Rebels circle Damascus airport; Russia, U.S. downbeat

BEIRUT (Reuters) - Rebels fighting to topple Syrian President Bashar al-Assad declared Damascus International Airport a battle zone on Friday, while Moscow and Washington both sounded downbeat about the prospects of a diplomatic push to end the conflict. Fighting around the capital city has intensified over the past week, and Western officials have begun speaking about faster change on the ground in a 20-month-old conflict that has killed 40,000 people. But Russia and the United States, the superpowers that have backed the opposing sides in the conflict, both played down the chance of a diplomatic breakthrough after talks aimed at resolving their differences. "I don't think anyone believes that there was some great breakthrough," U.S. Secretary of State Hillary Clinton said of a meeting with Russia's Foreign Minister Sergei Lavrov and international mediator Lakhdar Brahimi. "No one should have any illusions about how hard this remains. But all of us, with any influence, need to be engaged with Brahimi for a concerted, sincere push." Lavrov said the sides had agreed to send officials to another meeting with Brahimi, but also sounded a skeptical note. "I would not make optimistic predictions ... It remains to be seen what will come out of this," he added, noting that Brahimi knows the chance of success is "far from 100 percent". Rebels, meeting in Turkey in the presence of Western security officials, elected a 30-member unified military command, giving prominent posts to Islamists and excluding some senior officers who defected from Assad's army. Washington and its NATO allies want to see Assad removed from power. Moscow has blocked action against him at the U.N. Security Council, and while outsiders repeatedly point to signs of Russia losing patience with him, its stance has not changed. The past week has brought a war previously fought mainly in the provinces and other cities to the threshold of the capital. Cutting access to the airport 20 km (12 miles) from the city center would be a symbolic blow. The rebels acknowledge the airport itself is still in army hands, but say they are blockading it from most sides. "The rebel brigades who have been putting the airport under siege decided yesterday that the airport is a military zone," said Nabil al-Amir, a spokesman for the rebels' Damascus Military Council. "Civilians who approach it now do so at their own risk," he said. Fighters had "waited two weeks for the airport to be emptied of most civilians and airlines" before declaring it a target, he added. He did not say what they would do if aircraft tried to land. Foreign airlines have suspended all flights to Damascus since fighting has approached the airport in the past week, although some Syrian Air flights have used the airport in recent days. Syria says the army is driving rebels back from positions in the suburbs and outskirts of Damascus where they have tried to concentrate their offensive. Accounts from rebels and the government are impossible to verify on the ground. "SOME FIGHT LEFT IN THEM" Although Western opponents of Assad believe events are tipping against him, they also acknowledge that the war is still far from over. "It's very clear to me that the regime's forces are being ground down," U.S. ambassador to Syria Robert Ford, withdrawn last year, was quoted as saying by CNN. "That said, the regime's protection units continue to maintain some cohesion, and they still have some fight left in them, even though they are losing. I expect there will be substantial fighting in the days ahead." Rami Abdelrahman, of the Syrian Observatory for Human Rights, which has tracked the fighting since it began in March 2011, said: "I think it's unrealistic to expect that the battle is in its last stages right now." The meeting of rebels in Antalya, Turkey, was aimed at forming a structure to run the conflict in conjunction with a new opposition National Coalition, which some European and Arab states have recognized as Syria's legitimate representatives. One delegate at the meeting, who asked not to be identified, said two-thirds of the 30 members of the newly named command had ties with the Muslim Brotherhood or were its political allies. "We are witnessing the result of the Qatari and Turkish creations," said the delegate, referring to leading anti-Assad countries that are seen as backing the Brotherhood. Colonel Riad Asaad, founder of the Syrian Free Army rebel force, and General Hussein Haj Ali, the highest-ranking officer to defect from Assad's military, were among those excluded. NATO decided this week to send U.S., German and Dutch batteries of air-defense missiles to the Turkish border, putting hundreds of American and European NATO troops close to the frontier with Syria for the first time in the crisis. Russia's ambassador to NATO said the move risked dragging the alliance into the conflict. "This is not a threat to us, but this is an indication that NATO is moving toward engagement, and that's it," Alexander Grushko said. "We see a threat of further involvement of NATO in the Syrian situation as a result of some provocation or some incidents on the border, if they take place. The Dutch on Friday said they would send two Patriot batteries with up to 360 personnel. Germany approved its mission on Thursday. The United States and its NATO allies have issued coordinated warnings in recent days to Assad not to use chemical weapons, prompting Syria to accuse Western countries of conjuring the threat to justify a military intervention. Syria has not signed an international chemical weapons treaty banning poison gas, but has repeatedly said that it would never use such weapons on its own people. United Nations Secretary General Ban Ki-moon said: "We have no confirmed reports on this matter. However, if it is the case, then it will be an outrageous crime in the name of humanity."

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Berlusconi party says it will not push Italy into chaos

ROME (Reuters) - Silvio Berlusconi's center-right People of Freedom party pledged on Friday not to trigger a disorderly crisis that could alarm financial markets as Italy began to look forward to an election in the first few months of next year. People of Freedom, or PDL, Secretary Angelino Alfano told parliament that the party's withdrawal of support from Prime Minister Mario Monti in two confidence votes on Thursday had shown its disapproval without bringing down the government. "Yesterday we did not give a vote of no confidence because we consider the experience of the Monti government has come to an end, but we don't want to send the institutions and the country into chaos," Alfano said. The PDL is expected to allow budget measures in the so-called Stability Law to pass when it comes before parliament for final approval some time before Christmas, ensuring that deficit reduction goals are maintained and the budget is approved. Italian President Giorgio Napolitano is due to meet Monti on Saturday afternoon to discuss the implications of the PDL's decision after he spoke to the party's leaders on Friday. Napolitano, who is responsible for calling an election that must take place no later than April, said in a statement he believed a "constructive and correct path" could be found in the interests of the country and its international image. Pier Luigi Bersani, head of the center-left Democratic Party, which is leading in opinion polls, repeated that his party would continue to support Monti. Following several weeks of relative calm, which saw market confidence improve and Rome's borrowing costs come down steadily, investors have again been ruffled by Italy's political troubles, although reaction has not been extreme. The spread or difference between yields on Italian 10-year bonds and German counterparts that are considered less risky widened from just over 300 basis points to 323 basis points on Friday although it is still well off a peak of 553 points at the height of the crisis last year. But the standoff has refocused market attention on Italy's post-Monti government and how it will deal with reforming the recession-hit economy, a fact underlined by ratings agency Standard & Poor's late on Friday. The agency highlighted concerns over the election and said there was "uncertainty around whether the next government coalition would remain committed to the structural reform agenda" pursued by Monti. After changing his mind repeatedly in recent weeks, Berlusconi indicated on Wednesday that he was likely to seek a fifth term as prime minister and lead his divided party in the election now expected to be held by early March. NO CHANGE ON ELECTORAL LAW Berlusconi is expected to focus on attacking Monti's austerity policies after he accused the former European commissioner of dragging Italy "to the brink of a precipice." The decision to break with Monti's technocrat government, which the PDL has backed in parliament since it was appointed last year, was widely interpreted as an attempt by Berlusconi to hold the party together in the face of falling approval ratings. It also effectively ends hopes of a change to the current much-criticized electoral law and means next year's vote is likely to be held under a system that analysts say could allow the PDL to retain significant strength in the upper house. For that to happen, it would still have to patch up an alliance with its former coalition partners in the regionalist Northern League party, which has been struggling to overcome a damaging corruption scandal under new leader Roberto Maroni. Two opinion polls published on Friday showed that the Democratic Party had increased its lead over political rivals, while Monti's approval ratings had dropped.

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U.S. trade-human rights link tests Obama-Russia ties

MOSCOW (Reuters) - The Senate's passage of legislation to punish Russians who violate human rights is the first big test of Vladimir Putin and Barack Obama's resolve to improve relations since each won elections. Obama, who launched a "reset" in relations with Russia less than four years ago, is likely to sign the law even though Moscow sees it as "aggressively unfriendly". Damage to U.S.-Russian relations is all but inevitable. But there are signs that Putin, who won the presidency despite the biggest protests of his 13-year rule, may want to put the bad blood of a campaign in which he whipped up anti-American sentiment behind him. "I do not think that this will lead to a serious crisis in Russian-American relations," said Dmitry Trenin, director of the Carnegie Moscow Centre think tank. "(Putin) does not intend to make relations worse, and for this reason the effects of this legislation will be limited," Trenin said. The Senate approved the "Magnitsky Act" as part of a broader bill to lift a Cold War-era restriction and grant Russia "permanent normal trade relations" (PNTR), a move that in other circumstances would have been celebrated in both capitals. A month after Obama's re-election, it could have been the cap on a period during which he signed a landmark nuclear arms deal with Moscow and helped usher Russia into the World Trade Organization (WTO) after an 18-year membership bid. Instead, Moscow is furious over the human rights portion of the bill, an unmistakable message to Putin of displeasure with the treatment of Russians who dare challenge the authorities. The main targets are those allegedly involved in the abuse and death of Sergei Magnitsky, a lawyer who died in jail in 2009 - the victim, colleagues say, of retribution from the same investigators he claimed stole $230 million from the state. In a Foreign Ministry statement full of righteous anger, Russia called the Senate vote a "performance in the theatre of the absurd" and said the bill would badly cloud the prospects for cooperation between Moscow and Washington. How big the impact is largely up to Putin. The law injects a dose of poison into a relationship strained by the crisis in Syria and U.S. concerns about the direction Putin has taken since he revealed last year that he would return to the Kremlin after a stint as prime minister. "It will have a negative impact on the atmosphere, that's for sure," said Samuel Charap, senior fellow for Russia and Eurasia at the International Institute for Strategic Studies in Washington. The bill directs Obama to publish the names of Russians allegedly involved in the abuse and death of Magnitsky, who was jailed in 2008 on tax evasion and fraud charges colleagues say were fabricated by investigators against whom he had given evidence. Magnitsky, 37, said he was deliberately deprived of the treatment he needed as his health deteriorated painfully in jail, and the Kremlin's own human rights council has said he was probably beaten to death. The bill would also require the United States to deny visas and freeze the assets of any of those individuals, as well as other human rights violators in Russia not linked to Magnitsky, on a continuing basis. It is, at least in Russian eyes, almost a textbook example of what Putin dislikes most about the United States: its perceived use of human rights concerns as a geopolitical instrument and the resort to sanctions for punishment. In a decree signed hours after his inauguration to a six-year third term in May, Putin said he wants "truly strategic" ties with the United States but they must be based on equality, non-interference and respect for one another's interests. MUTUAL DOUBTS Trenin said the law would reinforce Putin's wariness about U.S. intentions. But he said Putin may want to focus on his long-stated goal of improving economic ties with the United States, which have not lived up to potential and which Putin and Obama pledged to focus on when they met at a G20 summit in Mexico in June. Russia has sought to reassure Americans that Moscow's response to the bill would not affect business dealings. The Magnitsky Act is the flipside of the bill to grant Russia PNTR status, which both sides hope, along with Russia's WTO membership, will bolster bilateral trade, which amounted to a paltry $43 billion last year. "There's a lot that can be done on that, and that is stuff he understands and cares about," Charap said of Putin. Russia has threatened to retaliate if Obama signs the bill into law. Foreign Minister Sergei Lavrov told U.S. Secretary of State Hillary Clinton on Thursday that Russia would bar entry for Americans "guilty of crude human rights abuses". The plan to respond in kind, telegraphed in repeated criticism of the bill, has spawned satire on the Internet. One mock news report showed a pretend U.S. lawmaker lamenting an end to summer vacations in Russia's industrial heartland. Russia has also warned it would respond with "asymmetrical" measures, seeming to hint the bill could have a spillover effect into broader areas in which the United States wants Russian cooperation most, such as nuclear arms control and Iran. But analysts said that is unlikely. They said the law would probably not derail Russian assistance on Afghanistan, affect diplomacy aimed to curb Iran's nuclear program or deepen disputes over U.S. missile defense and the conflict in Syria. "It will have a mostly symbolic effect," said Yevgeny Volk, a Russian political analyst.

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Feted in Gaza, Hamas leader to attend "victory rally"

GAZA (Reuters) - After receiving a hero's welcome on his return from decades in exile, Hamas leader Khaled Meshaal will attend a rally in Gaza on Saturday to mark the founding of his Islamist group and celebrate "victory" over Israel. At least 200,000 Palestinians are expected to attend the outdoor event, which is likely to be used by Meshaal to promote Hamas's growing stature in the Arab world and push the case for reconciliation with its secular political rival, Fatah. Meshaal, 56, is on his first visit to the Gaza Strip and was moved to tears on Friday by the ecstatic reception he received from flag-waving crowds as he toured the tiny territory, which is home to 1.7 million Palestinians. His trip comes just two weeks after Hamas fought an eight-day conflict with Israel that killed some 170 Palestinians and six Israelis and ended with an Egyptian-brokered ceasefire. Hamas claims it won the conflagration. Israel disputes this, saying it not only killed the Islamist group's military commander but also caused significant damage to its arsenal of rockets. The Israeli media largely ignored his visit to Gaza. There is no denying the fighting boosted Hamas's standing in the region, winning it the support of Arab neighbors, many of whom used to treat the group as a pariah before the Arab Spring uprisings ushered in several sympathetic Islamist governments. "Israel must now be fuming as it watches this Gaza victory," said Abu Waleed, 52, as he stood in a crowd on Friday, waiting to catch a glimpse of Meshaal, who survived a 1997 assassination attempt by Israeli Mossad agents in Jordan. The rally on Saturday commemorates the 25th anniversary of the founding of Hamas and the start of the first Palestinian uprising, or intifada, against Israel in December 1987. UNITY PLEDGE The recent war will feature prominently, with a huge model M75 missile erected on the open-air stage to recall the rockets that were fired last month towards Tel Aviv and Jerusalem. Local Fatah leaders are also due to attend - the first time Palestinian President Mahmoud Abbas's faction has taken part in such an event since at least 2007, when it fought a brief civil war with Hamas in Gaza that was won by the Islamist group. "Meshaal's speech will outline the priorities of the Hamas movement in the coming future, and especially the implementation of reconciliation (with Fatah)," Hamas spokesman Sami Abu Zuhri told Reuters. Clearly aware of the yearning amongst ordinary Palestinians for an end to the divisions that have weakened their cause on the world stage, Meshaal repeatedly returned to the subject during his many stops around Gaza on Friday. "With God's will ... reconciliation will be achieved. National unity is at hand," Meshaal shouted through a microphone at the ruins of one house destroyed last month by an Israeli air raid that killed 12 civilians, including four children. But reconciliation is easier said than done. While Hamas promotes armed resistance against the Jewish state, Fatah says it wants a negotiated deal with Israel. Equally problematic, both are embedded in their power bases, with their own security forces that they do not want to give up. Hamas's founding charter calls for the destruction of Israel but its leaders have at times indicated a willingness to negotiate a prolonged truce in return for a withdrawal to the lines established ahead of the 1967 war, when Israel seized East Jerusalem, Gaza and the West Bank. Nonetheless, it says it will not recognize the Jewish state officially, and is viewed as a terrorist group by Israel, the United States and most Western governments. Meshaal ran Hamas from exile in Syria from 2004 until January this year when he quit Damascus because of Iranian-backed President Bashar al-Assad's war against Sunni Muslim rebels, whose religion and politics are closer to those of the Palestinians. He now divides his time between Qatar and Cairo. His abrupt departure from Syria initially weakened his position within Hamas: ties with Damascus and Tehran had made him important, but with those links damaged or broken, rivals based within Gaza had started to assert their authority. Despite regaining the initiative during the Israeli conflict, working closely with Egypt to secure the truce, he says he plans to step down as leader shortly. Hamas has been staging a secretive leadership election for the last six months and some insiders said the huge welcome Meshaal has received on Gaza's pot-holed streets will put pressure on him to stay on as the group's overall chief.

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Smokers celebrate as Wash. legalizes marijuana

SEATTLE (AP) — The crowds of happy people lighting joints under Seattle's Space Needle early Thursday morning with nary a police officer in sight bespoke the new reality: Marijuana is legal under Washington state law. Hundreds gathered at Seattle Center for a New Year's Eve-style countdown to 12 a.m., when the legalization measure passed by voters last month took effect. When the clock struck, they cheered and sparked up in unison. A few dozen people gathered on a sidewalk outside the north Seattle headquarters of the annual Hempfest celebration and did the same, offering joints to reporters and blowing smoke into television news cameras. "I feel like a kid in a candy store!" shouted Hempfest volunteer Darby Hageman. "It's all becoming real now!" Washington and Colorado became the first states to vote to decriminalize and regulate the possession of an ounce or less of marijuana by adults over 21. Both measures call for setting up state licensing schemes for pot growers, processors and retail stores. Colorado's law is set to take effect by Jan. 5. Technically, Washington's new marijuana law still forbids smoking pot in public, which remains punishable by a fine, like drinking in public. But pot fans wanted a party, and Seattle police weren't about to write them any tickets. In another sweeping change for Washington, Gov. Chris Gregoire on Wednesday signed into law a measure that legalizes same-sex marriage. The state joins several others that allow gay and lesbian couples to wed. The mood was festive in Seattle as dozens of gay and lesbian couples got in line to pick up marriage licenses at the King County auditor's office early Thursday. King County and Thurston County announced they would open their auditors' offices shortly after midnight Wednesday to accommodate those who wanted to be among the first to get their licenses. Kelly Middleton and her partner Amanda Dollente got in line at 4 p.m. Wednesday. Hours later, as the line grew, volunteers distributed roses and a group of men and women serenaded the waiting line to the tune of "Chapel of Love." Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday. In dealing with marijuana, the Seattle Police Department told its 1,300 officers on Wednesday, just before legalization took hold, that until further notice they shall not issue citations for public marijuana use. Officers will be advising people not to smoke in public, police spokesman Jonah Spangenthal-Lee wrote on the SPD Blotter. "The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a 'Lord of the Rings' marathon in the privacy of your own home, if you want to." He offered a catchy new directive referring to the film "The Big Lebowski," popular with many marijuana fans: "The Dude abides, and says 'take it inside!'" "This is a big day because all our lives we've been living under the iron curtain of prohibition," said Hempfest director Vivian McPeak. "The whole world sees that prohibition just took a body blow." Washington's new law decriminalizes possession of up to an ounce for those over 21, but for now selling marijuana remains illegal. I-502 gives the state a year to come up with a system of state-licensed growers, processors and retail stores, with the marijuana taxed 25 percent at each stage. Analysts have estimated that a legal pot market could bring Washington hundreds of millions of dollars a year in new tax revenue for schools, health care and basic government functions. But marijuana remains illegal under federal law. That means federal agents can still arrest people for it, and it's banned from federal properties, including military bases and national parks. The Justice Department has not said whether it will sue to try to block the regulatory schemes in Washington and Colorado from taking effect. "The department's responsibility to enforce the Controlled Substances Act remains unchanged," said a statement issued Wednesday by the Seattle U.S. attorney's office. "Neither states nor the executive branch can nullify a statute passed by Congress." The legal question is whether the establishment of a regulated marijuana market would "frustrate the purpose" of the federal pot prohibition, and many constitutional law scholars say it very likely would. That leaves the political question of whether the administration wants to try to block the regulatory system, even though it would remain legal to possess up to an ounce of marijuana. Alison Holcomb is the drug policy director of the American Civil Liberties Union of Washington and served as the campaign manager for New Approach Washington, which led the legalization drive. She said the voters clearly showed they're done with marijuana prohibition. "New Approach Washington sponsors and the ACLU look forward to working with state and federal officials and to ensure the law is fully and fairly implemented," she said.

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New exhibition explores our love and hate of money

NEW YORK (Reuters) - How does money make you feel? Fearful, stressed, happy? U.S. financial guru Suze Orman has teamed with the producer of the popular Body Worlds exhibits for a new traveling show to look at how we relate to and understand money. Orman, media star and author of best-selling books on personal finance, described the finance-themed exhibit as "an extension of my life's work as a financial educator, and an innovative way to teach people about money". The interactive, multi-media exhibit, "Economia: Money Matters," will begin a five-year, nationwide tour in the fall of next year, starting in Chicago. The admission-charging show will move on to other venues that include science and natural history museums. Gail Vida Hamburg, who designed and developed the exhibition, said she hit on the idea several years ago. "I found a study about worry, stress and depression and their links to money or rather the lack of money ... I realized that I could synthesize all of this information into a designed exhibition with multimedia and interactives (displays)," said Hamburg, who designed the Body Worlds traveling exhibition of preserved human corpses that has toured Europe, North America and Asia. The Money Matters exhibit spans 7,000 square feet with galleries on phases of life ranging from College Road to Third Phase, or retirement. It aims to meet national and state financial literacy goals for children and adults. Hamburg, who founded museum exhibit firm Rainworks Omnimedia in 2010, believes the show's appeal is universal because money is something that everyone has a relationship with throughout life. Orman has described the show as a walk through the life of money, and the effect it can have on you. "It will be entertaining," she said in a statement, "and when you're having fun learning, the lessons stay with you." Hamburg said she addressed finance's fear factor by engaging people with various exhibits and displays. "How do you make it easy for visitors to understand the power of compounding?" she asked, adding that it has traditionally been taught with graphs or charts or calculators. She decided to approach it differently using visitor prompts, and entry into a computer terminal and to show the results through the growth of actual physical objects. "We should all be so smart with money and channel our inner Suze Orman. But we're not and we don't. Unless you're an MBA or an economist or a freak, you don't want to read about SEP-IRA or social security or student loan interest rates." The goal of the exhibition "is to give visitors the tools and resources for financial self actualization," she added.

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US mortgage rates for past 52 weeks at a glance

Average U.S. mortgage rates were little changed this week, staying near their record lows. Here's a look at rates for fixed and adjustable mortgages over the past 52 weeks:

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US home sales rise 2.1 percent in October

WASHINGTON (AP) — U.S. sales of previously occupied homes rose solidly in October, helped by improvement in the job market and record-low mortgage rates. The increase along with a jump in homebuilder confidence this month suggests the housing market continues to recover. The National Association of Realtors said Monday that sales rose 2.1 percent to a seasonally adjusted annual rate of 4.79 million. That's up from 4.69 million in September, which was revised lower. The sales pace is roughly 11 percent higher than a year ago. But it remains below the more than 5.5 million that economists consider consistent with a healthy market. As the economy slowly recovers, more people have started looking to buy homes or rent apartments. Prices are steadily climbing, while mortgage rates have been low all year. At the same time, rents are rising, making the purchase of a single-family home or condominium more attractive. "Altogether, the report is encouraging," said Michael Gapen, an economist at Barclays Capital. "Our view is that housing is in a recovery phase," he added, though it will be restrained by limited credit and modest job gains. A separate report Monday showed confidence among homebuilders rose this month to its highest level in six and a half years. The increase was driven by strong demand for newly built homes and growing optimism about conditions next year. The National Association of Home Builders/Wells Fargo builder sentiment index increased to 46, up from 41 in October. Readings below 50 suggest negative sentiment about the housing market. The index last reached that level in April 2006. Still, the index has been trending higher since October 2011, when it stood at 17. The Realtors' group said Superstorm Sandy delayed some sales of previously occupied homes in the Northeast. Sales fell 1.7 percent there, the only region to show a decline. Those sales will likely be completed in future months, the group said. The median price for previously occupied homes increased 11.1 percent from a year ago to $178,600, the Realtors' said. A decline in the number of homes available for sale is helping push prices higher. There were only 2.14 million homes available for sale at the end of the month, the lowest supply in 10 years. It would take only 5.4 months to exhaust that supply at the current sales pace. That's the lowest sales-to-inventory ratio since February 2006. Prices are also benefiting from the mix of homes being sold. Sales of homes priced at $500,000 and above have jumped more than 40 percent in the past year. Sales of homes and condominiums that cost less than $100,000 fell 0.6 percent. There have been other positive signals from the housing market. Applications for mortgage loans to buy homes jumped 11 percent in the week ended Nov. 9, compared with a week earlier, the Mortgage Bankers' Association said last week. Purchase applications are up 22 percent in the past year. Foreclosures are slowing. The number of properties that began the foreclosure process in the first 10 months of the year fell 8 percent compared with the same period last year, RealtyTrac said last week. And builders broke ground on new homes and apartments at the fastest pace in more than four years in September. The jump could help boost the economy and hiring. Still, the market has a long way back to full health. Many potential home buyers cannot meet stricter lending standards or produce larger down payments required by banks. That can be a particular problem for first-time homebuyers. They accounted for 31 percent of sales in October, down slightly from September and below the 40 percent that is common in a healthy market. Federal Reserve Chairman Ben Bernanke said Thursday that banks' overly tight lending standards may be preventing sales and holding back the U.S. economy.

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News Summary: US home sales rise 2.1 pct. in Oct.

SALES RISE: U.S. sales of previously occupied homes rose moderately in October, helped by improvement in the job market and record-low mortgage rates. Sales rose 2.1 percent in October to a seasonally adjusted annual rate of 4.79 million according to the National Association of Realtors. INVENTORIES: A decline in housing inventory is helping push prices higher. There were only 2.14 million homes available for sale at the end of the month, the lowest in 10 years. GAINS LIKELY TO CONTINUE: As the economy slowly recovers, more people have started looking to buy homes or rent apartments. Mortgage rates are at record lows and rents are rising. That makes buying a home more attractive.

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News Summary: US 30-yr mortgage rate at record low

RATES AT RECORD LOW: Average U.S. mortgage rates fell to fresh record lows this week, a trend that is boosting home sales. THE NUMBERS: Mortgage buyer Freddie Mac said the average 30-year loan rate dipped to 3.31 percent, the lowest on records dating back to 1971. The average on the 15-year fixed mortgage dropped to 2.63 percent, also a record. HOUSING RECOVERY: Home sales and construction are rising, providing a much-needed boost to the economy. Lower rates have also persuaded more people to refinance. That usually leads to lower monthly mortgage payments and more consumer spending.

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Retirement Savings Plan Reality: Save More

There's a buzz building in California over a state move to create a retirement savings plan for private employees with no workplace 401k. It might seem that everyone has plenty of access to a retirement savings plan, but at least a third of U.S. households get to retirement with just Social Security to back them up, reports MarketWatch. The "pioneering" part of such a retirement savings plan would be the opt-out clause. Under the California plan, which has to get past some federal rules and IRS hurdles, eligible workers would be automatically registered with the plan at a deduction rate of 3% of pay. They would have to choose to quit the plan, although of course they could instead choose to increase the takeout. The enforced deductions requirement of a good retirement savings plan is backed by research from Harvard and the University of Copenhagen. According to the research, giving people a tax break encourages them to save, but not much. Using data from Denmark, which is similar to the U.S. system but offers more detail, academics found that tax subsidies worth $1 raised the national savings rate by a penny. More On Forbes: 25 Best Places For A Working Retirement That's not much bang for a buck. Meanwhile, previous research found that an automatic retirement savings plan, such as the proposed California "opt-out" model, is very effective at raising savings rates. The reason, the researchers conclude, is that only about 15% of people in the system are active savers, that is, people who think about retirement and how much money it will take to achieve that goal. The remainder, a whopping 85%, are totally passive savers. They will save if obligated but make no concrete plan regarding their life after work. All of this would be quite the revelation, except that private pensions have a long and quite well-documented history, starting back in 1980 in Chile. Under reforms instituted by the military regime of the time, anyone with a formal job in the South American country is required to pay 10% beyond a minimum monthly income level. There is an income tax break, too, on retirement savings plan contributions, which can be up to 20%. More On Forbes: Do You Have Enough Money To Retire The Chilean system was reformed in 2008 to create a bigger safety net for the poor, essentially granting public pensions to those who did not earn enough to participate in the private system. Currently, 13 countries have either private or quasi-mandatory pension systems, reports the OECD. All pension plans fall into two categories, defined benefit or defined contribution (DC). A defined benefit plan puts the burden on future taxpayers to meet a minimum payout, which is essentially how Social Security works in the United States. A defined contribution retirement savings plan, the basis for private pension systems such as a 401k, means it's up to savers to put enough away and to invest and manage their savings carefully over decades. Your retirement savings plan As the OECD notes, "the starting point for a successful DC plan is a sufficiently high contribution rate." Put another way, depending on the market to deliver miracles is a mistake, but a similarly large (and common) mistake is believing that setting aside pennies in a retirement savings plan will add up to big dollars down the line. The agency concludes: In DC pension systems, one clear goal for policymakers should be to improve the design of default investment strategies so that investment risk is reduced as the worker approaches retirement. Such lifecycle investment strategies may need to be carefully regulated to ensure that workers are offered sufficient diversification and protection from market shocks in old age. Amen and hallelujah, we say. Whatever the outcome in California, two points about a proper retirement savings plan by now should be impressively clear to everyone: You need to save more, sooner, and you absolutely must have a serious, long-term investment plan to protect and grow that nest egg over time.

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