Groupon (NASDAQ: GRPN) posts earnings that trouble Wall St. and its shares fall by 10%. (Reuters)

A deal on mortgage data and foreclosures between five banks and state attorneys general is close to being done. The amount of the settlement will be about $25 billion. (Reuters)

Credit Suisse (NYSE: CS) posts a drop in Q4 results. (Reuters)

Rio Tinto (NYSE: RTP) posts poor results due to metal prices. (Reuters)

Levovo beats earnings forecasts as its market share rises, and it will produce a TV product for Chinese consumers. (Reuters)

Google (NASDAQ: GOOG) to launch a cloud storage product. (WSJ)

The House probably will approve a bill to regulate insider trading by members of Congress and their staffs. (WSJ)

China and Canada to increase official trade relations. (WSJ)

China’s CPI rises to 4.5% in January — up from 4.1% in December. (WSJ)

Some car companies press sales in Indonesia as the number of drivers there surges. (WSJ)

Chrysler may set a deal with banks for consumer and dealer loans that would replace its relationship with Ally. (WSJ)

Apple (NASDAQ: AAPL) tightens it approval process for apps used on the iPad and iPhone. (WSJ)

Petrobras (NYSE: PTR) estimates of its reserves and the P&L they may create could be too optimistic. (WSJ)

Goldman Sachs (NYSE: GS) buys much of AIG’s (NYSE: AIG) troubled bond portfolio, which dates back to 2008. (WSJ)

Two million homeowners could benefit from a $25 billion settlement over mortgages reached between five banks and the government. (NYT)

Car sales in China fall 24% in January. (NYT)

Young people are watching TV more and more on PCs. (NYT)

BP (NYSE: BP) is conversing with the U.S. government over claims from the Deepwater Horizon oil spill and may settle. (Bloomberg)

Sarkozy’s approval ratings in France are near all-time lows for a president. (Bloomberg)

Douglas A. McIntyre

Greek leaders face a deal for settling sovereign debt matters as workers strike. (Reuters)

Toyota (NYSE: TM) posts good third-quarter profits and says the U.S. will be a difficult market. (Reuters)

Boeing (NYSE: BA) may have trouble with its 787 deliveries after flaws were found in the body of the aircraft. (Reuters)

Verizon (NYSE: VZ) and Redbox set a deal to compete with Netflix (NASDAQ: NFLX). (Reuters)

Amazon.com (NASDAQ: AMZN) may open a physical store in Seattle. (Reuters)

House Republicans move to reopen debate on the Keystone XL pipeline. (Reuters)

Problems with regulators have made the Medco (NYSE: MHS) merger with Express Scripts (NASDAQ: ESRX) less likely. (Reuters)

The U.S. will create programs to help the troubled money market industry. (WSJ)

Barclays (NYSE: BCS), Credit Suisse (NYSE: CS), Morgan Stanley (NYSE: MS), Goldman Sachs (NYSE: GS) and Royal Bank of Scotland (NYSE: RBS) will bid as the New York Fed auctions risky bonds it got as part of its AIG (NYSE: AIG) bailout. (WSJ)

Greece will cut 15,000 public sector jobs. (WSJ)

Motorola Mobility (NYSE: MMI) wants a 2.25% royalty on Apple (NASDAQ: AAPL) iPhone sales based on IP claims. (WSJ)

Walt Disney (NYSE: DIS) and Univision are in talks to create a 24-hour news channel. (WSJ)

India cuts its growth forecast to 6.9%. (WSJ)

Eugene Isenberg of Nabor Industries (NYSE: NBR) gives up a $100 million retirement payout. (WSJ)

The Obama budget will have $3 trillion in cuts over 10 years and $1.5 trillion in new taxes — mostly on the rich. (WSJ)

Japan wants to enter a large Asia-Pacific trade agreement, but the U.S. may object. (WSJ)

Satellite makers say that U.S. regulations make it difficult for them to compete overseas. (WSJ)

Republic Airways (NASDAQ: RJET) is about to sell Frontier. (WSJ)

New LeadershipIQ research breaks companies into four groups based on management style and systems to create results. (WSJ)

Walmart (NYSE: WMT) promotes a manager to be the new CEO of its China operations. (WSJ)

Some large European banks will not take European Central Bank loans because they fear it will make them appear weak. (WSJ)

BP (NYSE: BP) raises its dividend. (FT)

An escrow fund may be set to help Greece instead of all aid money going to the nation directly. (FT)

Farmers to plant the largest corn crop since 1984. (Bloomberg)

Walmart will lower fat, sodium and sugar in some foods. (Bloomberg)

Douglas A. McIntyre

Read America’s Ten Shrinking Corporate Giants

Large companies can lose a significant amount of their revenues because they get into a great deal of financial trouble. A company may lose part of its customer base quickly because of economic forces, or it may be part of a financial catastrophe. As a result, the company’s revenue declines, and it begins to post large losses. In cases like these, companies often are forced to sell divisions to fund their survival. Alternatively, companies may close some of their operations that drain capital. General Motors and Citigroup are good examples of this category. Each moved from relative prosperity to difficulty in a very short period.

The other reason large companies shrink quickly is by design. The management of a corporation created by merger or acquisition activity may find that some of its pieces no longer fit together. One division may grow at a much higher or slower rate compared to others. Also, the way the stock market values one part of a large corporation may change because it is in a category Wall Street no longer favors. That, in turn, becomes a burden on the stock price of the entire enterprise. Telecom hardware company Motorola Solutions and media giant Time Warner fall into this category. Each is smaller than it was five years ago because it spun out a major business.

24/7 Wall St. used Capital IQ to screen the largest companies in America based on total revenue in 2006. We then screened for those that had the largest drops in total revenue between 2006 and 2010. Most of the eight companies on this list lost a third of their total revenue over the period, and some lost more than half. The list is ranked by total revenue loss from greatest to least.

This is 24/7 Wall St.’s list of America’s Shrinking Corporate Giants

IKEA posts a profit and grows in most regions of the world. (Reuters)

Greece and private creditors move closer to a debt deal. (Reuters)

Apple (NASDAQ: AAPL) says it will enter the digital textbook business. (Reuters)

IBM (NYSE: IBM) results show solid IT demand. (Reuters)

Angry Birds’ parent pushes back the date of its IPO. (Reuters)

The EC will decide whether to approve a Google buyout of Motorola Mobility (NYSE: MMI) by February 13. (Reuters)

Eastman Kodak’s (NYSE: EK) move into bankruptcy as a means to cut costs may not yield high value for its patents as well. (WSJ)

Credit Suisse (NYSE: CS) buys old AIG (NYSE: AIG) mortgage paper from the New York Federal Reserve. (WSJ)

AT&T’s (NYSE: T) new plan to raise data costs for subscribers may prompt some to switch to competitors. (WSJ)

HSBC’s (NYSE: HBC) Chinese PMI estimate shows slow manufacturing, with a 48.8 measurement compared to 48.7 in December. (WSJ)

Floods in Thailand do not dent Intel’s (NASDAQ: INTC) earnings much. (WSJ)

American homeowners finally begin to improve their property, according to IHS Global Insight. (WSJ)

China sets more deals with U.S. allies to strengthen its supply of oil. (WSJ)

The European Aviation Safety Agency says Airbus will do more safety inspections of its A380 superjumbo. (WSJ)

General Motors (NYSE: GM) says it is the largest car company in the world, but experts disagree on how to count affiliate sales. (WSJ)

The Energy Information Administration says exports of natural gas could drive U.S. prices up by 54% in 2018. (WSJ)

Google presses its effort in display ads, which could pressure Aol (NYSE: AOL) and Yahoo! (NASDAQ: YHOO). (WSJ)

General Electric (NYSE: GE) tries to improve its prospects, but its size and diversity may hurt that push. (WSJ)

Hedge fund investors pull more cash from the firms than they add in the last part of 2011. (WSJ)

Commerzbank, Banca Monte dei Paschi di Siena, and Spain’s Bankia must push to raise cash to meet regulations. (WSJ)

American Express (NYSE: AXP) and Capital One (NYSE: COF) earnings show consumers returning to the use of credit. (WSJ)

Dealogic says that companies have raised $44.2 billion this year — a record for the period. (WSJ)

Chris Dodd, the head of the Motion Picture Association of America, suggests that tech and content companies meet to explore their differences. (NYT)

Ireland says its economy will be troubled again this year as its tries to meet austerity goals. (NYT)

Italy’s banks borrow 50 billion euros from the European Central Bank. (FT)

International Monetary Fund’s Largarde warns that budget cuts linked to austerity could damage growth. (Bloomberg)

Douglas A. McIntyre

The World Bank sharply cuts global growth forecasts. (Reuters)

Greece and private creditors race to settle on a deal to avoid a financially dangerous default. (Reuters)

Fallout from the Chinese housing bubble may hit GDP. (Reuters)

More Americans use savings to help during what remains a harsh economic climate. (Reuters)

Olympus says the potential of an equity partner would be delayed until new management receives appointments. (Reuters)

Kraft Foods (NYSE: KFT) plans to cut 1,600 people when it breaks into two companies. (Reuters)

Asia-based companies may buy Research In Motion (NASDAQ: RIMM); Samsung states it has no interest. (Reuters)

Calpers plans to sell much of its real estate portfolio. (WSJ)

A Harvard Business School project finds that graduates voice concerns about the tax code and political gridlock. (WSJ)

More companies buy Apple (NASDAQ: AAPL) Macs than in past years. (WSJ)

Wells Fargo (NYSE: WFC) and Citigroup (NYSE: C) report loan growth as they announce earnings. (WSJ)

More Chinese citizens now live in cities rather than rural areas. (WSJ)

Spain plans to cut debt within it major states. (WSJ)

The National Science Board says more R&D jobs have moved to Asia. (WSJ)

The National Automobile Dealers Association says new fuel economy rules would damage sales. (WSJ)

An Abu Dhabi-based fund puts money into struggling UniCredit. (WSJ)

The FDIC proposes bank stress tests. (WSJ)

The United States Conference of Mayors says few cities have added jobs since the recession. (NYT)

Prime Minister Lucas Papademos says many investors in Greek sovereign paper will take large losses. (NYT)

Factory growth in the U.S. beats that among all G7 nations. (FT)

The World Bank says developing nations should prepare for a poor economic environment. (FT)

Bank of America (NYSE: BAC), Barclays (NYSE: BCS), Credit Suisse (NYSE: CS) and Goldman Sachs (NYSE: GS) will all bid for AIG (NYSE: AIG) debt portfolios held by the U.S. government. (FT)

Central banks increase the gold they lend for the first time in a decade. (FT)

Douglas A. McIntyre

The unofficial closing bells put the DJIA down nearly 49 points to 12,422.06 (-0.39%), the NASDAQ fell more than 14 points (-0.51%) to 2,710.67, and the S&P 500 fell -0.49% or more than 6 points to 1,289.10.

There were several analyst upgrades and downgrades today, including VMWare Inc. (NYSE: VMW) cut to ‘sell’ with a target price of $80 at Citigroup; American International Group Inc. (NYSE: AIG) started as ‘hold’ at Stifel Nicolaus; The Charles Schwab Corp. (NYSE: SCHW) cut to ‘market perform’ at Wells Fargo; Chesapeake Energy Corp. (NYSE: CHK) reiterated as ‘sell’ with lower estimates at Argus; and Citrix Systems Inc. (NASDAQ: CTXS) raised to ‘buy’ from ‘neutral’ at Citigroup.

Earnings reports since markets closed yesterday have led to some price changes as of the last half hour of trading today: JPMorgan Chase & Co. is down -2.63% at $35.88; SAP AG (NYSE: SAP) is up 2.42% at $54.54; and JDA Software Group Inc. (NASDAQ: JDAS) is down nearly -14% at $28.21.

Other standouts from today include the following stocks:

Georgia Gulf Corp. (NYSE: GGC) is up more than 34% at $32.85. The chemical and home products maker has received a buyout offer of about $1.03 billion ($30/share) from Westlake Chemical Corp. (NYSE: WLK).

Metabolix Inc. (NASDAQ: MBLX) is down about -58% at $2.52, after posting a new 52-week low of $2.51 earlier. The bioscience and chemicals company is suffering from the cancellation of a joint venture with Archer Daniels Midland Co. (NYSE: ADM), which the larger company unexpectedly announced this morning.

Patriot Coal Corp. (NYSE: PCX) is down nearly -13% at $7.87. The coal miner lowered its production forecast and closed several operations. We have more coverage here.

Diamond Foods Inc. (NASDAQ: DMND) is down more than -10% at $29.71. The snack food maker is now the subject of a criminal inquiry related to payments it made to farmers.

Canadian Solar Inc. (NASDAQ: CSIQ) is down more than -9% at $3.19. The China-based solar panel maker is among the group of Chinese makers who are cooling off, probably due to profit taking, after several days of sharp share price increases.

US markets are closed on Monday in observance of the birthday of Martin Luther King, Jr. We have the following events for Tuesday:

• 8:30 a.m. – Empire State manufacturing survey
• 11:30 a.m. – 3- and 6-month Treasury bill auctions

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Have a great long weekend.

Paul Ausick

American International Group, Inc. (NYSE: AIG) Started as Hold at Stifel Nicolaus.
BankUnited, Inc. (NYSE: BKU) Started as Outperform at Wells Fargo.
The Charles Schwab Corporation (NYSE: SCHW) Cut to Market Perform at Wells Fargo.
Chesapeake Energy Corporation (NYSE: CHK) Reiterated Sell and lowered estimates at Argus.
Citrix Systems, Inc. (NASDAQ: CTXS) Raised to Buy from Neutral at Citigroup.
Dr. Pepper Snapple Group, Inc. (NYSE: DPS) Cut to Market Perform at Wells Fargo.
Guess? Inc. (NYSE: GES) Cut to Neutral as Bear of the Day at Zacks.
Humana, Inc. (NYSE: HUM) Raised to Outperform as Bull of the Day at Zacks.
RealNetworks Inc. (NASDAQ: RNWK) maintained Speculative Buy with $15 price target at Canaccord Genuity.
Regions Financial Corporation (NYSE: RF) Started as Market Perform at Wells Fargo.
Titan International, Inc. (NYSE: TWI) named as value stock of the day at Zacks.
VMware Inc. (NYSE: VMW) Cut to Sell with an $80 price target at Citigroup.
Yandex N.V. (NASDAQ: YNDX) Started as Underweight at HSBC.

If you enjoyed the top analyst calls, you can sign up in the box below to join our morning email list to receive news directly in your inbox each morning. We include major analyst upgrades and downgrades, IPO and M&A news, special situation developments, observations on Warren Buffett and key market gurus, as well as special exclusive feature stories.

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JON C. OGG

Read the ten most hated companies in America

Research about companies comes in two sets. One is public research about consumer satisfaction, customer care, pricing of products and services, and brand impressions. Wall St. research takes into account another set of factors, which include present earnings, profit forecasts, product development and quality, and brand valuations.

Some of the companies on this list are widely despised because of the businesses that they are in. In an economic environment where resources are stretched, an airline or retail operation that has millions of customers is likely to make a lot of enemies. Similarly, banks and other corporations with a large number of retail outlets are at a disadvantage compared with businesses with few customers. Some of the corporations on this list also have had to fire significant numbers of employees due to the recession. Downsizing causes poor morale, increases the workload of the remaining staff and affects customer satisfaction when service is poorer.

We examined each company based on several criteria. We considered total return to shareholders in comparison to the broader market and other companies in the same sector during the last year. We reviewed financial analyst opinions on those companies that are public. We analyzed data from a broad array of sources, including Consumer Reports, JD Power, the MSN/Zogby Poll, ForeSee and the University of Michigan American Customer Satisfaction Index. We also considered negative press based on 24/7 Wall St.’s analysis of media coverage and the Flame Index, which uses a proprietary algorithm to review more than 12,000 websites and ranks companies based on the frequency of negative words. Finally, we considered the views of taxpayers, Congress and the White House — where applicable.

Several companies that should have been on the list based on performance and public perception during the financial crisis did not make it. For example, it would be easy to argue that mortgage giants Fannie Mae and Freddie Mac should be here. The bankruptcy and maintenance of the two by the federal government will cost taxpayers between $224 billion and $360 billion, according to the Federal Housing Finance Agency (FHFA). But, Fannie Mae and Freddie Mac are no longer stand-alone companies in any normal sense. Their shares have been delisted. Each is in effect a ward of the U.S. government with no ability to control its own fate through the actions of management or public shareholders.

The U.S. Postal Service could also be a candidate for the list. It has cost taxpayers billions of dollars, and it lost $5.1 billion in its last fiscal year alone. However, the Postmaster General and his staff have little or no control over the eventual fate of the USPS. Congress decides how and to what extent it will be funded. That means Congress essentially controls how many workers and offices will exist, and even, based on funding, how often the mail will be delivered.

It is worth noting that some of the companies on the list may have done very poorly by some measures, and well by others. A few of the most hated companies have had good stock performances. Others may have satisfied customers. All of this was taken into account when the decisions for the final list were made.

The following are 24/7 Wall St.’s 10 Most Hated Companies for 2011, in no particular order.

President Obama to ask for a $1.2 trillion increase in the national debt ceiling. (Reuters)

China’s foreign currency reserves drop to $3.18 trillion, a sign that exports have slowed enough to change monetary policy. (Reuters)

Novartis (NYSE: NVS) will cut 2,000 jobs in the U.S. (Reuters)

Apple (NASDAQ: AAPL) stops iPhone sales in China when crowds become unruly. (Reuters)

Several buyers, including Delta (NYSE: DAL) and US Air (NYSE: LCC), may approach American Airlines parent AMR about a buyout. (Reuters)

Yields fall at Italy and Spain debt sales. (Reuters)

Research In Motion (NASDAQ: RIMM) may have retained Goldman Sachs (NYSE: GS) to look at strategic alternatives. (Reuters)

The Fed may force Bank of America (NYSE: BAC) to leave a number of businesses and some areas of the country. (WSJ)

Goldman Sachs approaches federal officials about buying the troubled bond portfolio of AIG (NYSE: AIG). (WSJ)

A strategic review of PepsiCo (NYSE: PEP) by its board likely will not prompt the firing of its CEO, Indra Nooyi. (WSJ)

China sets new rules to make it easier for foreign investors to put capital into the country. (WSJ)

A Wynn Resorts (NASDAQ: WYNN) shareholder files suit about a possible donation the company made to a university in Macau. (WSJ)

Low retail sales raise concerns about the pace of the recovery. (WSJ)

An agency of the U.S. government pressures AMR to keep its pension plans intact. (WSJ)

Eurozone factory output drops in November, based on year-over-year numbers. (WSJ)

The government probes potentially illegal financial activities at Diamond Foods (NASDAQ: DMND). (WSJ)

Several lenders to Sears Holdings’ (NASDAQ: SHLD) suppliers want faster payments to those suppliers. (WSJ)

BMW and Mercedes increase production in the U.S. (WSJ)

Peugeot would like to form a broad alliance with another car company. (WSJ)

International bond investors largely believe a deal on Greek debt will be done, but not on the terms Greece expects. (WSJ)

China may invest some of its foreign reserves in stocks to get better returns. (WSJ)

Corn prices fall on new, higher estimates of U.S. production. (WSJ)

Members of the 2006 Fed did not anticipate the housing collapse. (NYT)

CVS Caremark (NYSE: CVS) pays $5 million for charging too much for some drugs. (NYT)

Target (NYSE: TGT) will set up small Apple stores inside its retail locations. (NYT)

The creditworthiness of U.S. companies fell over the past 30 years, according to S&P. (FT)

Google (NASDAQ: GOOG) and LG discuss a new TV project. (Bloomberg)

Eastman Kodak (NYSE: EK) approaches Citigroup (NYSE: C) for capital it might use as part of a bankruptcy. (Bloomberg)

Douglas A. McIntyre

The difference between the U.S. and every country in Europe — and the EU as a whole — is that America has a much broader array of resources. These include natural resources, intellectual property created by research and development, an activist central bank and a single political system in which national officials are elected by a single set of voters. America is also at the end of a financial and economic crisis similar to the one the EU has only just now begun to enter.

This is 24/7 Wall St.’s analysis of why America’s financial future is nothing like Europe’s.

1. Natural Resources

Many EU nations have few natural resources at all. This makes them net importers of expensive commodities, which include oil and agricultural products. These resources are not just expensive, they are also subject to sharp price increases, as commodity inflation earlier this year showed. Oil, as an example, rose from $70 a barrel to $100 in little more than a quarter.

The U.S. ranks seventh in the world in proven oil reserves, with 98 billion barrels. The EU ranks 24th with 5.1 billion — and the top country in continental Europe, based on national reserves, is Italy with 476 million barrels. The situation is similar in the case of major grains. America is the world’s largest exporter of wheat and corn. EU nations are among the largest importers of both. The U.S. has a much greater ability to weather periods of tight commodity supplies or rapidly rising prices than countries within the EU.

2. Intellectual Property

One of the largest drivers of American business revenue is the huge amount of money spent on research and development. Nations within the EU, with the exception of Germany, do not have corporations similar to Microsoft (NASDAQ: MSFT), IBM (NYSE: IBM), Google (NASDAQ: GOOG), Amazon.com (NASDAQ: AMZN), Facebook or Apple (NASDAQ: AAPL). Nor do they have companies based on the creation of content like the American film and TV studios. These companies produce huge profits for the American corporate tax base, create hundreds of thousands of jobs themselves and through their partners, and build a pool of cash that numbers in the hundreds of billions of dollars. Apple by itself has nearly $40 billion in revenue from outside the U.S. IBM and Microsoft get about half of their revenue from overseas.

The reasons for the superiority of America’s R&D are easy to document. Of the nearly 245,000 patents granted by the U.S. Patent and Trademark Office last year, almost 122,000 went to U.S. companies and U.S. citizens. Patent grants to German companies and people numbered less than 14,000. Grants to companies and people in Italy were less than 2,300. American companies are much more progressive in R&D expenditures. R&D to GDP in the U.S. was 2.7% last year. The average among EU nations was 1.73%. Among the financially weak EU nations, the ratio was under 1.5%. A lack of research and development expenditures keeps businesses from developing critical technology and valuable intellectual property assets.

3. Bank System

The U.S. bank system has already been bailed out by the Troubled Asset Relief Program (TARP) and use of the Federal Reserve short-term emergency borrowing window. Most of this activity came after the credit crisis in 2008 and was completed by 2010. The total TARP investment in banks and car companies was $411 billion in taxpayers’ money. The investment saved most, if not all, of America’s largest banks and two of its car companies. TARP helped overcome the destruction of financial firm balance sheets resulting from the fallen value of real estate-based assets.

What is very likely to be a massively costly bailout of EU banks has not yet begun. The cost of these bailouts will have to be borne largely by governments within the region, some of which are already deeply financially troubled due to sovereign debt loads and deficits. This national aid will be supplemented by the European Central Bank. The trigger of a new EU bank crisis almost certainly will be the write-offs of tens of billions of dollars in sovereign debt. The region’s banks face losses on Greek debt alone of as much as 100 billion euro, and considerably more on Italian and Spanish sovereign paper.

4. Gross Domestic Product

U.S. GDP is in the midst of an expansion that most economists put at about 2.5% for the current quarter. Some experts expect that to rise to 3% next year. This means the U.S. corporate and individual tax base has already begun to rise after a recession that lasted nearly three years. GDP growth means that America has the opportunity to cut some of its forecast deficits. Many countries in the eurozone are either in recession or are forecast to be next year.

Much of Europe’s GDP has already begun to contract, and some of the nations in the region never exited the downturn of 2007 to 2009. Spain has forecast it will have a recession that will last at least for the final quarter of this year and the first quarter of next. It expects a contraction of 0.2% followed by one of 0.3%. Italy entered a new recession in the third quarter of this year. It is the fifth recession the nation has experienced since 2001. The most significant concern about the downturns in Europe’s economies is that they will be exacerbated by austerity budgets, which will rob nations of the financial ability to stimulate industry and consumer spending.

5. Unemployment

U.S. unemployment has begun to drop and has fallen from more than 10% two years ago to 8.6% last month. The economy is currently creating about 150,000 jobs a month, with nearly all of them from the private sector. This gives the federal government the opportunity to increase its tax base, as well as a chance to cut the cost of long-term unemployment insurance. Recent weekly jobless claims show that the American unemployment problem has begun to improve at an accelerated rate.

The unemployment situation in Europe was, in some countries, much worse than the one in the U.S., even at the peak of the recession. In others, unemployment figures are worsening quickly. The jobless rate in Spain rose half a percentage point to 21.5% in the third quarter. Among people under 25 years old, the unemployment figure is closer to 40%. Unemployment in France reached a 12-year high in November. The jobless rate in Greece is over 18%, and if tourists avoid the country, the number will rise above 20% quickly. Those without jobs are a net drag on governments, with an increase in demand for unemployment support and a loss in terms of tax base. None of the most financially troubled countries in the region has money for job creation packages.

6. Yield Paid on Sovereign Debt

The U.S. Treasury has to pay only 2% on 10-year notes. This figure is 5% to 7% in the most troubled eurozone nations. American borrowing costs have been well below forecasts as the U.S. deficit has risen. Even if U.S. deficits reach the extraordinary levels expected over the next decade, the costs to fund the national debt is, and will be for the foreseeable future, relatively low.

The yield on 10-year notes issued by Italy is currently near 7%. The number is more than 5.3% for Spain and 13% for Portugal. The EU GDP weighted average is 4.8%, even when the AAA-rated nations of France and Germany are included. EU nations not only have historically unprecedented budget deficits in terms of ratio to GDP and absolute size, their costs of borrowing are also unprecedented. Even if a nation like Italy could afford, under normal circumstances, to borrow what it needs to finance its deficits, the current cost of its sovereign paper cannot be sustained without the country virtually running out of money.

7. Differences in Political Institutions

The U.S. political system, while chaotic at times, is far less fractured than among EU countries. This means that there is a better likelihood of getting meaningful fiscal support for programs that will lower the American deficit. The U.S. Congress and president are chosen by one electorate. That means there is a chance for significant political change, particularly in the years of a national election like the one in 2012.

The drawbacks of the EU system in which the federal governments in each nation are elected independently has been particularly obvious recently. The UK recently vetoed an EU plan to created new treaty provisions to attack the union’s financial trouble. The Finns party in Finland has nearly kept that country from participating in financial aid packages for the region’s weak nations. The government in Finland only recently survived a “no confidence” vote, which was brought primarily because of the aid question. The political complications of a multinational financial structure are not only felt on election day. Powerful forces in Germany are against that government’s leadership of EU bailout programs. Among nations that have received aid, like Greece, there is violent political pressure to reject the austerity that comes with it. A decision by Greece’s parliament to default on its bonds, or a Germany decision to cut funds for bailouts, would throw the 27-nation region into a financial panic.

8. Different Postures of Central Banks

The Federal Reserve has proved time and again that it is prepared to aggressively support not only the American financial system, but the broader economy as well. The Fed opened an emergency lending facility for banks, which was in place from late 2007 until well into 2008. The Fed also provided the credit facility for JPMorgan (NYSE: JPM) to buy Bear Stearns when the investment house collapsed, and supported AIG (NYSE: AIG), the world’s largest insurer, when it became insolvent in 2008. The Fed has continued to support the national economy through two rounds of quantitative easing. And the American central bank has indicated that it is open to another round of purchasing U.S. Treasuries or perhaps mortgage paper — QE 3.

The European Central Bank may be more of a problem than a solution to the EU financial situation. Its head, Mario Draghi, has repeatedly said that it will not buy bonds of troubled member nations. Draghi insists that such an action would be a break with the institution’s mandate. That leaves the ECB as a lender and supporter of banks, but not the sovereign debt that is the single largest and perhaps only real threat to their balance sheets. Deposits in banks in the most economically unstable nations have already begun to be pulled away in record numbers and placed in “safer” nations like the U.S. This has compromised the ability of those banks to make loans and create economic opportunity. It is ultimately impossible to salvage the banks based in EU nations if the nations themselves collapse financially.

Douglas A. McIntyre