KeNo's Housing and Economic Portal: Monday June 20 Housing and Economic stories

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‘Bankrupt’ claim heightens Spanish debt fears - (www.ft.com) The central Spanish region of Castilla-La Mancha is “totally bankrupt”, according to the incoming administration of the rightwing Popular party (PP), an accusation that will deepen concerns about Spain’s budget deficit. The claim has prompted angry denials from the Socialist government. Spain’s 17 autonomous regions and its more than 8,000 municipalities, with €150bn ($220bn) of accumulated debt between them, have become the latest worry for investors in Spain and its sovereign bonds. Although the amount is less than a quarter of total public sector debt, regional debt has doubled since 2008. The 17 regions collectively exceeded official budget deficit limits in 2010, and appear likely to do so again this year despite repeated demands for compliance from the central government. Catalonia, an economy the size of Portugal, says its deficit will be double the target.

Tables Turn: Deputies and movers show up at bank to seize property for homeowner - (www.winknews.com) The foreclosure nightmare started when Warren and Maureen Nyerges paid cash for a home owned by Bank of American in the Golden Gate Estates. They never had a mortgage whatsoever. But, the bank fouled it up and wound up issuing a foreclosure through their attorney. The couple took their case to court and after a year and a half nightmare the foreclosure was dropped. A Collier County judge said Bank of America has to pay the couple's $2,534 legal fees for the error. After more than five months the bank still hadn't paid up. So, the homeowners' attorney did just what the bank would do to get their money, legally seize their assets. "I instructed the deputy to go in and take desks, computers, copiers, filing cabinets, including cash in the drawers," Attorney Todd Allen told WINK News. Outside the Bank of America on Davis Boulevard, several deputies stood by with movers ready to start hauling out the bank's office supplies and furniture.

German Banks Top French With $23 Billion in Greek Sovereign Debt, BIS Says - (www.bloomberg.com) German lenders were the biggest foreign owners of Greek government bonds with $22.7 billion in holdings last year, making them a likely negotiation partner in burden-sharing deals for the country, data from the Bank for International Settlements showed. French banks, which led the group of Greek creditors with overall claims amounting to $56.7 billion, trailed their German peers on sovereign debt with $15 billion, according to the June report from the Basel, Switzerland-based BIS. The overall figure for French banks was inflated by $39.6 billion in lending to companies and households, mainly because of Credit Agricole SA (ACA)’s Greek unit, Emporiki Bank SA. (TEMP) German lenders have no major units in the country. At the end of 2010, Greek government bonds held by banks in countries reporting to the BIS totaled $54.2 billion, of which 96 percent was owned by European lenders. Germany and France, which accounted for 69 percent, may be asked to weigh in when the European Union goes ahead with plans to win Greece creditors to roll over their debt in a “Vienna-style” program.

Prospect of 2nd Greek Bailout Worries Economists - (www.nytimes.com) As European leaders move toward a second bailout for Greece, some economists are warning that a new rescue would merely kick the country’s problems further down the road and might not avert a default that could strain Europe’s monetary union. A year after providing an aid package of 110 billion euros, or $161 billion at current exchange rates, officials are considering whether to lend Greece an additional 50 billion or 60 billion euros as the country struggles with a deep economic downturn. Even if Greece is pulled from immediate danger again, economists say, European leaders face the prospect of providing still more aid over the next several years if Greece cannot revive its economy. “I don’t see how Greece can eventually avoid some kind of default,” said Martin N. Baily, a senior fellow at the Brookings Institution, who served as chairman of Council of Economic Advisers under the Clinton administration. “It’s hard to see how you can avoid the need to finance this over the next five to 10 years.”

Greece to start austerity drive as nation seethes - (www.reuters.com) Greek Prime Minister George Papandreou starts a campaign on Monday to secure a new international bailout by imposing years of austerity on a nation already seething over corruption and economic mismanagement. Unease is growing within Papandreou's ranks about the consequences of waves of budget cuts demanded under successive deals with the European Union and IMF -- and this could turn into alarm after at least 80,000 Greeks crammed a central Athens square to vent their anger over the nation's dire state. As the government struggles to prevent Greece from defaulting on its debt, the Socialist cabinet will discuss informally on Monday the medium-term economic plan which will impose 6.4 billion euros ($9.37 billion) of extra austerity this year alone. This is just the first stage of a drive to turn the plan, agreed on Friday with the EU and IMF as the price of a new financial rescue, into law. Papandreou will then present the plan to the political council of his PASOK party on Tuesday, before the cabinet clears it the following day and sends it to parliament.