Sunday, July 5, 2015

Monday July 6 Housing and Economic stories

Major Money Manager Braces for Bond-Market Collapse - ( TCW Group Inc. is taking the possibility of a bond-market selloff seriously. So seriously that the Los Angeles-based money manager, which oversees almost $140 billion of U.S. debt, has been accumulating more and more cash in its credit funds, with the proportion rising to the highest since the 2008 crisis. “We never realize what the tipping point is until after it happens,” said Jerry Cudzil, TCW Group’s head of U.S. credit trading. “We’re as defensive as we’ve been since pre-crisis.” TCW isn’t alone: Bond funds are holding about 8 percent of their assets as cash-like securities, the highest proportion since at least 1999, according to FTN Financial, citing Investment Company Institute data. Cudzil’s reasoning is that the Federal Reserve is moving toward its first interest-rate increase since 2006, and the end of record monetary stimulus will rattle the herds of investors who poured cash into risky debt to try and get some yield.

Big investors are dumping stocks like it's 2008 - (  Big investors are fleeing stocks. In a note Tuesday, Jill Carey Hall at Bank of America Merril Lynch (BAML) wrote that the clients' net sales of US stocks amounted to $4.1 billion last week, the largest total since January 2008. Most of the selling is being led by institutional investors. Here's Carey Hall: After three weeks of net buying, institutional clients' net sales last week were the largest in our data history. Hedge funds were net sellers for the ninth consecutive week, while private clients bought stocks last week following the previous week's net sales. Buybacks by corporate clients were slightly lower than in the previous week, but on a four-week average basis have generally continued at a constant pace since mid-May. Net sales last week were chiefly due to large caps (biggest sales ever of this size segment), though small and mid-caps also saw outflows. The strategists wrote that investors pulled the most money out of healthcare and financial stocks. Last week, outflows from healthcare were the largest on record, they said. On Friday, BAML strategists noted that investors last week pulled the most from government bonds since the so-called taper tantrum of 2013.

Why your state may be forced to raise your taxes - (  State government tax revenue is only 5 percent above its pre-recession level. State finances across the U.S. have been described as stable but slow growing. Six years into the post-recession economic recovery, that statement may be accurate, but the full truth may be more troubling. A handful of states are caught in a real pension fix. A few statehouse budget battles in recent months have been notable for their heightened drama—Kansas, where huge tax cuts backfired on Gov. Sam Brownback; and Louisiana, where a member of Gov. Bobby Jindal's own party referred to his budget plan as "money laundering." But it's not the extremes that have state budget experts concerned. More states have been unable to complete budgets so far this year than is typical, and the situation points to long-term spending problems—from K–12 education to Medicaid and infrastructure—that will persist.

Kansas budget woes could hit small businesses hard - (  By the numbers, Kansas is in the midst of a boom in small-businesscreation. Some 333,000 small-business owners filed returns this year, according to state revenue data, a record. But numbers can be deceiving, and even some prominent stateRepublicans are pointing to what they say are unintended consequences of a massive tax-cutting package championed by Republican Gov. Sam Brownback in 2012. Brownback had sold the package as a needed "shot of adrenaline" for the state economy, and particularly for small-business owners, whose profits would be exempt from state taxes. Indeed, the Kansas Department of Revenue reported 8,666 first-time small-business filings in 2013, the first full year of the cut. But experts agree the surge in filings probably has little to do with some sudden burst of entrepreneurship in Kansas. Rather, they say, it is more likely the result of people merely adjusting their filing status to take advantage of the tax break. It is simple enough—and perfectly legal—for, say, a veterinarian to set himself up as a corporation.

Facing "Full Blown Crisis", Bank Of Greece Enlists Security Firm To Ensure ATMs Stay Stocked  - ( he nice fellow shown above filling the cash machine at Arnie's Place restaurant in Nidri Greece works for G4S, a security services firm which is working with the Bank of Greece to coordinate the Greek bank run. In essence, it’s the Bank of Greece’s job to accept stodgy collateral (including unsecured bonds issued by the banks themselves and backed by the full faith and credit of the insolvent Greek government) for newly-minted German TARGET2 claims euros and it’s G4S’s job to determine how those euros should be allocated to ensure that the ATMs don’t run out of cash. Here’s Reuters with more: Security services group G4S has drawn up plans with Greece's central bank to keep the country's cash machines stocked in the event of a full-blown economic crisis, the company told Reuters. "Tuesday, Wednesday and Thursday were critical, really critical," he said, referring to withdrawals of cash from Greek banks. He added the situation eased over the weekend. Greeks withdrew more than 4 billion euros ($4.50 billion) from the banking system last week on fears the country was set to default and potentially leave the euro zone. That included withdrawals of more than 1 billion euros each on Thursday and Friday amid rising fears Athens would have to impose capital controls. The government denies it has any plans for that. G4S has been drawing up plans on how much cash it should move around the country, and when, Paterakis said. The firm has increased staff in recent months to meet an increase in demand for cash, which it estimates has risen by about 30 percent over the last two weeks.

Thursday, July 2, 2015

Friday July 3 Housing and Economic stories

Australian housing market facing 'bloodbath' collapse: economists - ( The Australian real estate market is in the grip of the biggest housing bubble in the nation's history and Melbourne will be at the epicentre of an historic "bloodbath" when it bursts, according to two housing economists: A bloodbath in the housing market, however, appears a near certainty due to the magnitude of falls required for housing prices to again reflect economic fundamentals. Lindsay David and Philip Soos, who have written books on the overheated housing market, have berated the housing industry and politicians who refuse to acknowledge the existence of a bubble due to a perceived shortage of housing in the major capitals. n a blunt submission to the upcoming parliamentary inquiry into home ownership, the pair claim there is actually an oversupply of housing, just as there was in the US before the market collapse that precipitated the global financial crisis.

Exclusive: Bank of Greece warned bankers of 'difficult' day if no debt deal - ( The head of the Bank of Greece warned bankers last week to brace for a "difficult day" on Tuesday if the Athens government does not reach a deal with creditors at an emergencyeuro zone summit on Monday, two senior bankers told Reuters. Bank of Greece Governor Yannis Stournaras called a special meeting with top bankers on Friday to discuss the mounting crisis in the banking sector after a flood of withdrawals that passed a billion euros a day toward the end of the week. They said Stournaras did not talk about capital controls being imposed on Greek banks, which rely on European Central Bank support to keep operating, but he made it clear that the situation would be serious.

Quicken Loans Busted For Deceptive Practices Again! - (  Washington State Accuses Quicken Loans Of Deceiving Active Military Personnel & Veterans. The state of Washington is charging Quicken Loans with targeting 35,000 active military personnel and veterans with deceptive mortgage offers. The Consumer Services Division of the Washington State Department of Financial Institutions claims that Quicken Loans falsely implied they were associated with the U.S. Department of Veteran’s Affairs. The DFI claims that in 2014 Quicken Loans distributed more than 60 different direct mailings in the state of Washington that offered active military personnel and veterans living in Washington the opportunity to obtain VA guaranteed mortgage loans. The DFI contends that the claims made by Quicken Loans in the mailings contain violations of state and federal laws prohibiting false, deceptive, and misleading advertising.

Affluent Greeks fret as they teeter on the edge - ( On a recent evening at the Semiramis hotel in Athens’ leafy, affluent northern suburbs, raspberries floated in champagne flutes and men in linen shirts smoked cigars by the pool as the city’s elite tried to pretend that the country was not on the edge of economic collapse. Hours earlier, €1.6bn had fled Greece’s banks, prompting Athens to appeal to the European Central Bank for more emergency funding as a stand-off between international creditors and the country’s populist government continued. At the poolside birthday, well-heeled businessmen, politicians, academics and socialites gossiped in hushed tones about when the banks might close or limit cash withdrawals. They also unleashed angry barbs at a government they blame for worsening the current crisis and expressed desperate, faltering optimism that eurozone leaders might still come to their rescue.

JPMorgan: Greece's Financial System Just Had a Terrible Week - (  Outflows appear to be accelerating. Failure to reach an agreement between Greek and European Union leaders last week spelled bad news for the banking system of the Hellenic Republic. Talk of capital controls is heating up, and with it the amount of money being pulled from Greece appears to be accelerating. JPMorgan analysts led by Nikolaos Panigirtzoglou estimate that Greek banks lost about 6 billion euros in the week ending June 19. That takes total deposit outflows from Greece to about 44 billion euros since the beginning of the year. The analysts use Greeks' purchases of offshore money market funds as a proxy to generate early estimates of those numbers.

Wednesday, July 1, 2015

Thursday July 2 Housing and Economic stories

Soros Hedge Fund Charged For Bringing Down Greek Banks - ( George Soros, the hedge fund manager credited with “bringing down the Bank of England,” is at it again, this time in Greece; although it does not seem the scale of the bet was anywhere near as large as Soros' GBP bet. Soros and his Quantum Fund are among 20 Hedge Funds who have waged a short war against Greek banks and Hellenic regulators are now fighting back. Quantum Fund, along with other major names such as Toscafund, Everest Capital and Abbeville Partners, have all received fines in the past three months from the Hellenic Republic Capital Market Commission, the Greek version of the U.S. Securities and Exchange Commission.

Weekend of Fear in Greece as Monday Brings Salvation or Ruin - ( Dorothea Lambros stood outside an HSBC branch in central Athens on Friday afternoon, an envelope stuffed with cash in one hand and a 38,000 euro ($43,000) cashier’s check in the other. She was a few minutes too late to make her deposit at the London-based bank. She was too scared to take her life-savings back to her Greek bank. She worried it wouldn’t survive the weekend. “I don’t know what happens on Monday,” said Lambros, a 58-year-old government employee. Nobody does. Every shifting deadline, every last-gasp effort has built up to this: a nation that went to sleep on Friday not knowing what Monday will bring. A deal, or more brinkmanship. Shuttered banks and empty cash machines, or a few more days of euros in their pockets and drachmas in their past - - and maybe their future. On a street corner, a performance artist burned what he said were his last euros. Nearby, an Afghan beggar joked about how he should have gone to Sweden instead. A mother grabbed her toddler’s hand as a dozen policemen motorcycled past, heading to a rally outside Parliament. And in his neighborhood restaurant Panagis Vourloumis, a 78 year-old ex-CEO, current investment banker and survivor of coups, dictators and communists, leaned forward and laid his worries on the table.

Calif. to gather data on its Obamacare customers - ( Covered California is watching! The Golden State's Obamacare exchange reportedly plans to collect and maintain sensitive insurance company data about its 1.4 million customers to analyze the performance of health plans—and says no customer will be allowed to opt out of the oversight. That level of scrutiny over peoples' drug prescriptions, visits to psychiatrists and gynecologists, and screening tests is raising concerns among privacy experts. But the Covered California insurance marketplace defends the data mining as crucial to making sure insurers and medical provides are doing their jobs correctly under the Affordable Care Act. "There is potential for so much public good, but there is a greater public good in protecting privacy and security," Michelle De Mooy, deputy director for consumer privacy at the Center for Democracy and Technology in Washington, told the Los Angeles Times. "I think asking permission is absolutely integral. It is not the state's data." The Times reported that the state in April signed a five-year contract with Truven Health Analytics to run the database that will store information about customers. Truven Health, which will receive $9.3 million for its work, is set to begin receiving patient data as early as this fall from insurers that sell health plans on the exchange.

Confirmed: WH Lied About Jonathan Gruber’s Role in Developing ObamaCare - (  President Obama’s dismissal of MIT’s Jonathan Gruber as just “some adviser” he barely remembers, rather than a key architect of ObamaCare, has always been one of the flimsiest and most transparent lies told by this profoundly dishonest White House. Everyone knew Gruber was critical to ObamaCare, and when he was caught on tape high-fiving himself for helping to fool what he described as “stupid” American voters with the Affordable Care Act’s web of false promises and ludicrous projections, he was speaking from the Administration’s heart. It’s still newsworthy that the House Oversight Committee has released emails to the Wall Street Journal showing Gruber had a far closer working relationship with the White House than it wanted to admit: The emails show frequent consultations between Mr. Gruber and top Obama administration staffers and advisers in the White House and the Department of Health and Human Services on the Affordable Care Act. They show he informed HHS about interviews with reporters and discussions with lawmakers, and he consulted with HHS about how to publicly describe his role.

For The First Time Ever, Total ECB Claims On Greek Banks Surpass Total Greek Deposits - (  Net of the latest ELA increase, when adding some €38 billion in collateralized EFSF bonds and other collateral usage, we find that we have not only reached parity but crossed it: as of this moment Greek deposits, which are generously estimated at €120 billion but in reality are lower, are less than the total ECB claims on Greek banks and the Bank of Greece, amounting to €126 billion. And with that the possibility of a Greek bail-in which could amount to up to 100% of total Greek deposits, becomes all too real.

Tuesday, June 30, 2015

Wednesday July 1 Housing and Economic stories

Small U.S. frackers face extinction amid drilling drought - ( Oil field work was coming in fast when GoFrac doubled its workforce and equipment fleet at the beginning of last year, just one of hundreds of small oil service companies thriving on the revival of U.S. drilling. Founded in November 2011 with a loan of around $35 million, the Fort Worth, Texas-based company was by 2014 making nearly that much in monthly revenues, providing the crews and machinery needed by companies including ExxonMobil (XOM.N) to frack oil and gas wells from North Dakota to Texas. Executives flew to meetings across the country in a Falcon 50 private jet, and entertained customers at their suite at the Texas Rangers baseball stadium in Arlington. The firm would soon move into a 22,000-square-foot office on the 12th floor of Burnett Plaza, one of Fort Worth's most prestigious office buildings. Eighteen months on, however, without work and unable to meet monthly loan payments, GoFrac has closed its doors, its ambitions gutted by a steep dive in oil prices. Of the 550-odd employees on the payroll at the beginning of this year, only six remain. 

Puerto Rico faces a 'bailout' problem - (  Mired in $73 billion in debt, Puerto Rico has tried multiple avenues to get its financial affairs in order, including the introduction of HR 870, a U.S. congressional bill that would let its municipalities and public corporations declare bankruptcy under Chapter 9—as is allowed in the states. But some experts think it's unlikely Congress will pass the bill.  "The perception is that, if you give Puerto Rico the authority to file for bankruptcy, that's the equivalent of a federal bailout, and that taxpayers in Iowa, in Texas and Alaska are authorizing federal funds to be spent to bail out Puerto Rico," Frank Shafroth, a professor specializing in municipal bankruptcy at George Mason University, said at a conference this week. Shafroth added that the perception is wrong: Detroit, he noted, did not receive "a thin dime" when it declared bankruptcy in July 2013. Bankruptcy is the opposite of a bailout, he said at the Ravitch Puerto Rican Fiscal Crisis Session in New York. 

Authorities arrest 243 people in $712 million Medicare fraud - (  The U.S. Department of Justice said on Thursday that 243 people have been arrested across the country, charged with submitting fake billing for Medicare, a government healthcare program, that totaled $712 million. Attorney General Loretta Lynch described the arrests as the largest criminal health care fraud takedown in the history of the Justice Department. Those arrested included 46 doctors, nurses and other licensed medical professionals. The charges are based on a variety of alleged fraud schemes, the government said, including submitting claims to Medicare and Medicaid, the healthcare program for low-income individuals, for treatments that were medically unnecessary and often never provided. The nationwide sweep, led by the Medicare Fraud Strike Force and the U.S. Centers for Medicare and Medicaid Services, involved about 900 law enforcement officials. It's the largest both in terms of the number of those charged and the amount of money lost.

Greek Deal Won't Save the Country's Banks - ( banks, which received two capital infusions in the past two years, may need a third one as a recession drives up losses from bad loans. The four biggest lenders, accounting for 91 percent of the country’s banking assets, could see their 12 billion euros ($14 billion) of tangible core capital wiped out by mounting provisions as overdue and restructured loans default. Even if Greece reaches an agreement with European creditors to free up additional money, its next bailout will need to include a new round of funding for the ailing banks. Bad loans rose last quarter as the economy slipped back into recession and Greeks delayed payments waiting for the new government to pardon debt. With the recovery stalled, the four banks -- National Bank of Greece SA, Piraeus Bank SA, Alpha Bank AE and Eurobank Ergasias SA -- could require 16 billion euros in additional provisions to cover losses if half of the 59 billion euros of overdue and restructured loans on their books sour.

Austrian ‘Bad Bank’ Heta Reports $7.9 Billion Shortfall - (  Heta Asset Resolution AG, the Austrian “bad bank” that unveiled a 7 billion-euro ($8 billion) capital hole Wednesday, said an insolvency may ultimately be the only way to shut down the company. Heta, the remnant of the failed, nationalized Hypo Alpe-Adria-Bank International AG, warned on Thursday that the insolvency remains on the table even as a debt moratorium imposed by regulators staved it off for now. Heta disclosed yesterday that 7.9 billion euros of writedowns depressed the value of its assets to 9.6 billion euros by the end of last year, 42 percent less than its total liabilities. “In the view of the management board, there are uncertainties about whether an orderly wind-down of Heta is possible outside of an insolvency, especially in the period outside of the debt moratorium currently in place,” Heta said in its annual report published on its website.

Monday, June 29, 2015

Tuesday June 30 Housing and Economic stories

Judge Adds The Fed To List Of Financial-Crisis Lawbreakers In AIG Ruling - ( It’s cold consolation for former AIG Chairman Hank Greenberg and his shareholders now, but a federal judge in Washington has ruled that the Federal Reserve broke the law when it seized almost 80% of AIG’s stock and charged it loan-shark rates for an $85 billion bailout in the depths of the financial crisis. The Fed’s behavior was all the more reprehensible because it gave other financial firms like CitigroupBank of America, Goldman Sachs and Morgan Stanley tens of billions of dollars in emergency loans on better terms. Many of those firms, Judge Thomas C. Wheeler noted in his 75-page decision, “engaged in much riskier and more culpable conduct than AIG, but received much more favorable loan treatment from the Government.”

Are junk bonds sending an early warning to markets? - ( While stocks are mildly higher over the past two months, high-yield bonds have fallen by more than 2 percent—and some say that presents an early warning for markets as a whole. To Larry McDonald, head of U.S. strategy with Societe Generale's macro group, the underperformance of high-yield bonds is a "systemic risk indicator," showing the possibility of instabilities within the financial system. After all, high-yield bonds tend to track stocks closely. Since they are much more sensitive to concerns about default than most fixed-income products—hence their high yields, and their more colorful "junk bond" moniker—they are much more levered to the business cycle and the state of the economy. That makes them similar to stocks. One theory is that "cracks" show in the high-yield market before they appear in the stock market, making divergence between junk bonds and stocks an indicator for where the market is going next. Since junk bonds have been underperforming, the concern would be that stocks are next to fall.

Greek central bank governor warns of 'uncontrollable crisis' - ( Greece’s radical Syriza government has confirmed that it will run out of money by the end of the month unless its creditors agree to release €7.2bn (£5.1bn) in bailout funds. As Athens prepared to meet its lenders on Thursday amid an increasingly sour atmosphere of claims and counter-claims, lead negotiator Euclid Tsakalotos conceded that the country does not have the funds to make a €1.6bn payment due to the International Monetary Fund due on 30 June. Athens delayed a payment to the IMF earlier this month, saying it would take advantage of a technical loophole, allowing it to “bundle” three tranches due this month into a single €1.6bn payment. But Tsakaolotos has now admitted that Greece simply does not have the money. He also underlined the fact that while Greece is still willing to make concessions to its lenders, it will not make pensions cuts — a key point of contention in the negotiations.

Even millionaires live paycheck to paycheck - ( It seems the rich are like the rest of us after all. One in five respondents with investable assets of $100,000 to $1 million, and 1 in 10 with investable assets of $1 million up to $10 million believe they have too much debt and are living paycheck to paycheck, according to a poll taken by MaritzCX. Among the 1,044 investors surveyed in November and December, 45% are worried they won't have enough income to last through retirement. And 30% believe they will have to work during that period of their lives. "What this is saying to me is even when you start looking at people who have managed to accumulate some wealth, they are also concerned about their future and about retirement,'' says Rich Brose, senior director strategic consulting for financial services at MaritzCX, which provides customer experience software and research services to help companies improve sales and customer retention. "They share a lot of the same concerns as ... the middle class and even people who might be struggling a little bit more.''

Govt lifts 'robosigning' restrictions on certain banks - ( Restrictions placed on certain banks for mortgage "robosigning" will lift as the firms have taken steps to fix their processes and pay restitution, the Office of the Comptroller of the Currency said Wednesday. The agency's consent orders against Bank of AmericaCitibank andPNC Bank will be terminated. Other banks will face additional servicing restrictions as they have not met all of the requirements of their consent orders. Institutions including EverBankHSBC BankJPMorgan ChaseSantanderU.S. Bank and Wells Fargo have not reached the standards set in their agreements, the OCC said. However, it will not impede consumer access to mortgages as they will still be able to make loans.