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Housings potential 'Death Spiral' - (money.cnn.com) Goodman often pauses several seconds before speaking, choosing her words deliberately. So it is especially distressing to hear her warn of a potential housing "death spiral." On top of the 2.5 million homes that have already fallen to foreclosure since the bubble burst, another 4.5 million mortgage holders have given up paying and are likely to lose their homes, she calculates. Millions more are underwater -- owing more than their home is worth -- and may give up if things don't improve soon. All told, Goodman warns that more than 10 million of the nation's 55 million mortgage holders could default by 2018. If home prices fall much more than the 6% or so she's projecting over the next 12 to 18 months, the picture worsens, as more foreclosures drive prices down further, in turn causing more sheriffs' sales. Goodman's research into who defaults shows that many governmental and private efforts at saving borrowers -- and reducing investors' losses -- by modifying mortgages weren't helping because they only extended payments or reduced interest rates. They didn't fix the fundamental problem of unsupportable debt loads.
Inside the Fed in 2006: A Coming Crisis and Banter - (www.nytimes.com) As the housing bubble entered its waning hours in 2006, top Federal Reserve officials marveled at the desperate antics of home builders seeking to lure buyers. The officials laughed about the cars that builders were offering as signing bonuses, and about efforts to make empty homes look occupied. They joked about one builder who said that inventory was “rising through the roof.” But the officials, meeting every six weeks to discuss the health of the nation’s economy, gave little credence to the possibility that the faltering housing market would weigh on the broader economy, according to transcripts that the Fed released Thursday. Instead they continued to tell one another throughout 2006 that the greatest danger was inflation — the possibility that the economy would grow too fast. “We think the fundamentals of the expansion going forward still look good,” Timothy F. Geithner, then president of the Federal Reserve Bank of New York, told his colleagues when they gathered in Washington in December 2006.
Eurozone's 'big bazooka' bail-out fund is left in tatters by S&P downgrade - (www.telegraph.co.uk) Plans for a €1 trillion "big bazooka" to stem the debt crisis were crushed on Monday night as Standard & Poor's stripped the European Financial Stability Fund (EFSF) of its AAA credit rating. The EFSF, which is tasked with supporting indebted countries, was itself hobbled as S&P gave it a AA+ rating, reflecting the downgrade of France and eight other eurozone countries on Friday. As the standoff with Greece's creditors continued, Mario Monti, the Italian prime minister, pleaded for Germany and other creditor countries to help lower his country’s borrowing costs. He warned there would be a “powerful backlash” among voters in smaller EU countries if they did not. S&P said the EFSF's rating would be cut again if member states' creditworthiness eroded further.
Wall Street justice system is a kangaroo court - (www.bloomberg.com) Probably unbeknownst to the millions of people who interact with Wall Street every day -- either as brokerage customers or as employees of Wall Street firms -- there is a price of admission to this world tucked deep inside the boilerplate documents that one must sign to open an account or to get hired. This catch is a nonnegotiable agreement for when disputes arise, say, about a bonus promised but not paid, or about a rogue broker who sticks his client’s money in a synthetic collateralized debt obligation that goes bust. Under the deal, the only venue to litigate the claim is a mediation or arbitration process overseen and administered by the Financial Industry Regulatory Authority, Wall Street’s powerful self- regulatory organization. Finra oversees some 4,460 brokerage firms and 630,000 registered representatives, mostly brokers, traders and bankers. By signing the initial agreements -- and if you don’t, you can forget about working on Wall Street or having a brokerage account with a Wall Street firm -- you agree not to pursue any future monetary claim against Wall Street in the U.S. court system.
Greece Looks More And More Like A Collapsed Society – (www.businessinsider.com) I spoke with someone from Athens today. It's not a pretty picture. Issues related to subsistence have replaced the fervor for demonstrations. This may not last according to this resident. The closing of stores and shops is escalating. Apparently, 20% of all retail establishments are shuttered. Nearly every block has one reminder of the ongoing depression in the economy. The Greek Diaspora is in full swing. People are leaving the country, old and young alike. They are going to Europe, where the prospects of jobs stink, but not as badly at Greece. They are also fleeing to America (family members in the US have been helping out), Australia (where some are welcome) and South America. The talk is that the Greeks are becoming the new Palestinians. They leave their homes, as there is no future there, but all the time they wish they never left.
Traders brace for eurozone crisis fallout - (www.telegraph.co.uk)
France is stripped of AAA credit rating by Standard & Poor's - (www.telegraph.co.uk)
France credit rating cut puts eurozone bail-out fund at risk - (www.telegraph.co.uk)
Spend, Spend, Spend, It's the American Way - (www.nytimes.com)
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nice post
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