Sunday, August 26, 2012

Monday August 27 Housing and Economic stories



TOP STORIES:

Blink! U.S. Debt Just Grew by $11 Trillion - (www.bloomberg.com) Republicans and Democrats spent last summer battling how best to save $2.1 trillion over the next decade. They are spending this summer battling how best to not save $2.1 trillion over the next decade. In the course of that year, the U.S. government’s fiscal gap -- the true measure of the nation’s indebtedness -- rose by $11 trillion. The fiscal gap is the present value difference between projected future spending and revenue. It captures all government liabilities, whether they are official obligations to service Treasury bonds or unofficial commitments, such as paying for food stamps or buying drones. Some question whether “official” and “unofficial” spending commitments can be added together. 

Three California cities' bankruptcy cases reverberate - (www.sacbee.com) The back-to-back bankruptcy filings of Stockton and San Bernardino, following Vallejo's insolvency a few years earlier, have sparked finger-pointing about causes and speculation about whether more cities may go under. Those on the political right say the bankruptcies resulted from local politicians' caving in to pressure from unions for higher pay and more generous pension and health benefits. Those on the left – unions particularly – contend that the collapse of the real estate market, caused by rapacious Wall Street bankers, is to blame.

BNP Fund Freeze Shrinks Holdings Five Years After Crisis Ignited - (www.bloomberg.com) When a Brookfield Investment Management Inc. analyst saw bonds of Accuride Corp., the wheel manufacturer in Evansville, Indiana, at 94 cents on the dollar in December, he decided it was time to buy. The problem was the price wasn’t real. The debt was only available at 104 cents. “When it actually came time to shake them loose from somebody’s hands, that’s where the disconnect came in,” said Richard Cryan, co-manager of high-yield corporate debt at the New York-based firm, which oversees $150 billion of assets. Unable to find a seller at the lower price, they gave up. Five years after BNP Paribas SA (BNP) marked the start of the worst financial crisis since the Great Depression by halting withdrawals from three investment funds that owned subprime mortgage securities, repercussions are lingering in the credit markets. What investors see still isn’t what they can get.

Forty Million Houses in the US That No One Needs? - (www.thedailybell.com) 40 million houses too many ... one explanation for falling prices ... America has too many big houses – 40 million, to be exact – because consumers are shifting preferences to condos, apartments and small homes, experts told the New Partners for Smart Growth Thursday, holding its 11th annual conference in San Diego through Sunday. Relying on developers' surveys, Chris Nelson, who heads the Metropolitan Research Center at the University of Utah, said 43 percent of Americans prefer traditional big, suburban homes but the rest don't. "That means we are out of balance in terms of where the market is right now, let alone trending toward the future," he said. He estimated that this demand suggests a need for 10 million more attached homes and 30 million more small homes on 4,000-square-foot lots or less.        

Former ECB Chief Economist Warns Against Trying to Blackmail Germany With History - (online.wsj.com) Germany’s guilt over the Second World War doesn’t oblige it to write blank checks to euro-zone countries that fail to reform their economies, said former European Central Bank executive board member Otmar Issing. Mr. Issing served as a member of the ECB’s Executive Board from 1998 to 2006. A German, he remains an influential voice on economic and central bank matters in his home country. Since leaving his ECB post he has served as an adviser to his government on financial and economic matters.





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