Thursday, November 8, 2012

Friday November 9 Housing and Economic stories


TOP STORIES:

The Immeasurable Risk European Banks May Be Hiding - (www.cnbc.com) There is growing concern among policymakers and analysts that the true extent of European banks’ debt problems is being masked. Sir Mervyn King, Governor of the Bank of England, became the most high-profile policymaker to date to warn of the dangers of banks putting off foreclosures in a speech Tuesday night. His stern warning to U.K. banks that they need to drop the “pretense” that some of their bad debts will be repaid was coupled with the statement that they have “insufficient capital” to deal with losses which have remained undeclared. Essentially, what seems to have happened is that banks across the euro zone have put off foreclosures on weak businesses – a process known as forbearance. This has been enabled by low interest rates across the region and rescue packages which have injected unprecedented amounts of liquidity into the banking system and helped keep struggling economies afloat.

Spain’s Bad Bank Seen as Too Big to Work: Mortgages - (www.bloomberg.com)  Spain’s bad bank will struggle to sell the 90 billion euros ($117 billion) of toxic property assets it takes from other lenders because of its size and inability to help buyers finance purchases. “When managing tens of thousands of assets scattered across the whole of Spain, big is not beautiful, it’s sheer chaos,” said Mikel Echavarren, chairman of Irea, a Madrid-based financial adviser. A large, “clumsy” bad bank will be at a “tremendous” disadvantage and will generate losses that Spaniards will have to pay for. The country has until the end of next month to establish the institution, a condition for receiving 100 billion euros of external aid for the financial system it requested in June. Premier Mariano Rajoy’s government seeks to purge about 180 billion euros of bad assets that the Bank of Spain says are on the balance sheets of lenders. The government has said the bank will be profitable and won’t cost taxpayers.

Ford Shuts Three Plants as Europe Loss to Top $3 Billion - (www.bloomberg.com) Ford Motor Co. (F) will shut three European plants, its first factory closings in the region in a decade, and cut 5,700 jobs to stem losses that the carmaker predicts will total more than $3 billion over two years. The shutdown of two U.K. factories and a plant in Belgium will remove production capacity for 355,000 vehicles, or 18 percent of the carmaker’s total in the region, Dearborn, Michigan-based Ford said in a statement today. The moves will yield gross annual savings of $450 million to $500 million annually, it said. Ford rose after saying its third-quarter earnings will be better than the second. The carmaker is forecasting losses wider than $1.5 billion each this year and next in Europe, Chief Financial Officer Bob Shanks said on a conference call. Ford had estimated the loss this year would total more than $1 billion. The closings, more extensive than those planned or carried out by PSA Peugeot Citroen (UG)General Motors Co. (GM)’s Opel unit and Fiat SpA (F), are in response to a car-market drop that may be the worst in 19 years.

ADP changes the way it estimates new jobs - (www.cnbc.com) ADP is altering the formula used for counting how many U.S. jobs are created each month in order to better align with government data, after repeated instances in which the two reports sharply diverged. The first ADP release to include the new formula will be the October jobs report to be issued Nov. 1. The government’s official report will come out one day later. Economists and investors look at the monthly data compiled by Automatic Data Processing Inc. ADP +0.47% , the nation’s largest processor of company payrolls and the distribution of checks to employees, to glean clues on how many new jobs the government is likely to report. Yet the ADP report has often overshot the mark or undercounted the number of new jobs created when compared to the official U.S. report issued by the Bureau of Labor Statistics.

France’s Quiet Bank Rescues Top $78 Billion With Peugeot - (www.bloomberg.com) France’s aid to PSA Peugeot Citroen SA (UG)’s troubled finance arm brings the state’s backing for the nation’s banks to more than 60 billion euros ($78 billion). The government yesterday said it will guarantee 7 billion euros in new bonds by Banque PSA Finance, the consumer-finance unit of Europe’s second-largest carmaker. The aid comes on top of support for Dexia SA (DEXB), the French-Belgian municipal lender, and for home-loans company Credit Immobilier de France.  “These bank rescues on the quiet should be getting more critical market attention,” said Bill Blain, a strategist at Mint Partners Ltd. in London. “We don’t know what’s next, but it certainly demonstrates that some of the specialized financial institutions remain very, very weak.”






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