TOP
STORIES:
Concerted
push by cities to vacate land by using blight - (www.michigancitizen.com) The
essence of the plan is the forced removal of people from their homes. Even the
Detroit News had to acknowledge this in its lead paragraph about the plan. It
said, “The city is trying to encourage — or push — people out of rundown
neighborhoods that are largely vacant.” How will it “encourage or push” them?
By cutting off services. The services being “stopped” are street lights
(which haven’t been on in many neighborhoods for years), tree trimming, removal
of abandoned houses, a process that continues at a glacial pace even in the
best of neighborhoods, and police services, whose absence might not be noticed.
The city is vague about what it intends to do with water, fire protection, garbage
pick up and basic sanitation. If past history is any guide, these too are
likely to be cut off. Certainly that was the strategy used in what is now
widely considered one of the most shameful episodes in city development, the
destruction of Poletown. Folks living in the neighborhoods targeted for
clearance would do well to learn the lessons from that effort and begin
immediately to develop local safety and support organizations to resist the
plan to force them out, house by house.
Defaults May Loom on California Redevelopment Agency Debt -
(www.bloomberg.com) As many as
100 municipalities that took over bond obligations when California erased
redevelopment agencies may not get the tax
revenue they’re counting on tomorrow to make payments, the
state Finance Department said. Such cities and counties may face cash-flow
constraints that eventually may threaten defaults, said Matt McCleary, a project manager at Rosenow
Spevacek Group Inc. The Santa Ana firm is advising about 35 cities on
redevelopment issues. About 400 redevelopment agencies that helped finance
projects to overcome blight were dissolved Feb. 1 by Governor Jerry
Brown to redirect more than $1 billion of their funds to help
fill a budget gap. Bonds for the projects were to be repaid with increased
property-tax revenue from the revitalized areas.
Late CMBS Loan Payments Exceed 11%, Morgan Stanley Says - (www.bloomberg.com) The delinquency
rate on U.S. commercial mortgages packaged and sold as bonds surpassed 11 percent
in May as borrowers struggle to pay off maturing loans, according to Morgan
Stanley. Payments on the debt at least 30 days late jumped 0.22 percentage
point to 11.91 percent, Morgan Stanley analysts said in a report today. The
surge marks “the third sizable consecutive month-over-month increase,” said the
analysts led by Richard Parkus in New
York. Borrowers are falling behind on payments as debt taken out at
the market’s peak matures, with loans from the commercial property boom in 2006
and 2007 deteriorating the most, the analysts said. Of $3.63 billion in
shopping mall, hotel and skyscraper mortgages that came due last month, 61
percent didn’t pay off at their maturity date, they said.
California Note Sale May Top $10 Billion, Chiang Says - (www.bloomberg.com) California,
the most indebted state, may need to sell more than $10 billion in short-term
securities in order to pay bills through the fiscal year that begins in July,
Controller John Chiang said. The size of the revenue-anticipation note sale may
exceed previous estimates as tax collections have trailed projections and the
state exhausted most of its internal borrowing ability, Chiang said in an
interview yesterday in Bloomberg’s San Francisco office. “It could be more,”
said Chiang, a 49-year-old Democrat. “The question is whether there is market
capacity.” A $10 billion sale would be the largest since 2010. California lost
more than 1 million jobs in the recession that started in 2007, reducing revenue
by 24 percent. This year, the largest state by population borrowed $5.4 billion
in September and had to seek another $1 billion in February after tax
collections fell short and spending exceeded expectations.
Hedge Fund ETF Weapons Turn Dangerous For Solo Investors -
(www.bloomberg.com) If you are
convinced, really convinced, the price of crude oil will rise today and U.S.
stocks will fall, Factor Advisors LLC has an exchange-traded fund for you.
The FactorShares 2X: Oil Bull/S&P500 Bear (FOL) offered
by the New York-based firm makes a two-times long wager on crude oil futures
and a short bet on Standard & Poor’s 500 Index futures, in effect
delivering twice the daily change in the spread between the two positions. The
product’s birth followed “a lot of feedback” from institutional investors,
including hedge funds, Stuart Rosenthal, chief
executive officer of Factor Advisors, said in a telephone interview. As the
biggest ETF managers capture assets from traditional mutual funds with
benchmark-tracking offerings, smaller competitors are catering to sophisticated
investors with an increasingly complex arsenal of products. Often based on
derivatives, these can be weapons for savvy investors to amplify wagers on rising
or falling prices of everything from stocks and bonds to currencies and
commodities. The same tools, readily available through conventional and online
brokers, have proven hazardous for individual investors who sometimes
misunderstand and misuse them with costly consequences.
JPMorgan CIO Swaps Pricing Said To Differ From Bank - (www.bloomberg.com) The JPMorgan Chase & Co. (JPM) unit
responsible for at least $2 billion in losses on credit
derivatives was valuing some of its trades at prices that
differed from those of its investment bank, according to people familiar with
the matter. The discrepancy between prices used by the chief investment office
and JPMorgan’s credit-swaps dealer, the biggest in the U.S., may have obscured
by hundreds of millions of dollars the magnitude of the loss before it was
disclosed May 10, said one of the people, who asked not to be identified
because they aren’t authorized to discuss the matter. “I’ve never run into
anything like that,” said Sanford C. Bernstein & Co.’s Brad Hintz in New
York, ranked by Institutional Investor magazine as the top analyst
covering brokerage firms. “That’s why you have a centralized accounting group
that’s comparing marks” between different parts of the bank “to make sure you
don’t have any outliers,” said the former chief financial officer of Lehman
Brothers Holdings Inc.
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