The Financial Landscape: Murdoch on the Hot Seat, Housing Starts Surge

Here's what's happening in the world of business, Tuesday, July 19

Murdoch on Trial

With the British Parliament opening hearings into the News Corp (NWSA) phone hacking scandal, Bloomberg reports that the media conglomerate "is considering elevating Chief Operating Officer Chase Carey to chief executive to succeed Rupert Murdoch," citing "people with knowledge of the situation." The decision will depend "in part" upon Murdoch's testimony before Parliament, for which he has reportedly been rehearsing. (Executives who watched these practice sessions are said to have been skeptical.) The ratings agency Standard & Poor's appeared on the scene to announce that it may downgrade News Corp's corporate debt rating, due to "business and reputation risks." News Corp has already lost $8 billion in market value since the scandal erupted.

Housing Starts Surge

The Commerce Department announced its estimate that new construction of U.S. houses rose in June to its highest level in five months -- a seasonally adjusted 629,000 homes, which represents an increase of 14.6% from May. Apartment-building appears to have driven the upswing, rising 31.8% last month.

The Tea Party Against the Ceiling

Some House Republicans are reportedly working to scuttle Senate Minority Leader Mitch McConnell's plan to allow the debt ceiling to be raised by backdoor maneuvering. A letter by Rep. Joe Walsh (R., Ill.), addressed to House Speaker John Boehner and Majority Leader Eric Cantor, reads in part as follows:

On behalf of the millions of Americans we represent, we strongly urge you to both publicly oppose Senator McConnell's plan to raise the debt ceiling and ensure it never comes to the House floor for a vote. The McConnell Plan punts on our duty as Members of the United States Congress. The plan, at its core, would allow the President to raise the debt ceiling on his own in exchange for insufficient spending cuts and a congressional "expression of disapproval." McConnell's plan supersedes the rights of the American people.

The House will vote Tuesday on an alternative bill -- dubbed the Cut, Cap and Balance Act by its Tea Party supporters -- which would "impose strict limits on future government spending," and require both houses of Congress to approve a balanced budget amendment to the Constitution. Regardless of the House vote, the Senate is highly unlikely to pass Cut, Cap and Balance, and President Obama has said he will veto it in any case. McConnell's plan -- a "legislative magic trick," in the words of The New York Times -- appears to be the only way out.