KeNo's Housing and Economic Portal: Tuesday November 22 Housing and Economic stories

Monday, November 21, 2011

Tuesday November 22 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Every Single MF Global Client With A Live Trade Is Getting A Margin Call Today - (www.businessinsider.com) I was an MF Global client for years. It originated from several years back, when I trading futures part-time, and the former boutique brokerage I used, Lind-Waldock, was taken over by global commodities broker Refco. Refco blew up some trades and went bankrupt. Then it was taken over by MF Global, which as we now know had its own way of blowing things up. Last week, my MF Global account was locked up all week. Couldn't transfer money out. Couldn't cover and exit trades. And as we now know, I wouldn't have gotten money out even if I tried. What's the bottom line this morning? It's still unclear, but as far as I can tell 75% of the money is missing from my transferred account -- allegedly locked up with the rest of the funds in the bankruptcy at MF Global Trustees.

Euro Finance Chiefs Focus on ‘Bazooka’ Fund as Political Turmoil Deepens - (www.bloomberg.com) European finance chiefs return to Brussels today on a mission to convince global leaders that they can shield countries such as Italy and Spain from the spreading debt crisis by bulking out their bailout fund. As political turmoil envelops governments in Athens and Rome, finance ministers from the 17-member euro area will work on the details of plans to increase the muscle of the European Financial Stability Facility. Leveraging the fund would aim to ramp up spending capacity to 1 trillion euros ($1.4 trillion). European leaders’ failure to resolve the two-year-old debt crisis threatens to drag down the global economy and trigger another financial downturn. World leaders at a Group of 20 meeting last week demanded euro governments do more to staunch the turmoil -- including fleshing out how an expanded EFSF would work -- before they commit fresh cash to the region.

Old Debts Dog Europe's Banks - (online.wsj.com) European banks are sitting on heaps of exotic mortgage products and other risky assets that predate the financial crisis, adding to pressure on lenders that also are holding large quantities of euro-zone government debt. Four years after instruments like "collateralized debt obligations" and "leveraged loans" became dirty words because of the massive losses they inflicted on holders, European banks still own tens of billions of euros of such assets. They also have sizable portfolios of U.S. commercial real-estate loans and subprime mortgages that could remain under pressure until the global economy recovers.

Italy Yield Surge Sets Berlusconi on Bailout Path - (www.bloomberg.com) Italy’s record bond yields are sending the nation down the same path taken by Greece, Portugal and Ireland in the days before they were forced to seek rescues. Italy’s 10-year notes traded above 5.5 percent for 40 days before breaching the 6 percent mark on Oct. 28 and reaching as much as 6.68 percent today. The bailed-out nations followed a similar trajectory, consistently averaging above 6 percent for about a month before crossing the 6.5 percent barrier. After that, it took an average of 16 days for yields to pass the unsustainable 7 percent level. “The trend appears worryingly similar,” said Riccardo Barbieri, chief European economist at Mizuho International Plc in London. “Clearly, the longer it lasts, the worse it gets.”

Eurozone crisis piles pressure on credit default swaps - (www.ft.com) Credit default swaps – the insurance-like derivatives instruments once labelled “financial weapons of mass destruction” – are now themselves under attack. Vilified by regulators after the financial crisis, the $26,000bn market is already slowly being moved towards central clearing, which will see the CDS more tightly controlled. At the same time, however, the swaps have come under renewed pressure in Europe, where politicians say they have contributed to the region’s dramatic debt crisis. These new developments have left many users of CDS scratching their heads. “We need clarity from European leaders and regulators on the CDS market before it freezes,” says Simon Thorp, chief investment officer of fixed income at Avoca Capital. “At the moment huge questions remain.” CDS are used by banks, hedge funds and asset managers as a way of hedging their vast exposures of loans and bonds, or managing counterparty risk. Importantly, such CDS differ from insurance contracts in that users do not have to own the underlying bonds that are being “referenced” by the derivatives – meaning the swaps can also be used to make outright bets on a company or country’s creditworthiness.