In Madrid, the Parliament was handed an austerity budget package that still doesn't close out the critical question of when -- or whether -- Prime Minister Mariano Rajoy will request aid from the European Stability Mechanism.
If the budget is designed to stir emotions, it is already a success, as demonstrators in Madrid are letting the government know that austerity isn't going to be the popular way to handle the county's economic troubles.
The budget proposes to freeze wages for civil servants for the third consecutive year and to invoke a 10 percent replacement rate for public service workers. For every 10 who retire, the government plans to replace them with just one worker.
Spain is reportedly attempting to bring its budget gap down from 9 percent of gross domestic product to 3 percent by 2014, which implies there is a yet-to-be announced oil field under Madrid or that someone is using fantasy math.
Like Greece, Spain will be chasing its own tail, attempting to lower investment without suffering the consequences. Like Greece, it is ignoring the production side of the equation, cutting costs and raising taxes and counting on foreign investment to come to the rescue. And that might happen under different circumstances but there are no knights in shining armor at this point, as the economy sputters in the United States and China is turning its focus on domestic consumption.
In London, finance regulators unveiled new procedures for establishing the London Interbank Offered Rate -- Libor -- after Barclays bank agreed in recent weeks to pay $450 million in penalties for manipulating data that goes into setting the benchmark index that is used to calculate interest rates on $300 trillion in financial contracts.
The major developments on the Libor scandal include taking the job of calculating the rate away from the British Banking Association and the establishment of the Financial Conduct Authority in Britain, which has been set up to help the city regain its reputation as a trustworthy financial center.
On the domestic front, Bank of America agreed to settle a class-action suit filed by investors who accused the bank of misleading behavior, including failure to divulge known problems when it purchased Merrill Lynch in January 2009.
BofA will pay $2.43 billion to settle the case and accept a charge of $3.5 billion in the third quarter, the nearly $1 billion difference made up by legal fees and income tax, The Wall Street Journal reported.
BofA shares dropped 0.7 percent with the announced settlement.
In international markets Friday, the Nikkei 225 index in Japan lost 0.89 percent and the Shanghai composite index in China added 1.45 percent. The Hang Seng index in Hong Kong rose 0.38 percent and the Sensex in India added 0.99 percent.
The S&P/ASX 200 in Australia was up 0.06 percent.
In midday trading in Europe, the FTSE 100 index in Britain was down 0.05 percent while the DAX 30 in Germany slipped 0.27 percent. The CAC 40 in France gave up 1.16 percent and the Stoxx Europe 600 shed 0.58 percent.
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