Business Breakfast: Europe's Feeling Stressed

Happy Friday! Europe's stressed out banks are getting a stress test, and it's not particularly clear how the world markets will react. If too many banks pass, the tests might be seen as a joke. If too many fail, the banking system will be seen as a joke. Not a joke: India's building a $35 computer for students. Like a joke, but not very funny: the state of our housing markets, as existing home sales keep going in the wrong direction since the housing tax credit expired.

World Markets Brace for Europe Bank Stress Tests: Most banks are expected to pass the tests--which may or may not be a good sign, depending on whether the exercise is deemed to be tough enough. Industry and government officials in Greece, Spain and Germany have hinted this week that major banks in their countries will come through the tests without trouble. [WSJ]

White House: 80 Percent of Bank Bonuses Unmerited: In a report to be released on Friday, Kenneth R. Feinberg, the Obama administration's special master for executive compensation, is expected to name 17 financial companies that made questionable payouts totaling $1.58 billion immediately after accepting billions of dollars of taxpayer aid, according to two government officials with knowledge of his findings who requested anonymity because of the sensitivity of the report. [NYT]

Housing Market Still Rolling Down a Hill: Purchases of existing single-family homes, condominiums and townhouses fell 5.1 percent in June from May to a seasonally adjusted annual rate of 5.37 million, the National Association of Realtors reported Thursday. The results, which measure only completed transactions, are better than analysts expected and capture the lingering effects of the tax credit. To qualify, buyers had to sign a contract by April 30 and close on it by June 30 -- though that closing deadline was recently extended to Sept. 30. [WaPo]

Obama is Sticking To His Campaign Promise on the Bush Tax Cuts: Speaking at a breakfast for reporters hosted by the Christian Science Monitor, Geithner said the White House wants to extend Bush-era tax cuts that benefit families earning less than $250,000 a year. But he said President Obama believes cuts affecting the top tax brackets should be allowed to expire on Jan. 1 to help reduce the nation's bloated budget deficit. "We believe that it is appropriate to let those tax cuts that go to the most fortunate 2 to 3 percent of Americans to expire on their current schedule," Geithner said, adding that Obama expects to undertake a broader overhaul of the tax system next year. [WaPo]

The $35 Laptop: India's human resource development minister, Kapil Sibal, this week unveiled the low-cost computing device that is designed for students, saying his department had started talks with global manufacturers to start mass production. "We have reached a [developmental] stage that today, the motherboard, its chip, the processing, connectivity, all of them cumulatively cost around $35, including memory, display, everything," he told a news conference in New Delhi. [Guardian]