AP

Fitch just downgraded Greece to C from CCC, putting the debt-laden country deeper into junk territory.

 

The action follows news that European leaders agreed on terms allowing for Greece to receive its second bailout.

Fitch's action is tied to the terms of the Greek sovereign debt swap. Here's what they wrote:

In Fitch's opinion, the exchange, if completed, would constitute a 'distressed debt exchange' (DDE) in line with its criteria and consequently yesterday's announcements set in motion the agency's process for reviewing Greece's issuer and debt securities ratings. The sovereign IDR has accordingly been lowered to 'C' from 'CCC' indicating that default is highly likely in the near term. The ratings of the securities subject to the exchange have also been lowered to 'C' from 'CCC'...

Fitch considers that the proposal to reduce Greece's public debt burden via a debt exchange with private creditors will, if completed, constitute a rating default...

Here's Fitch's announcement:

Fitch Downgrades Greece to 'C' from 'CCC'

22 Feb 2012 6:33 AM (EST)

Fitch Ratings-London-22 February 2012: Fitch Ratings has downgraded Greece's Long-term foreign and local currency Issuer Default Ratings (IDRs) to 'C' from 'CCC'. The Short-term foreign currency rating is affirmed at 'C'. The agency has also affirmed the euro area Country Ceiling at 'AAA', which is applicable to all euro area member states.

The downgrade follows yesterday's Eurogroup statement on a second financing programme for Greece including 'private sector involvement' (PSI) and a subsequent announcement from the Greek authorities outlining the terms of the proposed exchange of Greek Government Bonds (GGBs). The rating action is in line with Fitch's statement on 6 June 2011, which outlined its rating approach to a sovereign debt exchange (see 'Fitch Outlines Rating Approach to a Sovereign Debt Exchange').

The Eurogroup communique acknowledges that a common understanding has been reached between the Greek authorities and the private sector on the general terms of a 'private sector involvement' (PSI) exchange offer, including a nominal haircut of 53.5% to the face value of GGBs. The subsequent statement from the Greek authorities expands on the terms of the debt exchange and confirms the Greek government's intention to introduce collective action clauses (CACs) into those GGBs governed by Greek law.

In Fitch's opinion, the exchange, if completed, would constitute a 'distressed debt exchange' (DDE) in line with its criteria and consequently yesterday's announcements set in motion the agency's process for reviewing Greece's issuer and debt securities ratings. The sovereign IDR has accordingly been lowered to 'C' from 'CCC' indicating that default is highly likely in the near term. The ratings of the securities subject to the exchange have also been lowered to 'C' from 'CCC'.

Fitch considers that the proposal to reduce Greece's public debt burden via a debt exchange with private creditors will, if completed, constitute a rating default, and result in the country's IDR being lowered to 'Restricted Default' ('RD') upon completion. The ratings of GGBs affected by the exchange, including those not tendered but restructured under CACs, which are expected to be imposed retrospectively on bonds issued under Greek law, will also be lowered to 'D' ('default') at this time.

Shortly after completion of the exchange with the issue of new securities, Greece's sovereign rating will be moved out of the 'RD' category and re-rated at a level consistent with the agency's assessment of its post-default structure and credit profile.

Fitch regards the imposition of retrospective CACs as a material adverse change in the terms and conditions of GGBs in the context of an imminent debt exchange and confirms its assessment that the exchange will be distressed and de facto coercive on private holders of Greek bonds. Nonetheless, the primary credit event is the exchange itself and Fitch will rate Greece and its securities accordingly.

AP Fair share, baby. Fair share.

There has been a lot of fighting about the possibility of raising taxes on the highest-earning Americans.

 

There has also been frustration about how much President Obama's healthcare plan will eventually cost Americans, especially high-income Americans.

And there have been fisticuffs over the expiration of the " Bush tax cuts," which have now been in force for so long that most people have forgotten what life was like before them (in part, a federal budget surplus).

Until recently, however, these concerns have seemed academic--something that might happen happen at some point in the distant future.

Well, that future is almost here.

Andrew H. Friedman of Eaton Vance recently summarized the tax changes that will take effect in 2013, about 10 months from now.

The changes reflect the double-whammy of the new healthcare tax (3.8% on dividend income and other forms of unearned income) and the expiration of the Bush tax cuts. The combination of the two is startling, even for those who support raising taxes for rich people.

Importantly, these tax changes are already a matter of existing law. To prevent them from taking effect, Congress would have to agree to stop them from taking effect.

What's the bottom line on these changes?

Americans who earn more than $200,000 a year ($250,000 for families) are about to pay the highest taxes they have paid in a quarter-century, since the late 1980s. The top tax bracket on ordinary income will jump from 35% to 40% (or higher in the case of the self-employed). The tax rate on dividends, meanwhile, will leap from 15% to 43%.

Here's Andrew Friedman:

Republicans believe the Bush tax cuts should be extended for all taxpayers. Democrats believe they should be extended only for the middle and lower classes. President Obama has said he will veto any further extension of the Bush tax cuts for upper income families. If the President carries through on that threat, then either the Republicans must accept a compromise that raises taxes only on the affluent or watch the tax cuts expire for everyone. Under either scenario, affluent taxpayers will face higher taxes in 2013.

And that is not the end of the story.

To help finance the health care reform law passed in 2009, Congress approved a new tax on investment income to take effect in 2013. Beginning next year, families whose overall income is above $250,000 (individuals with income over $200,000) will pay an additional tax of 3.8% on taxable investment income (e.g., interest, dividends, capital gains, rents, royalties). This additional tax will not apply to non- taxable income, such as tax-exempt municipal bond interest, or to amounts withdrawn from qualified pension plans and IRAs.

When the new tax under health care reform is added to the expiration of the Bush tax cuts, in 2013:

• The top tax rate on ordinary income will rise from 35% to 43.4%—an increase of almost 25%*
• The top tax rate on capital gains will rise from 15% to 23.8%—an increase of almost 60%
• The top tax rate on dividends will rise from 15% to 43.4%—an increase of almost 200%
• The estate tax exemption will drop from $5 million to $1 million and the estate tax rate will rise from 35% to 55%—an increase of over 55%

Most important, Congress need not pass a single piece of tax legislation in 2012 for these tax rates to take effect in 2013. They will happen by default.

SEE ALSO: THE TRUTH ABOUT TAXES: Here's How High Today's Really Are

*UPDATE: Several sharp-eyed readers say that Friedman's calculation on ordinary income here is wrong. The top ordinary income bracket will increase to 39.6% (40%). The healthcare tax will then be applied to dividend income. Apparently, in the case of the self-employed, the healthcare tax will have the effect of raising the ordinary income tax to the 43% that Friedman cites. If anyone can explain the specific details of this, please do so in the comments below.

boeingmedia.com

The Boeing 787 Dreamliner had a lengthy gestation period which was coupled with a number of production delays.

 

And now it appears another issue has arisen.

According to Reuters, the carbon fiber fuselage of the 787 is experiencing issues related to shimming.

Shimming is a process that plane manufacturers use to fill tiny cracks that may occur when a plane is being built. Reuters reports that the issue with the shims has caused support structures in the rear of the plane to lose laminate.

The 787s next-generation, lightweight, materials may be to blame for the issue. All 55 planes that have been delivered may be susceptible to the problem.

Thankfully, Boeing has said that this is an easy issue to fix, but they are anticipating short term delays delivering planes currently on the assembly line until the issue is corrected.

Reuters also notes that Boeing is exploring a stretched variant of the 787, to be dubbed the 787-10. This will fit an additional 40 passengers at the expense of some of the plane's range.

Now take a look at what Boeing engineers do in their spare time >

Flickr / @Doug88888

About 11 million U.S. households with children under age 18 had no life insurance coverage as of 2010, according to LIMRA, a worldwide research and consulting organization for the insurance and financial services industry.

 

Overall, less than half of U.S. households had individual life insurance, a 50-year low.

That means if the breadwinner or the person responsible for childcare and household management died prematurely, the loss of income or need to pay for those services could push the household into poverty.

While most consumers begin thinking about life insurance when they get married and start a family, it can be wise to buy a policy even sooner, says Allen C. McLellan, associate dean and an assistant professor of insurance at The American College.

In fact, USAA Life Insurance reports that the number of single people buying life insurance is increasing, even as overall sales decline.

[See 10 Ways to Boost Your Social Security Checks.]

" A young single adult who's not married or not in a relationship certainly needs enough to pay their end-of-life expenses so their parents don't have to come in and clean up the debts," says McLellan. Single policyholders who offer financial or caregiving support to parents may want their policy to cover that need as well.

Buying a policy while you're young and healthy also means lower premiums however, older consumers may also want a life insurance policy to leave a legacy for their children or support a surviving spouse.

Whatever your age or life stage, the first step in purchasing life insurance is conducting a needs analysis. Several online life insurance calculators provide a benchmark, or an insurance agent can discuss your needs.

Seven to 10 times your annual salary is a common starting point, but many other factors come into play. " They're going to look at your ongoing expenses, your mortgage, your rent, are you paying tuition?" says Whit Cornman, a spokesperson for the American Council of Life Insurers. " Also consider immediate expenses, medical bills, burials costs, the fact that the family may need money to move if they're going to have to switch jobs."

For a spouse who doesn't work, " Consider what do you think are the costs of replacing that person?" urges Cornman. " For people who do the cooking, take care of the household, day care expenses. If they're a stay-at-home-parent, what are going to be the costs of that?"

In general, people to tend to underestimate their needs. And as Marvin Feldman, president and CEO of the Life and Health Insurance Foundation for Education (LIFE), a nonprofit that educates consumers about financial planning and insurance, points out, in this market, people need more capital to earn the same amount of interest that they did a few years ago.

[See How to Finance Life Until 100.]

Life insurance comes in many different varieties, so once you've determined your needs, an insurance agent can help choose a policy to match. Term life insurance insures you for a specified time frame, say 15 or 20 years, while permanent insurance remains in force as long as you continue paying the premiums.

Permanent life insurance is sometimes also called cash-value insurance because it can accumulate savings on a tax-deferred basis. Whole life, variable life, and universal life are all specific types of permanent life insurance.

" Term is very simple to understand," says McLellan, who compares term life insurance to paying rent. " When I stop paying the rent, I would lose the coverage. That's why many young people buy term life insurance off the Internet. Once I get into the complexities of whole life insurance or universal life, the game changes. Anything more than term is generally going to require the services of a licensed agent."

According to Amy Bach, executive director of United Policyholders, a nonprofit organization that provides insurance resources to consumers, the most commonly purchased option is a term life policy with a flat annual premium or semi-annual premium. " The problem with the term life policy," she continues, " is once the term expires, the premiums will go through the roof."

One way to handle this issue is by laddering policies. " That is, buy another policy before the end of the term so that coverage will continue," explains Cornman. " Some policies will let you continue coverage at the end of a term. You would likely pay a higher rate, but it still may be a better option than seeking out a new policy, which may be very costly or difficult to get at an advanced age."

[See How Long Should I Work Before Retirement?]

That said, life insurance may still be within reach because " companies are becoming much more efficient at keeping cost ratios down, so it's probably less expensive than it's ever been," according Feldman. " Not that finding the least-expensive price is most important."

Experts stress that whether you buy life insurance online or through an agent, choosing a reputable company with a record of good customer service is a must.

" You want to purchase insurance from a company that has a history of paying claims, that has a strong financial rating, and there are fairly easy ways of discovering these things," says Larry P. Ginsburg, an Oakland, Calif.-based certified financial planner and a board member of United Policyholders. Ratings companies like Standard & Poor can offer insights into an insurance company's financial stability.

Consumers should also be wary of insurance products that are overly complicated or over-promise.

" One of the biggest areas where consumer advocates have been working is to protect seniors who get sold these new complicated life insurance policies that are really more like investment products," Bach says. " The senior thinks they're going to see some benefit while they're alive, but they're so complicated and there are so many unknowns that it's not a suitable product for that person because of their advanced age."

She suggests avoiding shady pitches by asking friends and family for a referral to a reputable insurance agent.

Once you have a life insurance policy in force, it's recommended that you review your policy and beneficiaries every 12 to 18 months to ensure they're up to date. As Feldman points out, if you've gone through a divorce or gotten married and forget to update your beneficiaries, that can lead to problems when you die. " It's really important to make sure that those things are done properly," he stresses. Knowing you have the right life insurance policy and the right beneficiaries offers peace of mind that your loved ones will be taken care of should you pass away.

Additional Resources:

ACLI's Life Insurance Buying Tips

LIFE's Guide to Life Insurance

Standard & Poor's Insurance Ratings

United Policyholders' How to Do a 'Needs Analysis' Before you Buy Life Insurance

This post originally appeared on U.S. News & World Report.

Now see 7 simple tips for people who want to buy their first home >

AP

Tuesday Feb. 21 was a bad day for the U.S. in Iran, Syria, and Afghanistan.

 

In Afghanistan, protests against Americans who incinerated Korans at a military prison became so violent that Afghan police fired on the crowds killing three people. The anger is widespread, and more than 30 people have been wounded in protests throughout the country.

Afghans are forming outside compounds filled with police, contractors, and coalition forces chanting " death to America." This will do nothing but hurt American forces still fighting there, and make continued operations there through 2014 more difficult.

In Syria, where President Bashar al-Assad enjoys the support of both Iran and Russia, conditions are growing too dire for the U.S. to ignore.

The city of Homs, with the largest governing body in Syria and the largest number of anti-Assad protesters, is getting repeatedly shelled by government forces and Tuesday the attacks killed two Western journalists.

American reporter Marie Colvin and French photographer Remi Ochlik were killed along with 40 others when a shell struck the media center in Baba Amr where they were staying.

The White House has finally admitted the situation may demand military intervention. Obama spokesman Jay Carney told reporters that while the U.S. is reluctant to further the militarization of Syria, it would not " rule out additional measures."

When pressed Carney said " if we can't get Assad to yield to the pressure that we are all bringing to bear, we may have to consider additional measures."

Though he refused to elaborate, arming the rebels with weapons has recently been discussed and will likely be brought up Friday, when Secretary of State Clinton meets with representatives from 70 other countries in Tunisia.

This first " Friends of Syria" meeting will lay out an international response to the nearly year-long uprising. Russia will not attend the conference.

Finally, Iran has directly refused to allow IAEA nuclear inspectors into its suspected military test site at Parchin.

Tehran not only refused to allow inspectors access, it refused to a plan for resolving questions about its nuclear intentions, and declined interviews with its top scientists and military officials.

President Obama has stressed that inspections and sanctions would be used against Iran as long as possible, while insisting the U.S. would decisively prevent Iran from developing a nuclear weapon. Speculation about possible military action against Tehran is growing.

One of the more interesting reports comes from Joshua Kucera at EurasiaNet. Kucera talked to a Russian Foreign Ministry official who told him the Kremlin believes the U.S. may use its air base at Manas to launch an Iranian attack.

Located within Kyrgyzstan, officials there, and in Russia, are concerned about a retaliatory strike by Iran if the U.S. does attack from there. But with U.S. bases in Turkey, and Afghanistan, and the 5th Fleet parked in Bahrain, the Pentagon has plenty of options if it decides to move against Iran.

Shutterstock

Good morning. Here's what you need to know.

 

• Asian markets were up in overnight trading with the Nikkei rising 0.96 percent. Europe is sharply lower on eurozone PMI data and skepticism over the Greek deal, and U.S. futures are moderately lower.

• Eurozone composite PMI which measures manufacturing and services fell to 49.7 in February, from 50.4 the previous month. German PMI declined to 50.1 in February, down from 51 the previous month. French manufacturing PMI rose to 50.2 this month, from 48.5 in January. Now here are the 29 most bizarre economic indicators in the world >

• Chinese PMI came in at 49.7 in February according to a preliminary reading from HSBC Holdings Plc, compared with 48.8 the previous month. This however signaled a fourth straight month of contraction in manufacturing.

• Fitch cut Greece's long-term ratings to C from CCC. The ratings agency said Greece is highly likely to default in the near-term. This comes after talks that default risk is not off the table, despite Athens securing its second bailout yesterday. UBS Answers: Who are the fittest countries in Europe >

• Wells Fargo is buying BNP Paribas' North American energy lending unit. This includes $9.5 billion of loans from BNP, though only $3.9 billion of loans are drawn. Meanwhile, Citigroup is facing a multibillion dollar writedown on its investment in the Morgan Stanley Smith Barney brokerage, the WSJ reported.

• In earnings news, Toll Brothers reported Q1 net loss of $0.02 per share, on revenue of $322 million, missing expectations. Chesapeake Energy reported Q4 earnings of $0.63 per share, on revenue of $2.73 billion. HP is expected to report earnings of $0.87 per share today.

• President Obama will ask Congress to cut the corporate tax rate to 28 percent, down from 35 percent. Manufacturers would be given preference and would have a maximum effective rate of 25 percent.

• Existing home sales for January will be released at 10 AM ET. Consensus is for a rise in existing home sales to a 4.690 million unit rate. Follow the release at Money Game >

• Euro area industrial orders jumped 1.9 percent month-over-month in December beating expectations. This comes after a 1.1 percent decline the previous month. Orders of intermediate goods climbed 1.5 percent, while capital goods orders rose 4.2 percent.

• France's harmonized index of consumer prices or HICP, rose 2.6 percent from a year ago, staying near a three-year high in January. CPI however decreased 0.4 percent month-over-month. Morgan Stanley: This is what the euro economy will do in 2012 and 2013 >

• BONUS - Drew Barrymore was spotted carrying a sonogram fueling speculation that she might be pregnant.

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