Monday August 9 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Sacramento County missing $17 million in payroll taxes - (www.sacbee.com) About $17 million that Sacramento County entrusted to a payroll services company is missing, and the county has called on the FBI and the U.S. attorney's office to investigate. The money was supposed to go toward payroll taxes for employees of special districts in the county – dozens of park districts, cemetery districts and others. But the payroll company, Ingentra HR Services, has not kept up with the tax payments, and county officials learned they owe at least $17 million to the Internal Revenue Service, according to documents and information the county released in response to a Public Records Act request from The Bee. The total loss could be higher if the IRS does not waive interest charges on the back taxes. Ingentra has a history of problems paying customers' taxes on time and is a defendant in a 3-year-old lawsuit in federal bankruptcy court in New York that alleges the mishandling of more than $6 million in payroll tax funds for a number of small companies, court records show. The Bee was unable to reach anyone from Ingentra. Employees did not respond to e-mails, the company's phones are disconnected, and an attorney representing the company did not return a call seeking comment. County officials told The Bee that they were unaware of the lawsuit against Ingentra, despite the ongoing litigation in New York. Sacramento County has used the company since 2004, and its monitoring system failed to identify the missing payments to the IRS. The county repeatedly extended the company's contract, trusting Ingentra with between $150,000 and $8 million a week in payroll money.

Social Security Jitters? Better Prepare Now - (www.nytimes.com) If you are worried about the future of Social Security, join the crowd. With the nation’s debt swelling, the pressure on Washington to cut spending will only rise. Social Security may not be the first place lawmakers look. But the program, which has provided a significant financial cushion for retirees and others since the first checks were mailed in 1937, will surely be part of the discussion. The program, which has its own dedicated stream of income, is projected to pay out more this year than it is taking in, but that is a function of the weak economy. Social Security will, according to the last annual report from its trustees, be able to pay full benefits through 2037. Then, if there are no changes in the program in the meantime, the taxes collected will be enough to pay out only about 75 percent of benefits through 2083. So while Social Security’s finances are stable in the short term, most experts agree that the program needs to be bolstered for the long term. Among the proposals circulating is one from Representative John Boehner of Ohio, the House Republican leader, who recently suggested raising the retirement age to 70 for people at least 20 years from retirement. Other options include increasing Social Security payroll taxes, subjecting more income to the tax, reducing initial benefit payments or cutting cost-of-living increases (which would affect current retirees).

Top Hedge Funds That Dodged Crash, Rode Market Back Turn Gloomy - (www.bloomberg.com) Shawn Bergerson, founder of Waterstone Capital Management LP, made money when most hedge funds didn’t: in 2007 and 2008, as the housing-market collapse turned into a global financial rout, and in the recovery that has followed. Bergerson said he bet against convertible bonds of Advanced Micro Devices Inc. in June 2007. More than a year later, he reversed course and bought the securities. After riding the rebound by markets in 2009, he’s wagering against consumer- related stocks because he sees Americans curtailing spending and reducing debt amid high unemployment. “While I’m not expecting a major economic crisis or a disaster, the consumer is in a weak position,” Bergerson, 45, said in a telephone interview from his office in Plymouth, Minnesota, where he oversees $1.17 billion. He’s one of a small minority of hedge-fund managers, including Alan Howard and Colm O’Shea, who haven’t had a losing year since 2007 as they navigated the credit-market freeze, Lehman Brothers Holdings Inc.’s bankruptcy, the biggest stock- market rally in six years and the uncertainty over the direction of the global economy that has marked 2010.

Europe's €30 trillion headache - (www.telegraph.co.uk) European banks have amassed €30 trillion in liabilities and face a serious funding threat over the next two years as authorities withdraw emergency support, according to a new report by Standard & Poor's. The rating agency said banks are at risk of a vicious circle as sovereign debt fears and financial stress feed off each other. "Banking sector woes are eroding sovereign credit-worthiness, which is in turn reducing the real and perceived capacity of governments to support weak banks," said S&P. "The collective funding needs of Europe's banks are vast. The industry is much larger than America's or Asia's. Most of their mortgages and other personal loans stay on their balance sheets and require funding. This contrasts with the US, where financial institutions securitize (these) loans and which do not require balance sheet funding," said Scott Bugie, S&P's credit strategist. Total liabilities are €23 trillion for the eurozone and €8 trillion for the UK, Sweden, and Denmark.

State halts railyard funding - (www.sacbee.com) Just as work hits high gear, the downtown Sacramento railyard redevelopment is threatened with stoppage. State officials have informed railyard developer Thomas Enterprises they are halting payments from a $30 million construction grant until Thomas resolves an outstanding loan default with a private lender. The state's action is the latest stumbling block for the financially troubled Atlanta development company and for its partnership with the city of Sacramento to turn the moribund railyard into a thriving addition to downtown. Thomas, which bought the 240-acre railyard in 2006 from Union Pacific, already is at risk of losing the site for failing to make good on $186 million in loans. The company is attempting to negotiate a resolution with the lender, Inland American of Illinois.

OTHER STORIES:

Moody’s Says Spain May Lose Aaa Rating; U.S. Needs ‘Clear Plan’ - (www.bloomberg.com)

Dollar sinks to 8-month low vs yen as growth slows - (news.yahoo.com/s/ap)

Bonds Soar to Rare Heights - (online.wsj.com)

NYC Offers Build Americas With Sales on Pace for $165 Billion - (www.bloomberg.com)

Takeover Spree May Point to Second-Half Pickup in M&A - (www.bloomberg.com)

Wheat Surges, Heading for Biggest Monthly Advance Since 1973 - (www.bloomberg.com)

Yields Falling to ’04 Levels Spark Busiest July: Credit Markets - (www.bloomberg.com)

Europe Inflation Hits 20-Month High, Jobless at 10% - (www.bloomberg.com)

Japan GDP to Slow as Unemployment Rises, Output Drops - (www.bloomberg.com)

‘Meaningful Correction’ Looms for China Housing, Economists Say - (www.bloomberg.com)

China overtakes Japan as No.2 economy: FX chief - (www.reuters.com)