KeNo's Housing and Economic Portal: Friday November 11 Housing and Economic stories

Thursday, November 10, 2011

Friday November 11 Housing and Economic stories

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Americans ‘Hooked on Government’ as Record Number Get Benefits - (www.bloomberg.com) Political dysfunction is often blamed for Congress’s inability to curb the U.S. budget deficit. An even bigger obstacle may be the American public. A record 49 percent of Americans live in a household where someone receives at least one type of government benefit, according to the U.S. Census Bureau. And 63 percent of all federal spending this year will consist of checks written to individuals for which the government receives currently no services, the White House budget office estimates. That’s up from 46 percent in 1975 and 18 percent in 1940. Those figures will climb in coming years. The 75 million baby boomers have only begun their long march into retirement, while President Barack Obama’s health-care overhaul will extend insurance coverage to more than 30 million additional people.

Argentina Tightens Foreign Exchange Rules as Capital Flight Accelerates - (www.bloomberg.com) Argentina stepped up its efforts to stem capital flight and shore up the peso by tightening restrictions on foreign-exchange purchases in South America’s second-biggest economy. Investors purchasing companies or real estate will be required to deposit the full amount of the sale in Argentina, according to a statement sent by the central bank yesterday. In addition, individuals purchasing more than $250,000 per calendar year will need to demonstrate the origin of the funds. The measures target the unregulated foreign exchange market, which investors and companies use to skirt currency limits. The move came one day after President Cristina Fernandez de Kirchner, who won re-election on Oct. 23, issued a decree requiring energy and mining companies to keep all of their export revenue in the country as capital flight accelerates to $3 billion per month, according to estimates by Banco de la Ciudad de Buenos Aires.

MF Global Draws Down on Credit Lines - (www.bloomberg.com) MF Global Holdings Ltd. (MF), the futures broker run by Jon Corzine, drew down on its revolving credit lines this week as the firm reported its biggest quarterly loss and Moody’s Investors Service and Fitch Ratings cut its ratings to junk. The company tapped the entirety of two bank lines, said three people with knowledge of the matter, speaking on condition of anonymity because the move wasn’t disclosed. New York-based MF Global said in an Oct. 25 investor presentation that it had $1.3 billion in unused credit facilities, without giving a date for the tally. MF Global has declined about 65 percent this week and its bonds issued in August are trading at distressed levels as the firm seeks a buyer for its futures brokerage to raise capital. In its second downgrade this week of the firm, Moody’s said “weak core profitability” drove the broker to increase risk buying European sovereign debt.

Europe Looks to IMF, China for Rescue-Fund Cash - (www.bloomberg.com) European officials are studying the idea of an International Monetary Fund channel for money for their enlarged rescue fund, as China said it needed more detail on any potential plan before deciding whether to contribute. The European Financial Stability Facility may explore setting up a special purpose vehicle with the IMF, Klaus Regling, the EFSF’s chief executive officer, said at a briefing in Beijing today. Separately, Chinese Vice Finance Minister Zhu Guangyao said his government wants to hear about particulars such as the extent of loan guarantees to countries including Italy, and how the senior-debt portion would be structured. European leaders aim to tap China, holder of the world’s largest foreign-exchange reserves, for help after moving yesterday to contain the crisis by writing down Greek debt and targeting an expansion of the EFSF to about $1.4 trillion. China may seek to increase its influence at the IMF, a global lender of last resort, as a quid pro quo for contributing, said Tomo Kinoshita, an economist at Nomura Holdings Inc.

Whirlpool to Eliminate 5,000 Jobs, Lowers Forecast as Charge Is Increased - (www.bloomberg.com) Whirlpool Corp. (WHR), the world’s largest maker of appliances, sank the most since 2008 after saying it will cut 5,000 jobs and lowering an annual profit forecast by as much as 36 percent as consumers rein in spending. The shares dropped 12 percent to $53.14 at 10:19 a.m. in New York after earlier touching $52.03 for the largest intraday decline since Oct. 28, 2008. The stock had declined 32 percent this year before today.