Tuesday, September 18, 2012

Wednesday September 19 Housing and Economic stories



TOP STORIES:

Panicking Spaniards Pull Out Cash, Leave Country - (www.cnbc.com) It is, Julio Vildosola concedes, a very big bet. After working six years as a senior executive for a multinational payroll-processing company in Barcelona, Spain, Mr. Vildosola is cutting his professional and financial ties with his troubled homeland. He has moved his family to a village near Cambridge, England, where he will take the reins at a small software company, and he has transferred his savings from Spanish banks to British banks. “The macro situation in Spain is getting worse and worse,” Mr. Vildosola, 38, said last week just hours before boarding a plane to London with his wife and two small children. “There is just too much risk. Spain is going to be next after Greece, and I just don’t want to end up holding devalued pesetas.” Mr. Vildosola is among many who worry that Spain’s economic tailspin could eventually force the country’s withdrawal from the euro and a return to its former currency, the peseta. 

Food-Stamp Use Climbed to Record 46.7 Million in June, U.S. Says - (www.bloomberg.com) Food-stamp use reached a record 46.7 million people in June, the government said, as Democrats prepare to nominate President Barack Obama for a second term with the economy as a chief issue in the campaign. Participation was up 0.4 percent from May and 3.3 percent higher than a year earlier and has remained greater than 46 million all year as the unemployment rate stayed higher than 8 percent. New jobless numbers will be released Sept. 7.  “Too many middle-class families who have fallen on hard times are still struggling,” Agriculture Secretary Tom Vilsack said in an e-mailed statement today. “Our goal is to get these families the temporary assistance they need so they are able to get through these tough times and back on their feet as soon as possible.”

Assessing Fannie's Past and Future - (online.wsj.com) The man with the keys to the White House on Nov. 7 will face a major piece of unfinished business from the financial crisis: What to do with Fannie Mae and Freddie Mac, the two government-backed providers of money for home mortgages? Four years ago almost to the day, the Bush administration seized control of the two companies amid staggering losses on millions of mortgages they owned or guaranteed. So far, the Treasury has pumped about $142 billion into Fannie and Freddie to prop them up. Despite their financial woes, they remain the nation's biggest suppliers of funding for home loans. With the help of Uncle Sam's credit rating, they borrow money in the bond market and use it to buy mortgages from lenders or guarantee mortgage-backed securities against the risks of default. That effectively subsidizes consumer borrowing costs.

Breaking Up Banks Is Hard With Traders Hooked on Deposits - (www.bloomberg.com) Shareholders of Wall Street banks who agree with former Citigroup Inc. (C) Chief Executive Officer Sanford “Sandy” Weill that the companies should be broken up face an obstacle: bondholders. That’s because trading on Wall Street relies on borrowed money, or leverage, that can be obtained cheaply as long as the traders belong to a conglomerate such as Bank of America Corp.JPMorgan Chase & Co. (JPM) or Citigroup that gets federally insured deposits. Jefferies Group Inc. (JEF), a securities firm that isn’t part of a bank and can’t turn to the Federal Reserve for help, currently is charged more to borrow in the credit markets.  “If you divorce them from the mother ship, you’d also be divorcing them from the government at the same time, and that’s where the subsidy is,” Cornelius Hurley, director of the Morin Center for Banking and Financial Law at Boston University, said in a telephone interview. “The funding advantage is the key.”

Young and without a future - (www.washingtonpost.com) Enea Gjoni is sitting silently with some of his friends at an outdoor cafe that has become a gathering place for the Greek capital’s unemployed youth. No one is talking. They have been here for hours, as they have every other day for the past few months, and have pretty much run out of things to say. A year ago, Gjoni, 19, graduated from a technical high school in the city with modest life goals: He wanted to be an auto mechanic. But in a country that is entering its fifth year of recession, he has been unable to find any work. “There’s no future here,” he said as he idly stirred his coffee. More than 5.5 million young people across Europe are unemployed, the European Commission reports, part of what scholars are dubbing a lost generation.

ECB Braces For a Difficult September - (online.wsj.com) August was a good month for Mario Draghi. September may not be so kind. The European Central Bank president managed this summer to reduce Spanish and Italian bond yields without spending a euro, by saying he will do "whatever it takes" to preserve the currency, while dangling the prospect of big-time bond buys. This month, a number of events—starting with Thursday's monthly ECB meeting—threaten to derail Europe's hopes for a quick resolution to its debt crisis. More muddling through seems increasingly likely. Financial markets hope Mr. Draghi adds detail to a plan outlined last month to revamp the ECB's dormant bond-buying program and reduce borrowing costs for euro-bloc stragglers. He could announce whether the bank plans informal yield objectives for shorter-maturity bonds, and how it will communicate what it buys, and when, to markets.



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