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These are stories Report on Business is following Wednesday, June 13, 2012.

Follow Michael Babad and the Globe's top business stories on Twitter.

Canada's housing market softens
The Canadian housing market is on the wrong side of the ledger in a survey of global housing prices for the first time since 2008, down 2 per cent from the same time last year when adjusted for inflation as stricter borrowing rules and fading demand cool the market, The Globe and Mail's Steve Ladurantaye reports.

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Today's report from Scotia Economics underlines the difficulties facing markets around the world. Weakness in real estate markets is a direct threat to the banks that financed housing booms around the world, as bad loans threaten their balance sheets.

The Organization for Economic Co-Operation and Development also weighed in on the state of the housing market today, saying that while all appears well, there are some signs worth watching.

"Canada experienced a significant increase in house prices in the run-up to the 2008 crisis, but unlike in many countries with a similar experience, notably the United States, Canadian house prices have continued to rise," the OECD said.

"Residential investment declined only slightly as a share of output during the global financial crisis and has since rebounded to close to the pre-recession peak ... and looks set to rise further, at least over the short term, given the latest figures on housing starts," the group said in its bi-annual report on Canada.

"Indeed,  the absence of a real estate collapse is an important reason for Canada's relatively good economic performance during the crisis. While there are some signs of market imbalances, they do not appear to be widespread but are concentrated in certain segments of the market (i.e. condominiums) and certain locations (Toronto and Vancouver). In particular, the stock of unoccupied multiple units has swelled ... even after accounting for increases in multiple units in the market."

Boost productivity, OECD urges
Canada can't live off its resource wealth forever and must get serious about chronically lagging productivity and innovation, the Organization for Economic Co-operation and Development also warned today.

The Paris-based OECD gives Canada high marks for navigating through the tough global economy of the past few years in its annual country review, released today in Ottawa, The Globe and Mail's Barrie McKenna reports. But the longer-term outlook isn't good unless the country does something about stagnant productivity growth, the OECD says.

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The OECD expects the Canadian economy to grow 2.25 per cent this year and 2.5 per cent in 2013.

Moody's takes a piece out of Spain
Moody's Investor Service took the knife to Spain today in the wake of its €100-billion bank bailout, warning it could cut further still.

The agency took Spain's rating to Baa3 from A3, saying its plans to borrow the money to rescue its banks will "further increase the country's debt burden, which has risen dramatically since the onset of the financial crisis."

It also cited the government's "very limited" access to markets and its "growing dependence" on the country's banks to buy its new bonds. They, in turn, get their funding from the European Central Bank.

"The Spanish economy's continued weakness makes the government's weakening financial strength and its increased vulnerability to a sudden stop in funding a much more serious concern than would be the case if there was a reasonable expectation of vigorous economic growth within the next few years," Moody's added.

Moody's cut the rating of Cyprus, as well.

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What the Greek election could mean
Many observers are already speculating over what a Greek exit from the euro zone would mean for other countries, highlighting just what's at stake in this weekend's election.

The vote may well determine whether Athens remains in the group, and, thus, whether the 17-member monetary union will begin to unravel. Which is why there's so much focus on whether the pro- or anti-austerity forces are leading in the run-up.

The last election resulted in huge gains for the camp that wants to ease up on the harsh measures tied to the Greek bailout. But there was no clear winner, and efforts to cobble together a coalition government failed, meaning another vote.

Because of that, talk of Greece leaving has increased over the past several weeks, and several scenarios have been developed.

"Each day brings us closer to the Greek elections, an event that might be seen in years to come as the moment when the single European currency truly began to fall apart," said market analyst Chris Beauchamp of IG Index.

"The election is likely to be a close run thing, with the pro- and ant-bailout forces finely poised," he said in a research note today.

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"Chancellor George Osborne spoke for many yesterday when he said that a Greek exit might be the only thing that can really force the Germans' hand, but by then it might be too late," he added, referring to the British official.

Germany is under mounting pressure to relax its opposition to several of the measures seen as necessary to easing the crisis, such as euro bonds or a so-called banking union that would spread the risk throughout the group.

"For a currency union built on the principle that, once in, no country can leave, the initial departure might spark a chain reaction. However, as so often in this crisis, next week might come and go with no real change in the situation. It all  remains up in the air, and it is this uncertainty that is holding markets in check."

The crisis in the region is deepening by the day, with Spain now requiring a bailout for its ailing banks and the focus fast shifting to Italy, whose borrowing costs spiked again today with a sale of Treasury bills.

Also troubling is the way it's all beginning to play out in Italy. Yesterday, Prime Minister Mario Monti pledged that Italy would require no bailout, which is what the others said before they succumbed, and, today, Germany's outspoken finance minister warned Italians they have to swallow tough medicine.

"I can only hope that political forces in the Italian parliament and public opinion continue to decisively back him, because the road towards a return to sustainable growth through structural reforms, improved competitiveness and a lower deficit is the right one," Wolfgang Schaeuble said in an interview with an Italian news organization, referring to Mr. Monti.

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