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Rating agency Moody’s downgraded 16 Spanish banks on Thursday, the latest sign of distress in Europe.

Among those downgraded were giants Banco Santander and BBVA, the country’s two largest banks. Moody’s cited concerns about the banks’ exposure to Spain’s faltering economy and the "reduced" ability of the Spanish government to support them in a crisis.

"The Spanish economy has fallen back into recession in first-quarter 2012, and Moody’s does not expect conditions to improve during 2012," the agency said.

"Moreover, the real-estate crisis that began in 2008 is ongoing, and unemployment has risen to very high levels, with rising risks to white-collar employment (in addition to extremely-high youth unemployment) affecting the outlook for banks’ household lending."

The downgrades come amid mounting concern about a potential Greek exit from the euro, and the implications this could have for other fiscally troubled nations like Spain and Italy. Greece, currently operating with a caretaker government, could leave the euro should anti-austerity parties triumph in elections next month.

Earlier Thursday, Moody’s downgraded Spanish regional governments in Catalunya, Murcia, Andalucia and Extremadura because they are using massive amounts of debt to fund their operations and are unlikely to meet the financial target set by Spain’s central government.

Overall, Spain has pledged to cut its national deficit to 5.3% of GDP, but last week, the European Commission forecasted that the country would fail to meet that goal, instead hitting 6.4% of GDP. Spain announced roughly $35 billion in budget cuts earlier this year.

Credit downgrades are a worrisome sign to investors and can often cause a country’s borrowing costs to rise. The yield on Spain’s 10-year bond has spiked in the last two weeks, and now sits around 6.3%, its highest level since November.  

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Government data show Japan’s factory production fell in February in its first decline in three months, as demand for exports weakened.

The 1.2 percent decline in industrial output reported Friday was worse than expected.

The data show production was weaker in the transport equipment, electronics components and machinery industries. Output of cell phones, large passenger cars and liquid crystal devices fell.

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Federal Reserve Chairman Ben S. Bernanke defended the central bank

Companies restocked at a faster pace in December, a positive sign that they expect consumers to step up spending.

Business stockpiles grew 0.4 percent in December, the Commerce Department said Tuesday. That followed a similar gain in November. Sales rose 0.7 percent, almost double the November gain.

Companies are building up their stockpiles again after cutting them over the summer amid recession fears. Higher inventories require more production, which boosts economic growth. It also suggests companies expect more sales.

Rising inventories were a key reason growth accelerated in the final three months of last year. Still, some economists expect the restocking to slow this year.

Wholesalers reported a 1 percent increase in inventories. Retailers reported a 0.2 percent gain and manufacturers 0.1 percent.

Inventories rose to a seasonally adjusted $1.56 trillion in December. That is 18 percent above the low point reached in 2009, just after the recession ended.

Rising sales are keeping stockpiles from getting too high. If companies feel their inventories are excessive, they could cut back on orders, slowing the economy payday loans direct lenders.

Overall sales rose in December. Wholesalers reported a 1.3 percent jump in sales, followed by a 0.7 increase for manufacturers and flat sales for retailers. That pushed down the ratio of inventories to sales to the lowest level since March. A lower ratio suggests inventories aren’t out of line with sales.

A separate report Tuesday showed that retail sales rose 0.4 percent in January. Consumers rebounded from a slow holiday shopping season and spent more on electronics, sporting goods, building materials and gas.

The economy expanded at a 2.8 percent annual rate in the fourth quarter. But economists expect companies won’t add as much to their stockpiles in the current quarter. That could push growth down to 2 percent or even below.

Stockpiles held by manufacturers account for nearly 40 percent of total business inventories, while wholesalers and retailers each hold about one third.

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British police searched the offices of Rupert Murdoch’s British newspapers Saturday after arresting a police officer and four current and former staff of his tabloid The Sun as part of an investigation into police bribery by journalists.

The arrests spread the scandal over tabloid wrongdoing _ which has already caused the closure of one tabloid, the News of the World _ to a second Murdoch newspaper.

London’s Metropolitan Police said two men aged 48 and one aged 56 were arrested on suspicion of corruption early in the morning at homes in and around London. A 42-year-old man was detained later at a London police station.

Murdoch’s News Corp. confirmed that all four were current or former Sun employees.

A fifth man, a 29-year-old police officer, was arrested at the London station where he works.

The investigation into whether reporters illegally paid police for information is running parallel to a police inquiry into phone hacking by Murdoch’s now-defunct News of the World.

Officers were searching the men’s homes and the east London headquarters of the media mogul’s British newspapers for evidence.

Police said Saturday’s arrests were made as a result of information provided by the Management and Standards Committee of Murdoch’s News Corp.

News Corp. said it was cooperating with police.

“News Corporation made a commitment last summer that unacceptable news gathering practices by individuals in the past would not be repeated,” it said in a statement.

A dozen people have now been arrested in the bribery probe, though none has yet been charged.

They include former Rebekah Brooks, former chief executive of Murdoch’s News International, ex-News of the World editor Andy Coulson _ who is also Prime Minister David Cameron’s former communications chief _ and journalists from the News of the World and The Sun.

Two of the London police force’s top officers resigned in the wake of the revelation last July that the News of the World had eavesdropped on the cell phone voicemail messages of celebrities, athletes, politicians and even an abducted teenager in its quest for stories.

Murdoch shut down the 168-year-old tabloid, and the scandal has triggered a continuing public inquiry into media ethics and the relationship between the press, police and politicians.

An earlier police investigation failed to find evidence hacking went beyond one reporter and a private investigator, but News Corp. has now acknowledged it was much more widespread.

Last week the company agreed to pay damages to 37 hacking victims, including actor Jude Law, soccer star Ashley Cole and British politician John Prescott.

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The federal government is on pace to run a deficit below $1 trillion for the first time in four years, modest progress in the face of intense debate in Washington over spending.

The Treasury Department said Monday that the deficit was $137 billion in October. That brings the total for the first two months of the budget year to $236 billion _ $55 billion less than the same two months last year.

Still, part of the reason for the lower deficit is an accounting quirk.

And the government is on pace to end the year $973 billion in the red, according to the Congressional Budget Office. While that’s lower than last year’s $1.3 trillion imbalance, it would still be higher than any previous deficit before fiscal year 2009.

The government ran an all-time record deficit of $1.41 trillion in 2009, and a $1.29 trillion imbalance in 2010.

The CBO estimate does not include an extension of the Social Security tax cut and emergency unemployment benefits. Congress is likely to extend both before they expire at the end of the year. That could push the deficit back above $1 trillion if those programs aren’t offset. The two programs are estimated to cost around $200 billion.

A big reason the first two months are lower than last year is an accounting shift. Roughly $31 billion in benefit payments for October went out in late September. Federal benefits are paid on the first day of the month. But because Oct. 1 fell on a Saturday, the payments went out a day earlier and were accounted for in last year’s deficit.

Through, the first two months of this budget year, government spending totals $551.2 billion. That’s down 5.8 percent from a year ago, by mostly reflects the benefit shift.

Government revenues total $315.5 billion. That’s up 4.7 percent from a year ago.

Net interest payments on the government debt continued to be one of the fastest rising categories of government spending. They totaled $44 billion in October and November, up 19.5 percent from the same period a year ago.

A decade ago, the government was running surpluses and trillion-dollar deficits seemed unimaginable. Now, the nation’s public debt is $15 trillion and rising and polls show growing voter anger with the inability of both parties to reach solutions to the country’s budget problems.

A special 12-member committee was unable to reach agreement on at least $1.2 trillion in deficit reduction by a November deadline. That means automatic cuts of that amount will begin on Jan. 1, 2013.

Republicans want to modify the timetable for the automatic cuts, largely because it includes steep cuts to the defense budget.

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A U.S. trade envoy has accused China’s government of increasing its role in the economy in violation of its free-trade pledges and he appealed to Beijing to reconsider its embrace of “state capitalism.”

The comments reflect a harder U.S. tone toward Beijing amid disputes over market access for banking and other services and complaints China is supporting its producers of solar power and other technology despite promising to allow free competition.

In a speech this week, the U.S. ambassador to the World Trade Organization cited a “troubling trend” of increased Chinese government intervention in the economy over the past five years despite its WTO commitments to open its markets.

The ambassador, Michael Punke, made the comments Wednesday in Geneva, according to a transcript on the website of the U.S. Trade Representative’s office. He was speaking at a WTO meeting for the tenth and final annual review of China’s compliance with its WTO obligations since it joined the body in 2001.

“China seems to be embracing state capitalism more strongly each year, rather than continuing to move toward the economic reform goals that originally drove its pursuit of WTO membership,” he said. “This is a troubling development, and the United States urges the Chinese government to reconsider the path it is on.”

During a trip through Asia last month, President Barack Obama called on Beijing to show more maturity in its economic relations with other nations.

“Increasingly, trade frictions with China can be traced to China’s pursuit of industrial policies that rely on trade-distorting government actions to promote or protect China’s state-owned enterprises and domestic industries,” Punke said.

China’s trade and economy have grown rapidly since 2001, propelling it past Japan as the world’s second-largest economy behind the United States and financing a military buildup that has alarmed its neighbors.

On Wednesday, China’s Defense Ministry criticized Washington’s strengthened military pact with Australia as a throwback to “Cold War thinking.”

Beijing has alarmed foreign companies by unveiling initiatives to build up state-owned corporate champions in an array of fields from telecommunications to wind energy.

Business groups complain Beijing appears to be trying to squeeze foreign companies out of its clean energy and other promising industries. They have questioned whether the communist government wants to live up to pledges to allow foreign companies to compete on an equal footing with Chinese rivals.

Punke said that in its first five years of WTO membership, Beijing took “impressive steps” to reduce tariffs, eliminate trade barriers and improve protection for intellectual property rights.

But he noted complaints that Beijing tries to intimidate foreign companies, threatening to retaliate if they speak up about problematic policies or cooperate with their governments in challenging them.

Punke complained that Beijing appears to resort to trade actions in response to legitimate steps by the United States and other trading partners under their trade laws.

Last month, China launched a probe of U.S. government support for its solar, wind and other renewable energy industries after American authorities agreed to investigate a complaint by a group of companies that Beijing improperly subsidizes exports of solar panels and hurts foreign competitors.

“This type of conduct is at odds with fundamental principles of the WTO’s rules-based system,” Punke said.

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Throw a dart at a map of Europe now and it takes expert aim to hit a country run by a left-of-center government, especially after Spain’s Socialists were emphatically drubbed out of power over the weekend.

Although the shift to the right began years ago in such heavyweights as France and Germany, it is now all but complete three years into the continent’s grinding debt and economic crisis. Why? When times get tough _ when “the cows get thin” as the Spanish say _ political experts say edgy voters seek comfort with conservatives.

“The center-right is the natural preference in times of crisis,” said Piotr Kaczynski of the Centre for European Policy Studies in Brussels. “If you look at societies and how they make their preferences, they all tend to vote more conservative in times of crisis and more center-left in times of economic progress.”

Granted, on the European Union map there are scattered spots of leftist liberalism. A new Social Democratic government runs Denmark, there is a center left government in Norway and there is a broad Social Democratic-led coalition in Austria. And the Socialists might beat conservative President Nicolas Sarkozy in France’s presidential election next year.

But Kaczynski said there is no doubt the European left faces an uphill battle in re-establishing itself with an appealing message and the means to enact it, despite widespread disillusionment with go-go capitalism as seen in the Occupy Wall Street protests and Europe’s widespread anti-austerity marches.

In Spain, voters enduring a 21.5 jobless rate ejected the Socialists and install the center-right Popular Party by a crushing margin in Sunday’s election.

Voters dumped the Socialists in Portugal earlier this year and the Labour Party in Britain last year, in both cases shifting to conservative parties. A technocrat government has taken over in the last month from Greece’s Socialist prime minister.

Kaczynski said is not an ironclad rule that a government will be dumped from power during an economic crisis. He cited the cases of troubled governments being re-elected in Latvia, Estonia _ a member of the eurozone _ and Poland, and said as long as the public concludes the government is capable and taking the right approach to a financial crisis, it might get a second chance.

That was not the case for Spain’s Socialists, due to the poor record of outgoing Prime Minister Jose Luis Rodriguez Zapatero in fighting unemployment and in resurrecting an economy that overcome nearly two years of recession in 2010 only to stall again last quarter.

His punishment: the conservative Popular Party won 186 seats in the 350-seat lower chamber of Parliament, up from 154, while the Socialists plummeted from 169 seats to 110, their worst performance ever.

“Clearly, Spain is the biggest loss for the European Socialists. That is absolutely the case,” Kaczynski said.

In his first public comments, Zapatero _ who did not seek a third term _ said Monday that the austerity measures he took _ and which caused supporters to flee in a stampede _ “put the national interests ahead of party interests.”

Spanish stock and bond markets shrugged off the Popular Party win because it was so widely expected and because leader Mariano Rajoy has yet to spell out how he will attack Spain’s unemployment debacle, deficit and growth woes.

However, some experts say Europe is not going right ideologically but rather seeking something _ anything _ new to get out of its quagmire.

“I wouldn’t say Europe is turning to the right. It’s basically the crisis is crushing the incumbents,” said Eurasia Group’s analyst for Europe, Antonio Barroso. “People are disappointed in the bad economic data, high unemployment and basically they are voting for the other alternative.”

He noted that in Italy, conservative premier Silvio Berlusconi was forced to resign this month as the eurozone crisis centered on his debt-laden country _ but that was to a technocratic administration, not to leftist politicians.

Barroso also mentioned the 2012 French presidential race and Sarkozy’s record low approval rating. The feisty French conservative is trailing the Socialist Francois Hollande badly in the polls, although he has recovered a bit in recent weeks.

Socialists are strong in local and regional politics in France: They head 24 of France’s 26 regional governments and run major cities including Paris, Lyon, and Lille. Most recently, in September, the Socialists wrested control of the Senate, Parliament’s upper house, for the first time in more than a half-century _ seen by many as a rebuff to Sarkozy.

In Germany, conservative Angela Merkel beat the center-left’s Gerhard Schroeder in 2005 after he pushed through labor market reforms and welfare state cuts. The moves angered his leftist supporters but they are credited with bolstering Germany’s strength in the current financial crisis.

However, Stephen Lewis of Monument Securities in London agreed it is perhaps natural for people to turn to the right in times of extreme financial hardship. He noted it happened in the 1930s during the Depression.

“It is not surprising that we are seeing all these right-wing governments appear as a result of elections or imposed from Brussels,” Lewis said.

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Visa Inc. says its fiscal fourth-quarter profit rose 14 percent as cardholders used their credit and debit cards more often both in the U.S. and abroad.

The San Francisco-based payments processing network says it earned $880 million, or $1.27 per share, for the three months ended Sept. 30. Revenue rose 13 percent to $2.38 billion.

Wall Street was expecting profit of $1.25 per share, on revenue of $2.4 billion fast payday loan no faxing.

Visa says it processed 13 billion transactions during the quarter, up 9 percent from last year.

Worldwide, Visa card holders spent $1.55 trillion on their cards, with debit outpacing credit. That’s up 17 percent from last year’s quarter.

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Thailand’s prime minister says the country’s catastrophic floods may take up to six weeks to recede.

Yingluck Shinawatra also said in a weekly address to the nation Saturday that the crisis had displaced more than 110,000 people from their homes.

The government said the death toll had risen to 356.

Excessive monsoon rains have drowned a third of the Southeast Asian nation since late July, and over the last two weeks the government has struggled to prevent the inundation from pouring through Bangkok.

Districts just outside the capital’s northern boundaries have been submerged for days. Since Friday, rising waters have caused minor flooding in Bangkok’s outskirts.

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