The Financial Landscape: No Greek Bailout Yet; Big U.S. Firms Propose a Tax Holiday

Another twist in the Greek drama:

European finance ministers, trying to avoid the first bond default by a eurozone country, have failed to agree on a bailout plan for Greece, instead demanding that the Athens government implement austerity measures before they make a firm commitment to pay the 12 billion euros promised for July as part of last year's 110 billion euro bailout, let alone any further funds. The euro declined against the dollar and the yen on the unexpected news, and U.S. stock futures fell as well, reflecting the effect on European markets. Power outages were reported in Greece as employees went on strike to protest privatization of the nation's primary power utility, part of the planned cuts.

Big businesses lobby for tax holiday: Several large corporations that earn massive offshore profits are lobbying the U.S. government for a so-called "repatriation holiday," in which the federal tax on profits returned to the U.S. would fall for one year from 35% to 5.25%. Calling this plan "the next stimulus," they argue that the injection of $1 trillion or more into the economy would help create hundreds of thousands of jobs. As The New York Times notes, however, a similar incentive enacted in 2005 did not produce the promised result: Of the $312 billion that came back to the U.S., 92% went to shareholders via dividends and stock buybacks, rather than being invested in research and development or hiring, which is perhaps unsurprising, given how the money wound up overseas in the first place, according to the Times: "in some cases accounting measures that shift domestic profits to low-tax countries."

Buy low...:Bloomberg reports that stocks are at their cheapest in 26 years, noting that S&P 500 companies are set to make 18% more this year than in 2010, even as the index has fallen 6.8% since the end of April. "The market probably has room to rise 10% by year-end," according to one fund manager.