TEXT OF STORY
Kai Ryssdal: The broadcast today begins with a tale of two banks. One here, down in Georgia that we'll get to in just a minute. The other one in Spain, a small-ish savings bank called CajaSur. It was bailed out this weekend by the Spanish government to the tune of three-quarters of a billion dollars. The International Monetary Fund says all the same that Spain's doing OK for now but it does still needs some big reforms pronto. The head of the European Commission told Germany its proposals to resolve the debt crisis there are naive.
So with that as backdrop, we asked Marketplace's Alisa Roth for an update on how we're doing.
ALISA ROTH: There's good news and there's bad news. Here's the bad news, first: The European debt crisis is making banks nervous, so they're charging each other more to borrow money. That's a problem, because banks pass on those costs to businesses who borrow from them.
Beth Ann Bovino is a senior economist at Standard and Poors. She says that can have all kinds of effects.
BETH ANN BOVINO: That's going to be weight on their plans to expand, basically their interest in maybe increasing hires and that will ultimately be a weight on employment for people looking for jobs as well.
Now here's the good news: Europe's problems are making investors nervous, too. They're rushing to buy our Treasury bonds. That's making Treasuries cheaper.
Bovino points out that's important because a lot of mortgage rates are based on Treasuries.
BOVINO: So that in a sense has given U.S. rates a little bit of a break. Mortgage rates are down pretty significantly, that does certainly help the housing sector stabilize further.
That's great for people who are closing on houses now and for homeowners who want to refinance. Still it probably won't have a big effect on the housing market.
Tom Higgins is chief economist at Payton and Rygel. It's an asset management firm in Los Angeles.
TOM HIGGINS: So it's significant, but it's not a dramatic impact. Mortgage rates were already low before this crisis, and I think they're going to remain low for the foreseeable future.
But Beth Ann Bovino, from Standard and Poors, says the bad news could still win out. If the sovereign debt crisis in Europe gets worse it wouldn't take long before it crossed the ocean.
In New York, I'm Alisa Roth for Marketplace.