need smokescreens.  We need people to sit down at a table in a room filled with accurate statistics and come up with very real solutions. 

That is how this country was born.  It is time to do it again!

Remember, someday our children will be returning from war.  When they come home, they will be jobless.  Is that how we shall treat our veterans?

Facts are Facts 

14.6 million Americans are unemployed.

• Initial claims for state unemployment fell to 457,000 last week.
• Figures for the previous week were revised upwards so that 468,000 applied for benefits.
• Applications for new benefits fell by 11,000 last week.
• The four-week average decreased to 452,000, down 4,500 from the previous four-week average.
• In the week ending July 17, 4.57 million people were receiving benefits after an initial week of aid; an increase of 81,000 over the previous week.
• On July 22, President Obama signed legislation restoring benefits to recipients whose benefits expired June 2. 
• The legislation extended unemployment to insurance to 99 weeks.
• In a report from the National Association of Counties, the National League of Cities and the U.S. Conference of Mayors, local governments are projected to trim 500,000 workers by the end of 2011.

The Temporary Assistance For Needy Families

The Temporary Assistance For Need Families program was created in 1996 as a part of welfare reform legislation.  The theory was that it was better for the government to issue money to states so that states could put people back to work rather than simply subsidize unemployed workers.

Through this program, states are now applying for and receiving funds to put workers back to work.  The program smacks of the Great Depression but there are new twists that actually make sense.  The government is paying wages for workers who go to work for small businesses.

The New York Times identified a former computer technician who had lost his job.  Through the Put Illinois to Work Program, the out-of-work computer technician now earns $10.00 an hour to work in an art gallery. 

These federal job subsidies were originally financed with $5 billion of stimulus money.  One of the problems confronting long-term unemployed is that the longer workers are away from work, the less qualified they are to return to work. 

Programs like Put Illinois to Work are not only putting workers on the front line but they are helping small businesses as well.  Of course, the fear is that small business will never start hiring their own workers as long as there are government-subsidized workers available.

A research organization entitled the Center of Budget and Policy Priorities reports that 247,000 subsidized workers will be on the job by the end of September.  Typically, the jobs pay between $8.00 and $15.00 and cover blue and white-collar jobs.

A little more than $1 billion has been approved to create subsidized programs in 36 states and the District of Columbia.  Illinois operates the biggest year round program.  Most of the states pay the full wages up to a certain point.  Workers must come from a low-income household with minor children or be under 21 years of age themselves.

States and businesses alike are pushing to extend the program beyond the September cutoff.  The program accomplishes many goals but has also created some complications. If the business where subsidized workers are employed slows down, employers are laying off long-time employees to keep the subsidized workers. 

These details can be resolved.  The point is that someone came up with a plan to help people get back to work.  While it is true that there are Americans who do not really want to work, the fact is that work is part of our culture and part of our individual composition.  Being unemployed for a length of time is a strenuous, negative and expensive experience.

It is time for Washington to step up to the plate or go home and do not come back.  This is why Congressmen and Senators were hired and why their successors will be hired.  Stop pointing fingers and get to work.

Dupont’s strong sales figures from every division surprised analysts.  The company immediately raised annual projections and raised expectations for several key divisions.  Overall, U.S. business has posted strong quarterly reports, but the Consumer Confidence report, issued Tuesday morning, turned down from June’s adjusted 54 percent to slightly over 50 percent in July.

The fear surrounding U.S. companies is how the profits are being generated.  What makes the Dupont performance encouraging is that profits came from strong sales rather than from cost cutting.

Europe Climbing

Meanwhile, European equities posted positive gains for the sixth consecutive day.  UBS AG and Germany’s largest bank Deutsche Bank AG handily surpassed expectations.

UBS rode the three month high measure of banking shares to a 10 percent gain. Deutsche Bank rose 5.8 percent, Tompkins Plc, who agreed to sell to the Canada Pension Plan Investment Board and Onex Corp, climbed 5.3 percent.

Philipp Musil of Semper Constantia Privatbank AG in Vienna explained, “I am happy about the figures, which beat really high expectations.  The market is near the top end of the trading range and there’s a new positive feeling about Europe.”  

UBS has seen an inordinate number of withdrawals from its wealth management division.  In the second quarter, withdrawals amounted to 8.1 billion francs compared to 15.4 billion in the first quarter.  The wealth management division posted a pre-tax profit of 1.13 billion francs.  

UBS silenced its critics and caught analysts by surprise by turning around its investment banking division.  The division generated 3.07 billion francs from trading equities, currencies, bonds and commodities in the second quarter. 

Switzerland’s biggest bank reported a net gain of 2.01 billion Swiss francs ($1.91 billion) year to date.  One year ago, the bank posted a loss of 1.4 billion francs.

Bernanke may have appeared uncertain about the economy’s direction, but he was steadfast in the Fed’s commitment to use all weapons at its disposal to prevent a double dip.  Pressed by Senate members to detail the weapons in the Fed’s arsenal, Bernanke played his cards very close to the vest. 

In essence, the chairman did not outline any possible details summarizing the Fed’s position saying, “We remain prepared to take further policy actions as needed to foster a return to full utilization of our nation’s productive potential in a context of price stability.”

Thus far, The Federal Reserve has held the line on near zero interest rates, implemented in December 2008, and on the purchase of troubled mortgage and bonds.  The Fed has spent $1.5 trillion on the products since the recession began.

Despite his direct assertions that an economic downturn was unlikely, Bernanke’s testimony weighed heavily on Wall Street.  The Dow Jones closed down 105 points on Wednesday.  Strong corporate returns have neutralized a series of negative reports concerning employment, manufacturing and housing.

When pressed by the committee, Bernanke stuck to his script.  The chairman said was considering all possibilities but that for the time being the main options remained the purchase of more mortgages and lowering the rate paid to banks to place excess reserves with the Fed.

Senate Republicans would like the Fed to halt the flow of red ink while Democrats favor more stimulus funding to solve unemployment.  Bernanke was cool to both possibilities.

Euro Zone Worries

In his testimony, Bernanke added that problems in the euro zone had unnerved Wall Street and created the uncertainty in investment markets.  Bernanke also cited the slow growth in the employment sector as problematic.

Overnight, the euro zone checked in with surprisingly positive economic news.  A survey from Markit showed improved employment, progress in manufacturing and increased growth in the euro zone.

The Markit Purchasing Manager’s Index surveys 2000 varied businesses in the zone.  The index rose to 56.0 in July, up from 55.5 in June.  Analysts had projected a slight downward turn to 55.0.  Manufacturing rose to a starling 56.5 from 55.6 in June.

The zone’s largest economy, Germany, reported the largest growth in its services sector in three years.  France also reported gains in demand for services.

European markets rose sharply on the release of the Markit survey and carried forward in early morning U.S. trading.

While the participants agreed to the concept, they returned home to unleash austerity cuts with little concern for growth.  The avoidance of a strategy to grow alongside the debt reduction has spread beyond the euro zone as Britain, Brazil and India have joined the parade.

On Tuesday, China expressed concern that the euro zone cuts would greatly affect the country’s export balance.  The U.S. has expressed the same concern ever since Greece needed assistance to meet its obligations.

In Monday’s after trade quarterly reports, IBM and Texas Instruments announced lower than expected results.  The surprise announcements sent tremors thought European markers and sent the Nikkei to a 1.2 percent loss as European equities fell for a fifth straight day.

Earlier in the day, the euro had crossed the $1.30 mark and was holding at $1.3029.  Nervous investors seemed to doubt the currency’s ability to handle the results of the stress tests to be revealed on Friday.  The euro was trading at $1.2851 when U.S. markets opened but the slide looked to be continuing.

Director of research at Forex.com, Jane Foley, explained, “We’ve seen risk appetite claw back a fair amount and the market is questioning whether that move is valid.

China Speaks

On Tuesday, China’s Ministry of Commerce spokesperson, Yao Jian, said that the country’s export business would fall as a result of the cuts in he euro zone.  China has enjoyed stellar gains in the first half of 2010.  

In June, exports increased 43.9 percent in year-over-year comparisons and 48.5 percent in May comparisons.  However, imports also rose dramatically and nearly nullified any growth in GDP.

 Yao said that second half export growth would fall to about 16.3 percent yielding a 24.5 percent rise in GDP.  That rise is modest by 2009 comparisons, but wages have been increased in certain areas and the Ministry of Commerce mentioned these changes are detrimental to the export-import ratio.

 According to the International Energy Agency, China has replaced the U.S. as the world’s energy consumer.  China challenged the report saying that Beijing was aggressively pursing replacement of outdated manufacturing plants.

Yao said China is expecting to begin new construction projects to meet the country’s rising consumption expenditures.  With newly increased wages, demand for products has also increased and China will see a significant rise in internal sales.

The originally divisive financial plan, which includes stress testing of the zone’s 100 largest banks, has buoyed the euro.  In overnight trading, the euro reached a two-month high at $1.2970 and seems certain to cross the $1.30 threshold soon. 

On June 7^th, the euro had fallen to $1.1875.  Based upon strong showings at debt auctions in Greece, Portugal and Spain, the euro has stabilized and has moved ahead.  Greece, Spain and Portugal have suffered credit rating reductions by all major credit agencies. 

The European Central Bank’s strong cash position has eased intra-bank trading.  The euro has gained 9 percent since early June and unless the Federal Reserve raises its rates, the dollar may continue to slide against other currencies.  Thus far, the Federal Reserve has hesitated to raise rates because another round of quantitative easing may well be in the offing.

On July 1^st, the dollar fell to 89.96 yen, the lowest rate since December.  The dollar’s 14-year low against the yen is 84.82, struck in November 2009.  After that fall, the Bank of Japan invested 10 trillion yen in the dollar.  Analysts had projected a 90.18 dollar/yen gain by March 2011.

Euro Zone Progress

Following a solid Spanish bond auction, successfully renegotiated wages in Greece and a vote of confidence in Italy, French Prime Minister Francois Fillion addressed the media on Friday.  The Prime Minister stressed that recent weakness in the euro was the result of poor national fiscal policies and not weakness in the euro currency system.

The prime minister allayed fears by asserting that the euro was on the mend.  Fillion pushed Japan to maintain faith in the currency.

“Greece has endangered the credibility of its budgets, but public finances in the EU are no worse than the situation in the U.S/ and Japan,” said Fillion.

In early Friday trading, the dollar continued its 1 percent slide against the euro, the yen and sterling.  Poor economic news and political infighting have caused weakening of the dollar.

A report showing that producer prices fell for the third successive month was released on Thursday.  On top of the Empire State Survey, conducted by the New York Federal Reserve, which shows that New York’s production fell to its lowest rates since December, and a similar report in Pennsylvania, projections for growth have been trimmed.

Goldman Sachs released projections that the euro would rise to $1.35 in the next six to 12 months.  As bond auctions in the U.S. continue weak performances, investors are left to question exactly what is the economic policy in Washington today?

The International Monetary Fund earlier raised predictions of U.S. GDP to 3.3 percent in 2010 and 2.9 percent in 2011.  The nation’s high unemployment rate and steadily climbing foreclosure rates are the chief concerns of the IMF, who suggested that unless these problems were addressed, the likelihood of a double dip is strong.

The New York Federal Reserve published its “Empire State” summary.  The report indicated that a state composite of business factors dropped a whopping 15 points in June to 5.08.

Most importantly, the American consumer and American business are both running scared.  American business is hoarding cash like never before.  The American consumer is in a “necessities only” only state of mind. 

The U.S. Labor Department reports that seasonally adjusted farm prices fell 0.5 percent in June on top of 0.3 percent in May.  The lack of consumer confidence has caused analysts to lower their projections for the second quarter and to lift projections for a double dip recession.

For the week ending July 3, 2010, 4.68 million persons received unemployment benefits after the one-week waiting period.  The projected unemployment figure had been 4.41 million.

Budget concerns and political jousting have caused millions of Americans to see their benefits expire.  The number of persons either dropping unemployment benefits or politically prevented from collecting benefits another 236,162 to 3.91 million in the week ended Junes 26.

The Labor Department indicates that 45 percent of the 14.6 million persons unemployed in June have been out of work for six months or more.  Unemployment benefits are administered by state in cooperation with the federal government.

The Senate Impasse

Like much of today’s significant legislation, an impasse on a bill extending benefits to workers is mired in political bickering.  Originally, Congress voted to extend benefits from 26 to 53 weeks.  The new legislation would extend benefits to 99 weeks. 

Current legislation to extend the benefits longer has passed in the House but is stalled in the Senate.  The original bill called for release of $34 billion more beginning on July 1, 2010.  When the bill hit the Senate, 11 Democrats opposed the legislation.  Senate Majority Leader Harry Reid promised another vote on Tuesday the 20^th.

At issue is the federal deficit.  Fiscal conservatives believe the government cannot afford another $34 billion stimulus-type spending package.  Additionally, conservatives have suggested that extending the benefits relaxes the recipient’s desire to find work.  Liberals disagree; stating that extending the benefits puts the American consumer back in the marketplace.

Due to the impasse, more than 2.1 million Americans lost their unemployment benefits from June 5 to June 10.  If benefits are not extended by July 31^st, another one million persons will follow suit.   

Outside Washington, Main Street understands that no progress and no plan is a dangerous path.  In Ohio, unemployment was 10.7 percent in May and 83,000 new applications were processed in June.

Democrats argue that Republicans want people to suffer so as to influence the November elections.  Republicans suggest that Democrats cannot make difficult decisions.  Main Street residents see Washington politicians pointing fingers and blaming the other guy when what is needed is someone to step up to the plate and fight for the voters.

Unemployment and Infrastructure May Be The Answer

Conservatives suggest that every dollar spent on unemployment or aiding state governments helps increase the GDP more than the act of extending benefits which merely increases the deficit.  For example, if schools are forced to cut back on educators or even their own staff, those employees become an immediate liability of the state and the federal government.

If the government is going to adopt another stimulus package, the proceeds must be spent on infrastructure.  These necessary expenditures increase jobs, increase manufacturing and increase consumption; all good things.

Washington needs to take action, now!  We have waited while they jockey for position long enough.

Since falling below $1.19 for the first time in four years, the euro has made a steady push toward recovery.  On Tuesday, the currency crossed the $1.2663 threshold and appeared steady despite news that Germany, the zone’s largest manufacturer, reported an unexpected slowdown in factory orders. 

The news from Germany was outweighed by the success of the Spanish debt sale on Tuesday.  Combined with low consumer confidence projections from the States and further bad news on the employment front in the U.S. short-term confidence in the euro continues to rise. The euro has had a seven-week winning streak against the dollar.

Euro zone regulators are walking a fine line in deciding what details to release about the upcoming stress tests that will be applied to 91 of the zone’s largest financial institutions.  German Chancellor, Angela Merkel, who has become a strong spokesperson for the euro and the European Union, sees the euro in a much-improved position since the effects of the crises in Greece first evolved.

Last week, the sector was able to repay 442 billion euros n emergency loans, a feat considered unlikely just tow months ago.  The repayment only required minimal assistance from the European Central Bank. 

Stress Tests To Be Released Later in Month

European Central Bank President, Jean Claude Trichet, will face the media on Thursday.  Trichet will be under pressure to convey more information about the tests than he has been prone to do.  At present, lenders can decide what results to publish, a policy transparency advocates oppose.

German Finance Minister, Wolfgang Schaeuble, has said that Germany can deal with publication of results.  Not all euro zone members are up to that task.  Chancellor Merkel affirmed Schaeuble’s pronouncement and added:

“The euro has stabilized.  It’s an important signal that banks are carrying out stress tests and that we’ll have more transparency the system.  And, it’s pleasing that, in contrast to the spring, nearly all countries in Europe are now saying we have to reduce deficits and introduce structural reforms.  Once the measures that we’ve agreed have been completely implemented it’ll mean the euro will be on stronger foundation than before the crisis.”

As the Obama Administration insisted at the G-20, the euro zone needs to not only concentrate on debt reduction but must maintain a commitment to growth.  Merkel may have it right about the zone’s positive direction in terms of austerity cuts but without growth, the zone has inherent weakness.  For this reason, many analysts project a steep fall for the euro prior to year’s end.

On Wednesday, Moody’s announced an upcoming review of Spain’s credit rating.  The success of the bond auction indicates that investors had already factored in the ratings slide. Standard & Poor’s and Fitch had already downgraded Spain’s rating earlier this quarter, but on Wednesday Moody’s said the rating could fall by as much as two levels.

Spain’s Prime Minister has tried to keep the country one step ahead of analysts, many of whom feel the country is headed for a “Greece-type decline.”  Prime Minister Jose Luis Rodriquez Zapatero’s Socialist Party managed to pass austerity legislation in May by the slightest of margins – one vote.  Ever since, support for the Socialist Party has declined.  Much of the dissatisfaction has been focused on proposed reforms to the country’s labor laws.

Spain currently faces a 20 percent unemployment rate.  Adding to the fiscal woes is the fact that the country’s recession recovery has amounted to barely a whisper.  Political opposition to the austerity cuts mounted in June.  The opposition maintains that policy changes regarding unemployment only scratch the surface of a deep hole.

The country must find the means to deal with the reality of minimal growth to offset a decade of inflationary practices and some of the highest levels of household and corporate debt in the euro zone. 

Greece Pains The PIIGS

Comparisons to Greece also continue to haunt Portugal, Italy, Ireland and, of course, Spain.  Kathrin Muehlbronner of Moody’s describes what is happening in Southern Europe.  “The contagion has been so dramatic in the markets in the last few months people forget really what a gulf there is between Spain and Greece… Spain is a very highly credit worthy country,” said the analyst.

In 2009, Spain had a public deficit of 11.2 percent.  Spain’s debt-to-GDP ratio is closing in on 55 percent.  Moody’s says the ratio will rise to 80 percent by 2014. 

Zapatero’s government announced a plan to trim 15 billion euros from the budget by 2013.  The government projects these savings will cut the budget deficit to 3 percent of GDP by 2013. 

Moody’s strongly disagrees, citing the government’s growth projections as unrealistic.  The rating agency projects 1 percent growth from 2010 to 2014.  Government projects 3 percent growth by 2013.  In Wednesday’s report, Moody’s stressed the need for deeper cuts and a revamping of the country’s employment policies.

Labor reform legislation is currently under review by parliament.  Spain has the highest unemployment rate in the euro zone.  Critics say the reform package does not acknowledge the severity of the employment crises.  40 percent of employable Spaniards under the age of 25 are unemployed.

The country is busily finalizing plans to bring the unlisted private banks under one umbrella.  The merger of some of the country’s troubled banks has already cost the government 10 billion euros.  Plans to bring the smaller, private banks under tighter reins through mergers are projected to cost another 30 billion euros. 

Adding to the financial pressure is a July redemption ticket for 16.2 billion euros.