Wednesday, June 30, 2010

Thursday July 1 Housing and Economic stories


Munis Ambacked into corner - ( Ambac, the US company that started the municipal bond insurance business in 1971, may soon put another nail in the industry’s coffin. On Wednesday it warned that it might file a prepackaged bankruptcy amid continuing fallout from its expansion into exotic structured finance and an inability to segregate its separate business lines. Bond insurers occupied a key role in America’s $2,800bn municipal debt market, insuring more than half of issues as recently as a few years ago or more than $1,000bn in outstanding principal. Their raison d’ĂȘtre in the face of a minuscule historical default rate was the impossibility of conducting due diligence on thousands of tiny issuers and extreme risk aversion by investors.

U.S. Faces 'Severe' AIG Losses, Says Panel - ( A watchdog panel reviewing the bailout of American International Group Inc. said U.S. taxpayers "remain at risk for severe losses" and that the government didn't act aggressively enough to protect U.S. taxpayers during the 2008 rescue. In a lengthy report, the bipartisan Congressional Oversight Panel concluded that the U.S. government, which owns nearly 80% of the insurance giant, is likely to "remain a significant shareholder in AIG through 2012" and it is unclear if taxpayers "will ever be repaid in full." The report contrasted with more optimistic comments Wednesday by Federal Reserve Chairman Ben Bernanke before a U.S. House panel. Mr. Bernanke said that every major financial institution receiving government aid at the height of the financial crisis has repaid taxpayers with interest and dividends, and AIG is not expected to be any different. "AIG, I believe, will repay," he said. Since September 2008, the Federal Reserve Bank of New York and the Treasury Department have committed up to $182.3 billion to support AIG and provided roughly $132 billion of those funds so far. AIG is on the hook to repay about $101 billion mainly through asset sales and stock sales, and the rest is to be recouped from mortgage securities the New York Fed took onto its balance sheet.

‘Short-Term Maneuvers’ Save Public Jobs, Risking Bond Defaults - ( Los Angeles City Councilman Jose Huizar had $10 million to spend on a parking garage for his district. Fellow lawmakers voted instead to use the money for expenses such as payroll. “Ten million is 150 city workers, 100 police officers,” Bernard Parks, chairman of the Council’s Budget and Finance Committee and a former Los Angeles police chief, said at an April 29 meeting. “If we can find $10 million and not give 150 pink slips, that is the best use of the money.” States and cities haven’t cut jobs with the same vigor as companies even as they face deficits projected by the Center on Budget and Policy Priorities and the National League of Cities to reach $200 billion in the year beginning July 1. That’s raised investor concerns about more public debt defaults, which totaled $6.3 billion last year and $8.2 billion in 2008, the most in 30 years, says Distressed Debt Securities, a Miami Lakes, Florida, newsletter. “There are a lot of municipalities that really need to make deep cuts and not just continue short-term maneuvers,” said Ashton Goodfield, a fund manager and head of municipal-bond trading at DWS Investments in Boston, which holds $29 billion of public debt. “This is the time to do it.” Cities and states have sacrificed services during the steepest recession since the 1930s as voter and union opposition and federal stimulus money steered them from labor cuts like those at companies. Public employment fell 1.2 percent, or by 231,000 jobs as of May, since peaking in August 2008, U.S. Labor Department figures show. That’s less than at private employers, which trimmed payrolls 6.9 percent, or nearly 8 million jobs, since a high in December 2007.

Ambac May File Pre-Packaged Bankruptcy as Regulators Limit Cash - ( Ambac Financial Group Inc. said it is considering filing a prepackaged bankruptcy because it’s unable to take dividends from its bond insurance unit to cover holding company expenses. “It is highly unlikely AAC will be able to make dividend payments to the company in the foreseeable future,” Ambac said in a regulatory filing dated today, referring to Ambac Assurance Corp., its principal operating unit. Ambac Assurance, the second-largest bond insurer before the onset of the credit crisis, is issuing so-called surplus notes to policyholders rather than covering their full claims. Ambac announced yesterday that it replaced $16.4 billion of collateralized debt obligations backed by subprime mortgages in exchange for $2.6 billion in cash and $2 billion of newly issued surplus notes in AAC. “The company’s liquidity and solvency are largely dependent on dividends and other payments from AAC and on the value of AAC after the surplus notes have been redeemed, repurchased or repaid in full,” the company said in the filing.

BP shares plunge on oil spill fallout fears - ( Shares in BP plunged again in early trading in London -- extending a sell-off in New York -- as U.S. political pressure intensified on the British oil company to halt dividend payments and fork out greater compensation for the Gulf of Mexico oil spill. The stock had dropped as much as 11 percent to a 13-year low at the open as experts warned dividend payouts would likely be postponed. However, it recovered some ground by midmorning, trading 4.5 percent lower at 373.80 pence ($5.46) as analysts suggested the sell-off was overdone. As BP finds itself caught between an angry U.S. administration and unhappy shareholders, Prime Minister David Cameron's office said the British leader would discuss the issue with President Barack Obama on a scheduled telephone call over the weekend. Investors are fretting about the rising costs facing BP after Obama suggested it should pay unemployment benefits to thousands of oil workers laid off during a moratorium on deep-sea drilling triggered by the spill. BP tried to reassure investors before the London Stock Exchange opened, saying it was in a strong financial position and it saw no reason to justify the U.S. sell-off, and many analysts agree that the company can withstand the crisis. But most market experts also acknowledge that the political rhetoric surrounding the accident was outweighing financial fundamentals. "We don't believe BP has a funding issue but given the overwhelmingly hostile nature of the U.S. government the company may decide to suspend payments until the wells are capped and the clean-up sufficiently advanced to convince the US that it can afford all the costs as well as pay dividends," said Evolution Securities analyst Richard Griffith. "Unilateral action against BP over its U.S. operations, be it unreasonable or illegal, hangs over BP."


May foreclosure rate steadies as banks hold back - (

World leaders leaving stimulus tactics aside amid fledgling recovery - (

Bernanke Warns of ‘Unsustainable’ Debt - (

Fed Says Economy Improved, With ‘Modest’ Gains in Many Regions - (

Bernanke warns U.S. of 'unsustainable' debt level - (

Bernanke Says Gold, Commodities Conflict on Inflation - (

Goldman Sachs Hudson CDO Said to Be Target of Second SEC Probe - (

Goldman Faces $1 Billion Suit - (

BOE Keeps Stimulus in Place as Cameron Plans Emergency Budget - (

New Zealand Raises Rate for First Time in Three Years - (

China Exports Jump Most Since 2003, Property Prices Rise 12.4% - (

Trichet Under Pressure Over Bonds as Spreads Widen - (

Honda Extends China Factory Shutdowns as Worker Unrest Widens- (

China’s May Property Prices Rise More-Than-Estimated 12.4% - (

EU to Expand Rescue If Package Fails, Van Rompuy Says - (

China’s Five-Month Oil Imports Rise on Fuel Demand - (

Asia Best Placed to Weather Europe Crisis as China Exports Soar - (

China’s Hunger Fuels Exports in Remote Russia - (

More Labor Trouble in China for Honda - (

Lincoln's Win Juices Overhaul Effort - (

E.U. Refuses to Be Rushed on Regulating Financial Practices - (

Tuesday, June 29, 2010

Wednesday June 30 Housing and Economic stories


Ambac Warns of Default as Bondholders Organize - ( Ambac Financial Group, the bond insurer whose toxic assets were seized by Wisconsin state regulators in March, said it could default on its loan obligations and was still considering filing a prepackaged bankruptcy. The company, which has had trouble writing new business since losing its 'AAA' credit rating in 2008, said in a U.S. Securities and Exchange Commission filing on Tuesday that "as early as the second quarter of 2010" it may decide not to make interest payments on its debt, which could result in a default. Holders of some of Ambac Financial Group's $1.24 billion senior debt, have formed an ad hoc committee and will try to push the company into a prepackaged bankruptcy, people familiar with the matter told Reuters. Ambac shares fell as much as 16 percent in extended trading following the news. The bondholders' committee, which includes hedge funds Centerbridge Partners, Halcyon Capital Management, Mangrove Partners and Camden Asset Management, is looking to use a prepackaged bankruptcy to exchange their debt for equity in the company, the sources said.

Mortgage Mystery At The FHA - ( There's a big head-scratcher hanging over the mortgage market. Government-controlled Fannie Mae and Freddie Mac buy mortgages from banks and mortgage companies. Now, as they face the costs of huge defaults, both are scouring their books to identify loans they should never have been sold, often because borrower data weren't true. And mortgage makers are making big payments to Fannie and Freddie as reimbursement for these badly underwritten loans. Oddly, one large government player in mortgages, the Federal Housing Administration, has disclosed next to nothing about its reimbursements. And without such information, it is impossible to judge whether the FHA has taken proper steps to force mortgage makers, and not taxpayers, to bear the costs of faulty loans. Does the FHA stand to claim back large amounts? Traditionally, it has insured loans made to lower-income borrowers, often with poor credit histories. The FHA's business actually declined in the housing boom, because it required documentation that lenders were able to avoid on subprime and Alt-A mortgages, and because it stuck mainly to standard fixed-rate loans. And that higher level of documentation, and the fact that its business dipped during the boom, are possible reasons why the FHA mightn't have the right to collect large reimbursements.

Spain Small Lenders Struggling for Funding - ( Smaller Spanish banks are losing access to the European repo market due to concerns Spain could be heading for a debt crisis along the lines of EU partner Greece, a top financial source in Spain said on Wednesday. The repo market is wary of smaller Spanish lenders because of their real estate losses and because they can only offer Spanish government bonds as collateral. The sharp rise in Spain's 10-year government bond yield since mid-May, to a peak of 4.66 percent from below 4.00 percent — has brought it above the previous high of 4.50 percent hit just before the European Union agreed on a trillion-dollar financial safety net for euro zone countries in early May. "The smaller Spanish banks cannot finance their positions in (Spanish) government bonds through the repo market outside Spain. This shows just how little appetite there is for Spanish government risk outside Spain," the financial source said. "And the problem is these small lenders do not have access to the interbank market so basically they are tapping the ECB to cover short-term funding needs," the source said.

Geithner: Fannie and Freddie next for reform, someday - ( Geithner said that embattled mortgage lenders Fannie Mae and Freddie Mac will be addressed once work is finished on financial reform.

Treasury Secretary Timothy Geithner said Thursday that embattled mortgage lenders Fannie Mae and Freddie Mac will be addressed once work is finished on the financial regulatory reform bill. Geithner told CNBC said that he is confident Congress and the White House will move "quickly" to reform the government-controlled firms. "We certainly welcome the broad support we've heard from Republicans and Democrats about the need to go forward on reform," he said. "And we're going to move on reform of Fannie and Freddie and the broader housing finance system as soon as we get this bill passed." One of the Republicans' main criticisms of the financial bill that passed the House and Senate over the past few months is that it did not address Fannie and Freddie, which many blame for causing the housing crisis that helped fuel the overall economic meltdown in 2008. The firms were taken into government conservatorship at the apex of the 2008 financial crisis. The firm has taken billions in government funds, but some Republicans have accused the Obama administration of using them as more of a public policy tool to support specific housing efforts.

Fannie Mae's Duncan Says Buyer-bait Tax Credit Did Not Create Demand - ( The federal homebuyer tax credit shifted demand in the U.S. housing market without having a lasting impact on prices, according to Douglas Duncan, chief economist of Fannie Mae, the largest mortgage financier. “Temporary tax credits change behavior temporarily,” Duncan said today at a National Association of Real Estate Editors conference in Austin, Texas. “It’s simply shifted demand forward.” To qualify for the tax credit, buyers were required to sign a contract by April 30 and complete the purchase by July 1. Housing data have shown demand may cool after the deadline. A Mortgage Bankers Association index of applications for loans to purchase properties fell last week to the lowest level since 1997. The number of homes on the market in April surged by the most in a decade, the National Association of Realtors said. “It actually created some price appreciation that’s not supportable long term,” Duncan said of the tax credit.

Manhattan Empty Condos May Be Rentals as Leases Reign - ( When Richard J. Bailes and his family paid $4.1 million in March for a four-bedroom apartment in the glass and steel Georgica on Manhattan’s Upper East Side, just eight of the building’s 58 units were occupied, he said. Bailes and his family had plenty of places to choose from. About 8,700 new condos sit empty in Manhattan, with 75 percent not even listed for sale yet, said appraiser Miller Samuel Inc. Priced at levels the market no longer supports, they’re selling so slowly it would take as long as seven years to find buyers for them all, said Jonathan Miller, president of Miller Samuel. Miller teamed up with Westwood Capital LLC and developer Gerald Guterman to raise as much as $1 billion to buy empty condos and manage them as rentals. Guterman made his name in the 1980s doing just the opposite. “Things are going to run out of steam at pretty predictable times,” said Daniel Alpert, managing partner of New York-based Westwood Capital. “In the case of these condos, it’s when the reserve funds run out.” Builders can’t afford to cut prices because they borrowed too much at the height of the market, according to Miller. He and his partners are betting that lenders will seek to sell their condo units at a loss rather than foreclose on the building and assume all the developer’s liabilities until the units are sold.


Are Stocks Near Bear Market? - (

Get Into Cash, Asia Catching Europe Flu: Analyst - (

Reduce Stock Holdings Immediately: Harris' Ablin - (

BP Oil Spill — A Tragedy In Pictures - (

Luxury Houses Losing Value - (

May House-Buying Activity Looks Worse Than Expected - (

Did Fannie and Freddie Cause the Housing Bubble? - (

Big increase in mortgage foreclosures predicted for this year - (

Strategic Default: The $10,000,000,000 Monthly Economic Stimulus - (

Why Banks Try to Make Borrowers Feel Like Sinners When They Can't Their Mortgages - (

Foreclosure developer thriving from rentals - (

Why We're Falling Into a Double-Dip Recession - (

Scariest Job Chart Ever Just Got Even Scarier - (

Disneyland, businesses, enjoy Prop. 13 loopholes - (

BP Not A Public Company By End Of Summer? - (

Cramer: Why We Won't Revisit Dow 6,500 - (

Housing's Double Dip: Numbers Tell How Bad It Is - (

Drumbeat for Fed rate hike gets louder The Fed - (

A Move to Ease Student Debt Lifetime Slavery - (

Break the Credit-Rating Rules - (

Automobile-dependent real estate and jobs - (

Small-time counterfeiter arrested, Federal Reserve not even investigated - (

Clarke and Dawe on the Subprime Mess - (www.old but good) - (

Monday, June 28, 2010

Tuesday June 29 Housing and Economic stories


Panic then silence over suspicious Chinese drywall - ( Letters and e-mails show that builders, suppliers, contractors and others raised red flags about drywall imported from China nearly four years ago, but none of them disclosed their concerns to the public. At least two builders were ``panicking'' in late 2006 over the smell coming from drywall they had acquired from Miami-based Banner Supply, according to e-mails and letters, and the builders had isolated the problem to wallboard made by a Chinese manufacturer. Despite concerns -- one builder said it could not sell some of its homes because the smell was so potent -- none went public with their problems. It wasn't until at least two years later that homeowners began reporting the effects of hydrogen sulfide emissions from the drywall eating away at their properties, and some believe, their health. The letters and e-mails are part of court files in local and federal lawsuits against many companies in the drywall production and supply chain. The documents offer a glimpse of what some call a concerted effort to deceive consumers. ``What I can say for the consumers: They were duped,'' Miami attorney Ervin Gonzalez said.

Car dealer gets 12 years for mortgage fraud; used voodoo dolls targeting investigators - ( Downey car dealer gets 12 years in house-buying fraud scheme. Ruben Hernandez allegedly used voodoo-like dolls targeting the prosecutor and investigators in the case. A Downey used-car dealer who allegedly used voodoo-like dolls targeting the prosecutor and investigators was sentenced Wednesday to 12 years in prison for a multimillion-dollar house-buying fraud scheme. Ruben Hernandez was accused in 2008 in a series of house purchases using fake Social Security numbers and fake bank statements that defrauded banks of about $4 million. The U.S. Marshals Service took Hernandez into custody in February 2009 after he became involved in a high-speed chase. A search of his Pasadena home uncovered some unexpected items, authorities said. "Investigators went into one of the bedrooms, and it was a shrine with a cross and all kinds of skeletons and stuff," said Eugene Hanrahan, an L.A. County deputy district attorney.

Mortgage, credit card, student loan, auto loan debt also $13 trillion! - ( Every man, woman, and child would owe an average of $43,000 if we divided up mortgage, credit card, student, and auto debt in the United States. Of course, this is based on the current population of 309 million. But we know this isn’t exactly accurate since an infant really didn’t charge up a credit card or take out a HELOC. We should break this down to each individual household. If we average this figure out over all U.S. households the amount comes out to over $120,000 per household. When 1 out of 3 Americans have no savings, how do you think many will be able to pay off their debt? For decades, the model has revolved around servicing debt and not necessarily paying the initial balance off. But many American families are feeling the deep psychological strain of an economy largely built on debt.

Greece to Sell Assets to Help Pay Down Deficit - ( Greece announced Wednesday its plans for a big sale of state-owned assets, as the struggling government moved to shrink its huge budget deficit and fulfill the terms of an international rescue package. The government will sell 49 percent of the state railroad, list ports and airports on the stock market, and privatize the country’s casinos, the Finance Ministry said after a cabinet meeting in Athens. The government will also sell minority stakes in water utilities serving Athens and Thessaloniki, sell 39 percent of the post office, and combine its vast real estate assets into a holding company to be listed on the stock market. The sales are intended to help raise 3 billion euros, or about $3.7 billion, from 2011 to 2013. The government agreed to raise a billion euros a year over that time as a condition of the 110 billion euro aid program it received from the European Union. Greece has been under pressure to get its finances in order since the Socialist government announced last autumn that its center-right predecessor had greatly understated the size of the deficit, which is now running at about 13.6 percent of gross domestic product.

Builder: Buyer-bait tax credit disappointing - ( The CEO of Hovnanian Enterprises Inc. said Thursday a final push by homebuyers in April to qualify for a government tax credit didn't give the homebuilder's sales as big a boost as he'd hoped. The company's new home contracts tumbled 17 percent in the February-April quarter versus a year ago. Excluding communities that are no longer open, new contracts were flat, however. Those results exceeded the builder's internal projections, but still disappointed. "I'd be less than candid if I didn't say we were hoping for better sales due to the impact of the homebuyer tax credit," CEO Ara Hovnanian said. The tax credit - $8,000 for first-time homebuyers and $6,500 for repeat buyers - helped stoke sales for homebuilders this spring. In April, new home sales nationwide jumped 14.8 percent; in March, new home sales posted the biggest monthly increase in 47 years. The government incentive expired April 30, although homebuyers have until June 30 to close on their purchase. That had many builders anticipating they would see a spike in sales as buyers raced to qualify for the credits.


BP flexes muscle in D.C. - (

Quitting the day job to go hiking - (

Public Union Parasites Move To Bar California Bankruptcies - (Mish at

Could BP walk away with a $75M fine? - (

Say goodbye to full-time jobs with benefits - (

Why does government subsidize mortgage debt? - (

Should you rent or buy? - (

Bay Area jobs hit harder by recession than U.S. - (

Desperately seeking COBRA subsidy - (

China's Housing Bubbles: Quality Research Required - (

Krugerrand Output Jumps to 25-Year High on European Debt Crisis - (

National debt hits $13 trillion - (

New iPhone, iPad limits: 2 GB won't get you far - (

Chrysler recalls 285,000 vehicles - (

"Banks" allow members to pay with time, not cash - (

Econophysicist Accurately Forecasts Gold Price Collapse - (

Drilling ban to cost thousands of jobs - (

Foreclosure storm continues in Central Valley - (

Sydney quickly becoming the city few can afford to live in - (

Sunday, June 27, 2010

Monday June 28 Housing and Economic stories


The next generation of house buyers has too much college debt - ( Similar to the housing bubble, it was a legislative push to bring a college education to the masses that stimulated demand. Grants and loans became much more widely available over the last 10-15 years. And, safe from bankruptcy discharge, student loan debt became an easy and safe investment. Like anything else, increased demand lead to increasing prices and, therefore, more stimulus and higher loan amounts. With the economy seemingly booming, few thought twice about taking on huge debts. After all, their college education would lead to a high-paying job. Colleges used the extra cash to expand in every direction, adding buildings, professors, increasing salaries, and expanding facilities. Fueled by willing investors and government mandate, the price spiral grew quickly. All of these actions were taken in the name of helping students, but few ever stopped to consider that loaning an 18-year-old kid $40,000 a year might not be “helping” him. In fact, just like housing, the beneficiaries weren’t the borrowers, but the lenders, brokers, and sellers. It is their collective, repugnant greed to blame. An example from the New York Times: Meanwhile, universities like N.Y.U. enrolled students without asking many questions about whether they could afford a $50,000 annual tuition bill. Then the colleges introduced the students to lenders who underwrote big loans without any idea of what the students might earn someday — just like the mortgage lenders who didn’t ask borrowers to verify their incomes.

Bizarre ad about wrecking your house before foreclosure - ( This crazy video provides a list of 34 items in house that will give you 30,000 in cash.

Congress Eyes $15 Billion Construction Loan Guarantee Program - ( Morons from Congress providing money to the Homebuilders industry for loan guarantees when we have 2M or more vacant homes already. Miller, Maloney, and Baca not addressing any real problems and giving free taxpayer money to their biggest campaign supporters….. Hoping to jump-start housing construction, three legislators have introduced a bill in Congress that would create a $15 billion, three-year loan guarantee program for acquisition, development, and construction financing. Introduced by Rep. Brad Miller (N.C.), with co-sponsors Carolyn Maloney (D-N.Y.) and Joe Baca (D-Calif.), the bill would create a new program within the Treasury Department to guarantee loans on "viable" residential construction projects. The government would be authorized to spend up to $15 billion. While some reports indicate the program would be for smaller home building companies, the legislation as written doesn't make such a distinction. The Treasury Secretary would determine who is eligible, based on whether the "company is credit worthy, reputable, and has a record of successful residential building projects." While the bill doesn't enjoy widespread support currently, it will doubtless pick up proponents once the numbers for housing starts in May are released. They are expected to show a sharp decline. Many Congressmen facing re-election in November will no doubt want to be part of an effort to prop up a housing industry that appeared to get back on its feet in the early part of the year.

The Future Of America's Working Class - ( Watford, England, sits at the end of a spur on the London tube's Metropolitan line, a somewhat dreary city of some 80,000 rising amid the pleasant green Hertfordshire countryside. Although not utterly destitute like parts of south or east London, its shabby High Street reflects a now-diminished British dream of class mobility. It also stands as a potential warning to the U.S., where working-class, blue-collar white Americans have been among the biggest losers in the country's deep, persistent recession. As you walk through Watford, midday drinkers linger outside the One Bell pub near the center of town. Many of these might be considered "yobs," a term applied to youthful, largely white, working-class youths, many of whom work only occasionally or not at all. In the British press yobs are frequently linked to petty crime and violent behavior--including a recent stabbing outside another Watford pub, and soccer-related hooliganism. In Britain alcoholism among the disaffected youth has reached epidemic proportions. Britain now suffers among the highest rates of alcohol consumption in the advanced industrial world, and unlike in most countries, boozing is on the upswing.

Five Failed Banks Cost the FDIC $317m, on Track for Record Year - ( Regulators shut down five separate banks on Friday, naming the Federal Deposit Insurance Corp. (FDIC) as receiver. In an ongoing indication of investment opportunities in failed banks, the FDIC effectively found buyers for essentially all assets and deposits of the shuttered firms. The failures, however, are expected to cost the FDIC's Deposit Insurance Fund (DIF) $317m. The five transactions bring the running total of banks shut down so far in 2010 to 78, more than twice the 36 failures seen by the same time last year. The growth in failures is on par with recent explosions in the volume of shuttered banks, according to audit firm Grant Thornton. A new white paper (download here) finds that bank failures in 2009 grew nearly 500% from 2008, and represented approximately 70% of total bank failures in the past decade:

Realtors (TM) Want Congress to Corrupt the Tax Credit Timeline - ( The real-estate lobby wants Congress to extend the amount of time that potential home buyers have to complete transactions that qualify for the $8,000 federal home-buyer tax credit. To qualify for the tax credit, buyers had to sign purchase agreements by April 30. Those buyers have until the end of June to close on those sales, and anything that closes after that wouldn’t get the tax credit. The problem, says the National Association of Realtors, is that many of those signed contracts are on foreclosures and short sales, where the lender allows the house to sell for less than the amount owed to the bank. Those transactions take longer than normal to process, and there’s some concern that many sales may not actually close in time. “There could be a sizable number of home buyers who responded to tax credit incentives, but may encounter problems,” said Lawrence Yun, the trade group’s chief economist, in Wednesday’s report that showed a 6% surge in pending home sales during April. The NAR and its members are asking Congress for flexibility with the June 30 deadline, but it is unclear when—or even if—something would happen. (The National Association of Home Builders says it is not asking for a deadline tweak.) Congress would have to pass such a measure quickly, which is no easy task. One possibility would be to attach the extension to a piece of legislation that’s already winding its way through both chambers.


Euro Zone Faces Zero Growth, US Facing Trouble: Roubini - (

Hungary Roils Markets - (

Spain's Labor Reform Could Sideline Unions: Report - (

Home-debtor epiphany - (

Net worth of FDIC increased slightly, to negative $20.7 billion - (

Canada raises interest rates - (

Mortgage Walkaways Have Huge Incentive - (

Hungary Gov't Aims to Meet 2010 Deficit Goal - (

ECB's Trichet Says Bank Stress Tests Nearly Complete - (

Bank of America Workers Sue for Overtime - (

Weak Euro Hurts Greece? - (

Foreclosure crisis hitting hard on the west side of the Salt Lake Valley - (

Real Estate Dumbass of the Decade - (

Buffett Says He Expects `Terrible Problem' for Municipal Debt - (

Moody's Chief Says CDO Ratings Deeply Disappointing - (

Strategic Foreclosure - (

Saturday, June 26, 2010

Sunday June 27 Housing and Economic stories


Growing ranks of long-term jobless face tough odds - ( If you lose your job these days, it's worth scrambling to find a new one — fast. After six months of unemployment, your chances of landing work dwindle. The proportion of people jobless for six months or more has accelerated in the past year and now makes up 46 percent of the unemployed. That's the highest percentage on records dating to 1948. By late summer or early fall, they are expected to make up half of all jobless Americans. Economists say those out of work for six months or more risk becoming less and less employable. Their skills can erode, their confidence falter, their contacts dry up. Their growing ranks also will keep pressure on Congress to keep extending jobless benefits, which now run for up to 99 weeks. Overall, the economy has created a net 982,000 jobs this year. But for Jeff Martinez and the record 6.76 million others who have struck out for six months or more, their struggles are getting worse, not better. Martinez, 40, a salesman in Washington, D.C., says he's logged more than 200 interviews in the past three years. Decked out in a dark navy suit and Burberry tie, Martinez projects drive and a zest for deal-making. And yet the most urgent deal of his career — finding a job — eludes him.

Debtors’ Prism: Who Has Europe’s Loans? - ( IT’S a $2.6 trillion mystery. That’s the amount that foreign banks and other financial companies have lent to public and private institutions in Greece, Spain and Portugal, three countries so mired in economic troubles that analysts and investors assume that a significant portion of that mountain of debt may never be repaid. The problem is, alas, that no one — not investors, not regulators, not even bankers themselves — knows exactly which banks are sitting on the biggest stockpiles of rotting loans within that pile. And doubt, as it always does during economic crises, has made Europe’s already vulnerable financial system occasionally appear to seize up. Early last month, in an indication of just how dangerous the situation had become, European banks — which appear to hold more than half of that $2.6 trillion in debt — nearly stopped lending money to one another. Now, with government resources strained and confidence in European economies eroding, some analysts say the Continent’s banks have to come clean with a transparent and rigorous accounting of their woes. Until then, they say, nobody will be able to wrestle effectively with Europe’s mounting problems.

Hungary Default Comments ‘Unfortunate,’ Varga Says - ( Hungary’s economic situation is stable and recent comments about a possible default were “unfortunate,” the government said, pledging to stick to the budget deficit goal approved by the country’s creditors. “Any comparison with countries that have much higher credit default swap ratings than Hungary is unfortunate,” State Secretary Mihaly Varga told reporters today in Budapest. “The comments that have been made about this issue are exaggerated and if they come from colleagues that’s unfortunate.” Comments from Hungarian officials over the previous two days sparked concern that Europe’s sovereign debt crisis may be spreading to eastern Europe. That helped weaken the euro, pushed Hungary’s currency to a 12-month low and borrowing costs rose the most since October 2008, when the country needed an international bailout to avert a default. Prime Minister Viktor Orban, who took power a week ago, sought permission for a wider budget deficit from the European Union and the International Monetary Fund, which led the 20 billion-euro ($24 billion) bailout for Hungary. European Commission President Jose Manuel Barroso this week rebuffed Orban, urging him to continue fiscal consolidation.

California’s Lockyer Seeks Curbs on ‘Naked’ Swaps - ( California Treasurer Bill Lockyer said U.S. and international financial regulators should limit trading of municipal credit-default swaps to help prevent speculative, or “naked,” trading of the derivatives. Lockyer, a Democrat, said lacking an outright ban on speculative use of credit default swaps -- the trading of debt- insurance contracts by investors who don’t own the securities -- regulators should adopt capital-margin requirements to reduce leverage and prevent abuses. “The municipal CDS market, when used by bondholders to hedge risk, can benefit issuers by increasing demand for bonds,” Lockyer, who earlier sought a ban on speculative trading of municipal credit default swaps, said today in a statement. “But naked trading of CDS by investors who don’t own California bonds poses a potential danger to taxpayers.” The growth of credit default swaps has raised questions among officials including Lockyer about whether Wall Street banks that are paid to underwrite their bonds also profit by arranging or promoting bets against them. Credit-default swaps tied to subprime home loans amplified the financial crisis that struck more than two years ago. There were $31 trillion of credit-default swaps outstanding in the first half of 2009, more than double the level four years earlier, according to the International Swaps and Derivatives Association.

The Next Shoe: Hungary Pressed To Disclose The 'True State' Of Its Finance's - ( The Hungarian government has preemptively warned that it will soon outline massive economic restructuring... since it will soon, ominously, disclose the true state of its 2010 budget. The Hungarian currency, the forint, fell and Hungarian bond yields rose on the news: CNBC: "After the figures reflecting the true state of the economy (become public), within 72 hours an economic action plan must be put on the table," Prime Minister Viktor Orban's spokesman Peter Szijjarto told TV2 television. "It cannot be adjustment, about patching up (the economy)...measures aimed at improving the financial situation must be linked with deep structural changes," Orban told the same television channel over the phone from Brussels.


Hiring weak in May except for Census workers - (

Payrolls in U.S. Increase in May Less Than Forecast - (

U.S. Stocks Tumble as Job Growth Trails Forecasts; Alcoa Falls - (

Gold Futures Rebound on Demand for Alternative to Slumping Euro - (

Treasuries Rally on Payrolls Report, Spread of European Crisis - (

Oil Tumbles Most in Four Months on U.S. Jobs Data, Euro Drop - (

G20 scraps plans for universal bank tax - (

U.S. stock market to start week with worry list - (

Consumer advocates call for tough protections in final regulation law - (

Hungary to publish budget report after mkt turmoil - (

German businesses could steer the country out of the eurozone - (

ECB Advocates Fiscal Tightening as Geithner Wants Demand Growth - (

Job Data Casts Pall Over Economic Recovery - (

Weak job growth puts brakes on steady recovery - (

Regulators seize three banks, year total at 81 - (

Cap Slows Gulf Oil Leak as Engineers Move Cautiously - (