KeNosHousingPortal.blogspot.com
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At Ambac, Haves and Have-Nots - (www.nytimes.com) LIFE is unfair, as everyone knows. But never has this been clearer than in the aftermath of the financial crisis. Small banks that took no part in reckless lending are saddled with higher costs because of the bailout used to rescue big banks that messed up; individuals who scrimped and saved during the boom are being hurt by interest rates kept artificially low to rescue the economy. Yet another situation involving haves and have-nots is evident in the workout plan covering policyholders of the Ambac Assurance Corporation, the Ambac Financial Group subsidiary that insured municipal and structured finance obligations. Ambac Financial, which has been struggling since the crisis began, filed for bankruptcy protection last Monday after skipping an interest payment on a debt issue. Financial filings from Sept. 30 showed that Ambac had about $912 million in capital and about $7.9 billion in resources to pay claims. THE commissioner’s plan would separate the insurer into two entities. One, known as the “segregated account,” contains $50 billion in policies written on mortgage securities and a small group of other unrelated issues, like debt raised to build a monorail in Las Vegas. There are roughly $30 billion of mortgage securities in this account. Anyone who holds policies on mortgage debt would receive 25 cents on the dollar in cash on the claims and a note for the rest — payable in 2020. The notes carry an interest rate of 5.1 percent. The rest of the company, if the plan goes through, will contain all the other Ambac policies, predominantly those insuring municipal debt. Any parties that hold the $300 billion worth of policies in this segment will receive full value.
Credit Fears, QE2, Elections Prompt Muni Selloff - (online.wsj.com) The tumble in long-term municipal bonds last week comes as a flood of states and municipalities are seeking money in the debt markets, raising the prospect some will have to pay higher yields to lure investors. California leads the list of planned borrowers. The state alone is planning $14 billion of sales before Thanksgiving. Investors have been keeping a close eye on the municipal debt markets in recent months, amid reports—albeit rare—of some municipal borrowers struggling with or walking away from debts.
Troubled California begins $14bn bond sale - (www.ft.com) California on Monday kicks off about $14bn of debt sales, hoping that investor desire for yield will outweigh concerns over the US state’s fiscal trouble in a weak market for local government debt. The Golden State is the starkest example of the financial difficulty facing US local governments. Worries are mounting of a possible rise in defaults or a reassessment of risk in the $2,800bn municipal bond market, hitherto perceived as a safe place to invest. California’s plans to sell its debt come just days after Arnold Schwarzenegger, the state governor whose term ends in January, called a special session of the legislature to address a state deficit projected to be more than $25bn over the next 18 months.
Concern grows as Dublin spurns help - (www.ft.com) Irish officials insisted on Sunday that they did not need fiscal assistance from the European Union, even as pressure mounted on Dublin to accept aid and present plans to restructure its banking system. Senior European officials held informal deliberations late into the evening to decide whether Ireland needed an aid package before the markets opened, in order to reverse a two-week-old bond market collapse that was briefly halted on Friday. Those discussions broke up, however, without any action taken. Although Irish leaders have said the country needs no new cash until June, concerns about its finances have spread to other so-called “peripheral” EU economies, driving up yields on their government bonds. But publicly Irish ministers reiterated that they were not in discussions with the EU and were determined to weather the storm. “We must show clearly that Ireland can stand alone and it’s determined to get out of the financial difficulties we are in,” Batt O’Keeffe, Irish enterprise minister, said on local radio.
O.K., You Fix the Budget - (www.nytimes.com) Imagine that Democrats and Republicans somehow came together and agreed on a grand bargain to cut the deficit. Experts on taxes, health care, entitlements, the military and other federal policies offer their ideas. They decided to cut the pay of federal workers over the next several years, close military bases, reduce foreign aid, eliminate earmarks, expand the payroll tax and cut Social Security benefits for high earners, as the chairmen of a bipartisan commission recommended last week. Democrats also accepted the plan from John Boehner, the presumptive House speaker, to make large cuts to social programs. Republicans accepted President Obama’s proposal to let the Bush tax cuts expire on income above $250,000. If the two parties managed to do all of this, how much of the country’s long-term deficit would they eliminate? About one-third of it. The looming federal deficits are so large that they are likely to occupy much of Washington’s attention for years. Arguably, this new deficit obsession — what some are calling the Age of Austerity — began this month. The midterm elections ushered in a Republican House majority pledging to shrink government, and on Wednesday the leaders of the bipartisan panel released the outline of a deficit-cutting plan for the panel’s members to debate.
OTHER STORIES:
Ireland Says It’s in Talks on Markets as Germany Pushes Aid - (www.bloomberg.com)
Treasuries Slump as Fed Begins Second Round of Monetary Easing - (www.bloomberg.com)
Municipal Bond Market Shudders - (www.nytimes.com)
Asia fund flows feed risk appetite - (www.ft.com)
China Assails Monetary Easing, Citing Inflation, Bubble Risks - (www.bloomberg.com)
Under Pressure Over Bailout, Dublin Defends Its Finances - (www.nytimes.com)
Japan Grew 3.9% in Third Quarter, More Than Forecast - (www.bloomberg.com)
China to consider hot money policies: report - (www.reuters.com)
Strauss-Kahn Says IMF Can Help Ireland’s ‘Difficult’ Situation - (www.bloomberg.com)
Eurozone in talks on Ireland bail out - (www.ft.com)
Financial crisis fears grow in Ireland, Portugal - (www.washingtonpost.com)
California's a fiscal mess, but debt isn't the problem - (www.latimes.com)
BofA Sells BlackRock at Discount as Deadline Looms - (www.bloomberg.com)
1 comment:
The problem with adjusting taxes for where people live ignores the fact that a lot of companies pay more to people living in expensive areas. So under such a plan the people living in an expensive area would be paid more but have reduced tax rates.
Bush tax cut debate
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