Tuesday, December 27, 2011

Wednesday December 28 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Federal reserve report: Home flipping drove housing bubble in Nevada, California, other states - (www.washingtonpost.com) Of course, no mention on how Fed low (zero) federal funds rates caused the housing bubble!!

A new federal report shows that speculative real estate investors played a larger role than originally thought in driving the housing bubble that led to record foreclosures and sent economies plummeting in Nevada, California, Arizona, Florida and other states. Researchers with the Federal Reserve Bank of New York found that investors who used low-down-payment, subprime credit to purchase multiple residential properties helped inflate home prices and are largely to blame for the recession. The researchers said their findings focused on an “undocumented” dimension of the housing market crisis that had been previously overlooked as officials focused on how to contain the financial crisis, not what caused it.

Felix Zulauf: A Coming Depression Will Lead To The Collapse Of The Euro - (www.businessinsider.com) Perhaps 3 countries will leave the euro next year. Feliz Zulauf was interview by King World News over the weekend and offered some excellent macro insights on the situation in Europe. The Swiss macro money manager, unfortunately, has been right about the Euro’s developments over the last few years and has a very dire outlook. He says the periphery is entering a periphery that will eventually lead to several nations leaving the currency union: “I think the periphery goes into depression. When you look at a country like Greece, it’s now been in recession for three years. GDP is probably down 15% from the top. The stock market is down 90%, which is the equivalent of 1929 to 1932 in the US. This is depression-like. …Then I expect next year one country, probably three, will exit the euro. That will make 2012 very interesting because there are no rules on how to exit the euro. A country exiting the euro means the next day, when they exit, their banking system is bust. That means the banking system has to be immediately nationalized in a new currency.

Hedge fund redemptions surge after losses - survey- (www.reuters.com) Hedge fund investors finally seem fed up. After months of heavy losses, big and small clients asked funds to return $9 billion in October. That number is three times as large as the $2.6 billion (1.7 billion pounds) they pulled out in September, data from BarclayHedge and TrimTabs Investment Research show. The dramatic jump in redemption requests shrank the industry to $1.66 trillion, its lowest level in nearly two years and well below its $2 trillion peak, the researchers said in a report released on Monday. The redemptions are the largest since July 2009 when $17.8 billion was removed. Hundreds of hedge funds had a deadline for clients to pull out money in October and dozens of clients opted to use it after seeing five straight months of losses.

ECB Overnight Deposits Hit Fresh High - (online.wsj.com) Euro-zone banks' overnight deposits with the European Central Bank hit a fresh high Friday for this year as markets reflected disappointment over the ECB's refusal to step up its bond purchases or become a lender of last resort to governments. Banks deposited EUR334.905 billion with the ECB Friday, the central bank said Monday, up from EUR310.061 billion Thursday and also higher than the previous 2011 peak of EUR332.79 billion reached Dec. 2. Deposits also tend to rise with the approach of the ECB's reserve period for commercial banks. The current reserve, or maintenance, period will end Tuesday.

Top Earners Not So Lofty in the Days of Recession - (www.nytimes.com) Hold the condolence cards, but the recession cost the rich. The share of income received by the top 1 percent — that potent symbol of inequality — dropped to 17 percent in 2009 from 23 percent in 2007, according to federal tax data. Within the group, average income fell to $957,000 in 2009 from $1.4 million in 2007. Analysts say the drop largely reflects the stock market plunge, and most think top incomes recovered somewhat in 2010, as Wall Street rebounded and corporate profits grew. Still, the drop alters a figure often emphasized by inequality critics, and it has gone largely unnoticed outside the blogosphere.

OTHER STORIES:

Scenarios: Next potential flashpoints for euro zone debt crisis - (www.reuters.com)

Europe’s debt summit fails to halt rise in borrowing costs - (www.washingtonpost.com)

Investors May Shun Banks’ Contingent Convertibles as Regulator Adds Limits - (www.bloomberg.com)

U.K. Inflation Slows for Second Month, Led by Cost of Food, Transportation - (www.bloomberg.com)

Retail Sales in U.S. Climbed Less Than Forecast; Pace Slows - (www.bloomberg.com)

Fed Seen Revising Zero-Rate Pledge as Need for Bond Purchases Diminishes - (www.bloomberg.com)

Bernanke's Legacy at Fed: Still a Lagging Indicator- (online.wsj.com)

EU Banks Selling ‘Crown Jewels’ for Cash - (www.bloomberg.com)

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